Gold and Silver Stocks and Related Commentary Message Board

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Politics : Gold and Silver Stocks and Related Commentary

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To: tyc:> who wrote (10553)	4/8/2005 9:30:51 AM
From: Claude Cormier	Read Replies (2) of 18308

<To my mind it ignores one fundamental; stocks have value because they have earnings. To short sell stocks with earnings is to incur liability for the value if those earnings. (It makes more sense to hedge by diversifying on the long side).> Senior (and mid-tiers) gold producers, unlike most other stocks, see their net asset value go down when the product they sell (gold and other metals) goes does not move up. Further more, they face depletion of gold assets as they cannot easily replaced them. They lose on two fronts. The bigger they are the more they become cyclicals. Very few growth stocks in this sector. Juniors can certainly be shorted as well. But this game can be a lot more risky than shorting seniors as net asset value can change dramatically when a junior pulls a few good drill holes. On the other hand, if there are growth stocks in the mining sector, you will find them in the juniors. I do not short individual stocks. But beleive me that doing so on indexes or buying puts has been a good strategy for me to hedge my longs in the junior sector.

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