When you read the complete KGC release they actually made an even bigger bet for lower POG. They booked a profit on 500k at 310-320 spread over the next several years, and reestablished the same ounces and maturities at LOWER PRICES of 270-274. They will now be capped at those lower prices on a rally. With the puny contango of 3 1/2 to 3 3/4%, this is not only a bearish strategy, it's a stupid one. Why would anyone buy into a gold company who didn't believe there was more potential than $270. If you didn't believe in gold, you wouldn't be looking at these stocks in the first place. It just completely baffles me. KGC is clueless, and if anyone is connecting the dots here, KGC will be left in the dust in this rally, and will dwindle away if we don't rally. Lose-lose if you ask me.
This illustrates a point about gold stocks. As if the sentiment isn't poor enough, you have this stuff to deal with. It requires an inordinate amount of attention to hedging book details, that even dedicated gold bulls (what few there are) can't perform. Really only extraordinarily committed and trained people will bother. I can do it and have, but it gives me splitting headaches and makes me testy.
Further, there are few good analysts left that follow the industry so as a result some fine companies with bullish gold philosophies get thrown out with the dirty bath water. And who knows what goes on between reporting periods. Bad news all the way around, and I don't think these Kinross-like companies realize what it's going to take to attract investors back. This is clearly not it! |
