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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG
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To: jrhana who wrote (1052)11/23/2003 6:18:00 AM
From: Andrew  Read Replies (2) of 48092
 
Valuation is I believe subjective in the markets and perhaps even more so in the Gold shares.

In the past few months we have seen Goldcorp have several sell recommendations from ANALysts who cite the fact that Goldcorp is overvalued relative to its peers when valued by reserves and other criteria blah blah.

I believe this company is specially positioned to have a higher valuation than ANY other producer in the world and is why I continue to hold it.

1 - Growing high grade reserves
2 - New shaft being sunk / increasing production
3 - I think lowest cost mine in the world
4 - Underground mine in a politically stable country *
5 - Pays a higher dividend yield than IBM or MSFT or for that matter most any tech and will continue to for many years

*This is an intangible, we have no knowledge of what the future holds in the current geopolitical environment and I feel that in certain unforeseen events although gold might rise dramatically in value some gold mining companies might lose value or become worthless depending on their exposure to certain geographic areas. I thank the market for allowing me to buy Agnico last week at such a depressed price.

For these reasons I am limiting myself to have no or little exposure to in no particular order China (and all of Asia), Russia (and all former Soviet), Africa (including and especially SA which is a quagmire IMO), Venezuela (no explanation needed). I am wary of certain other Central and South American Countries as well.

Of the majors I own or will continue to own, some have limited exposure to these areas but are well diversified so having one mine out of a large portfolio of mines in one of these regions limits risk.

As an example I sold the last of my BGO at 2.98 due to highly concentrated exposure to Russia and SA. Missed some of the move but made up for it elsewhere.

Yes there are many juniors that have not participated as much in this gold bull. I believe the reason for this is that some of them do not have a sexy story to tell. I have a short list and am doing my research now to see which ones have the best upside potential so that I can rotate some % of my portfolio into them. My criteria for these is proven reserves which have not been given fair value by the market, potential for growth of reserves and having assets based in politically stable climates.

I have not directly owned any grassroots explorers throughout this entire gold move and nor do I envision that I will unless I find some which are very compelling but at current valuations for explorers I am staying clear. Despite this I still have been able to manage a 2 year 400% return and above all else I want to keep it.
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