If Barrick didn't hedge for the last two decades, they would likely be the size of Agnico,...whom may produce about 400,000 oz of gold, instead of Barrick's 5.5 million oz with an additional 3 million oz annual production coming on in 5 years from new projects, with an Agnico market cap of about CDN$2 billion, instead of Barrick's CDN$15 billion.
Is this a smart argument?
Some folks perhaps are a little lazy to bother to do a few simple calculations, or bother to read and understand a set of financial statements. They prefer instead to read some others opinions and propaganda and suck it in, hook, line and sinker.
In the end, the financial statements rule, and in a few quarters (or perhaps years depending on Bushie) when the evil doers stop buying up all the spot gold in sight as they stockpile it in whatever corrupt nation will shelter them, and the gold market settles down, cashflow will rule as it always has in the end.
A simple calculation to determine relative valuation between companies is (oz gold to be produced in next year * cash netback per oz (gold revenue per oz minus cash cost per oz))divide by fully diluted market cap. Anyone taking the time to go through this calculation for several companies would realize that many gold company valuations are just as nuts as dot commies at their peaks in 2000. Anyone investing in golds that hasn't done these calculations for the golds they are in are, well, perhaps a little silly, if not very foolish, but then 95%+ of the participants in the stock market are a little silly and foolish and that's why the rest of us can make money (only one U.S. fund beat the S&P 500 12 years in a row,..and it wasn't a gold fund (gggggggggggggg)).
Surely anyone who discarded the dot commie belief that profits didn't matter, would have second thoughts about POG going to thousands of dollars to allow all gold producers to become as wealthy as Bill Gates,...but looking at valuations of some gold producers, some dim lightbulbs still believe that the tooth fairy is real. No problem,...I'm counting on it,...stop losses are in place and the golds are the momo place to be, we can't help but make money (ggggggg) |
