Hi Bruce. I agree - the metals are going to come back - and probably in a screaming upsurge, especially if the mainstream market goes into the tank and the pros start chasing this wildly undervalued sector.
An independent arbitrager on tonight's Nightly Business program says stock prices are way above anything that can be justified rationally - and reflects the competition among fund managers to keep their portfolios increasing in value. So their continued buying of the index stocks, especially, and the big caps in general, keeps pushing the stocks higher, attracting more money from fresh investors, which fuels the cycle, round and round we go!!
He said the mining sector, along with the small caps, is now probably the most undervalued and overlooked sector on the market. But sentiment is not with these - yet!! So their sideways or downwards spiral continues, opposite to the mainstream... The question is: How long can this continue?? Where does it end?? What event will end it?? The Japanese P.M., whose comments on Japan's selling U.S. Treasuries to buy gold yesterday, which precipitated the 192-point drop in the Dow, apologized today for his brash comment, and so, the market retraced its losses!! Japan is the U.S.'s primary creditor, and the U.S. $, the market, interest rates, I'd say global stability in this paper system, would endure catastrophe if people believed Japan was actually going to do this. Is this a warning to get out of paper and into hard assets???
BTW, I note your owning some RYO. On yesterday's Nightly Business, another independent was saying how RYO's cost of mining was around $290/oz., but they were planning to get this down to as little as $215 (U.S.) an oz. by 1999! Yet their stock price is down from a recent high of C$6.50 to a current C$3.15!! Kinross - down from C$11 to under C$6.00. It goes on. In spite of these companies' selling forward, like RYO's selling forward for a year's production at U$390/oz., their profits healthy and getting healthier - yet the stock (and other companies in a similar situation, like Placer Dome Gold (PDG-T), Barrick (ABX-T), TVX Gold (TVX-T)), continues to decline. I just don't know ...
Anyways, I carry on too much sometimes ... your thoughts?
Harry K. |
