Claude, thank you so much for the references. I had not seen them before, only excerpts. I will review them in detail later.
I realize by your answer that we may be talking about two different things. Calandra/Doody were talking about how the market was valuing the four or five intermediate producers. Doody felt like the $400+ averages for four of the producers were ahead of themselves, and would be more reasonable at $500+ gold. He apparently thought Iamgold, at $200+ per oz, was in need of doubling to catch up. None of these numbers mean what the reasonable share value are, only what the market has driven them to.
I think what you are talking about is what a company or analyst would use to calculate a reasonable share price. Your $125 average at current gold price is much lower than the $200-$400 range of the five intermediate producers. BTW, do you know what some numbers are for major producers?
So, the share buyers are anticipating a lot of value that is not there (i.e., not justified)? I thought that was more common on those stocks that did not yet have proven or probable reserves. But, thinking about it, I guess people would buy the producers first, and drive the price above the true value. I guess one of the guidelines for calculating a stock value is a "confidence" and/or a "comfort" factor?
I note that Doody's numbers appear to come from dividing the market cap by the sum of the proven plus probable reserves. If you divide market cap by only proven reserves, the numbers would be higher. And, he lumped the proven and probable together. You seem to place lot lower value on probable. I assume you mean $50-$200 for proven and $0-$50 added on for probable?
BTW, I posted this on GE thread because Rod Steel posted the reference on the RB thread and he checks SI thread every day. These numbers do not apply to GE. GE has no proven or probable reserves, by the accepted guidelines. We will have to wait to see if we ever define any reserves. I was going to say we had "proven" the "reserves" that we had produced so far in the plant, but then I realize it has to be economic, so even our production can't be counted yet.
Claude, again thanks for taking your time to answer this question. Out of it all, I am now prepared to see large range of stock price values versus gold in the ground. It doesn't make the job of an analyst like you very easy, when irrational exuberance may be a large part of a stock's current price!
gerald |
