Isopatch--yes, I've been glancing at the posts on this thread regularly, and I've posted more recently than a month ago. When you say you're dead on predicting an increase in the price of gold shares, it looks more like a self fulfilling prophecy rather than a rationally based prediction. Here's why:
Whenever there's uncertainty in the marketplace, caused in this case by both economic and political events, a substantial number of rather conservative, risk averse investors literally panic, bail out of all their non-gold investments and plow everything into the traditional safe haven in hard times. Reminds me of Bob Hope's often quoted views on Vietnam: "First I was a dove, then a hawk, and now I'm just a chicken."
I will go back to one of my earlier posts to remind you that in my view Warren Buffett still has the best investment strategy--buy with the idea of holding forever. This is as true in the insurance field as it is in fossil energy, where the factor that really counts is the rate of consumption continually being in excess of the rate of new discoveries. That's the basic economics at work here, and it translates into oil and natural gas prices gradually working their way upward, until such time as somebody comes up with a reasonably priced substitute, particularly in the transportation uses of oil.
When you see a major change in the fundamentals, such as a new technology that requires far less fossil fuel, then it's time to reevaluate. Buffett reevaluates his investments constantly, as he did when deciding to dump his U.S.Air investment years ago. At that time, he commented that he realized only too late that the airlines were one of the few industries bent on suicide. Kind of prophetic, though I'm sure he didn't mean it in the current sense.
The notion that the whole world is sliding into a recession and that demand for oil and gas will drop has created enough pessimism among energy investors to make the whole sector look inviting once again. While I think CHK may be an interesting hedge on a weak economy, I also think UCL is the best long term opportunity, based on those old fashioned (and obviously long forgotten) fundamentals, such as increase in oil and gas reserves, price earnings ratio, low debt levels, and track record on recent discoveries.
Art |
