large NEM position/bubble-itis
I agree with what you just said, NEM is total bubble-itis at $270 gold. But is it at $350?
When I sensed the oil bull was back in town Jan 1/00, I chose a basket of small cap stocks like it was a New Years resolution. None of them had reasonable p/e & psr ratios at $16 oil, but they did at $30. No one believed the bull was back at $20 and it was time to sell when it hit $30, when every one thought the planet was out of oil <again>.
Same play here, if you believe. If you don't, there are some pretty smart investors on this thread that are 90% cash and 10% in precious metals, you could easily hold 100% cash if you love the dollar.
Last note -- trading gold stocks is not unlike trading Hi-Tech, you buy them for the future prospects. I was looking at a valuation table that listed about sixty PM stocks and the average PSR was in the neighborhood of 30%, so in a sense you should feel bad for not taking a chance at a real "leveraged" play.
If NEM has only a PSR of 2, you should really reconsider what were doing here! When shopping for gold stocks look for P/B, Market Cap/ounces in reserve and finally future CF/S, because by accepting present day values you aren't "prospecting."
Oh! One more thing... If someone offered to exchange a note called "euro" straight across with your dollar, would you do it? That's where the real danger is, "acceptance."
Regards
Frank P. |
