Important Comment Today from Russell on SA golds / NEM
"Richard,
Your newsletter continues to be as useful and entertaining as ever. In particular, thank you for providing the constant reinforcement needed to hang onto gold stocks in a turbulent market, rather than trying to trade in and out. However, there's one case in which I'm wondering whether an exception needs to be made, and that's South African gold stocks.
I bought Harmony, Goldfields, Durban, and AngloGold over a year ago. I am currently sitting with a net loss of about 18% in them. That in itself doesn't bother me; I can afford to hold them indefinitely while waiting for the primary trend to lift them. My concern arises from: 1) the looming South African gold miners' strike, and 2) the looming South African government's royalty on gold mining revenue (not profits). I am beginning to wonder whether South Africa is simply not going to be a place where gold mining companies can be reasonably profitable, regardless of the primary trend of gold itself, and am wondering if I should take the relatively small loss in these stocks - potentially avoiding the big loss - get the writeoff, and redeploy the money into other gold stocks. On the other hand, of course, the bad news is already known and factored into the price, so maybe there's nothing to be gained from selling now.
If you have any thoughts on this and would be willing to share them in your daily postings, it would be much appreciated.
Best regards,
Michael A
Russell Comment -- I'm not a fan of the South African government. These are good mines, but the S. African mines are heading for a possible strike, and the S. African government wants to be a "partner" in the gold mines. I have a position in Harmony and Durban, but I'm not excited about these positions. I'm thinking about switching these stocks to Newmont. But I haven't moved yet." |
