re: Any thoughts you care to share on NEM?
I've only started looking at this sector recently, and there are others on this and other boards who know a lot more than I do about NEM.
I hate bidding wars, as it usually means the winner overpays. It becomes an ego thing, and irrational prices get paid.
Nevertheless, Newmont is the biggest unhedged gold producer. This makes their stock a leveraged play on the price of gold. Their profits are highly dependant on the price of gold.
Gold is a good investment when confidence is shaken in the governments who print the pieces of paper labelled "dollar" and "yen" and "euro". Gold will do well if inflation goes over 4%, or in a persistent deflation. At the moment, I consider those scenarios as possible, but not a certainty. They are one possible future, and it is worthwhile using NEM as a bomb shelter, a hiding place, in case an event on the tail of the BellShapedCurve happens.
14 is a very strong, multi-year support level for the stock. If they overpay for this acquisition, and/or if the U.S. economy gets out of recession by mid-2002, and/or if inflation is 0%-1% in 2002, then I will probably get a chance to buy at 14 sometime this year. At that price, the most pessimistic outlook (for gold) is in the stock. Which means the risk/reward is in my favor. |
