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Strategies & Market Trends : Dave Gore's Trades That Make Sense
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To: Dave Gore who wrote (8299)6/18/2002 9:41:38 PM
From: The Vet  Read Replies (2) of 16631
 
Yes Dave, all the more amazing when you consider Barrick gold (ABX) trades at a PE of over 50 and it is heavily hedged.
Then you compare HGMCY, unhedged with a PE of 8 or so. This sort of disparity occurs between all the North American majors and the South African gold miners, so when you hear the analysts say that gold stocks are overvalued, generally they are right.
Even for gold stocks it should be a stock pickers market, but in a bull market everything rises, even those which on fundamentals, shouldn't..
However with gold miners a few dollars higher in the POG can make a marginal mine into a winner so those PE figures are very variable when gold is rising or falling. The exceptions are the heavy hedgers who have locked in their price and shouldn't react much at all except when their hedge book blows up and they get into serious trouble. ABX actually increases its hedge book loss by $21 million for every $1 rise in the price of gold. At about $345 per ounce they are in deep sh......
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