Selling in gold and gold shares just merciless. NGD had a great report, but who gives a sh*t. The hedgies are selling shares and soon they'll even be trying to sell the 386 computers that were in the closet when they moved into their rented space. Look at the SA golds. The rand is getting crushed and their costs will go down accordingly, but who cares. Sell 'em down to 1/2 of book. It has to stop sooner or later, but I'm sitting back and holding my GLD, SLV, GORO, and GFI (this will go soon, to be replaced by another SA producer not to be DRD). Will probably add some SLW one of these days. But I don't think there's any hurry. I thought the inflation trade would begin with all of the liquidity, but I think it's too early. From what I can tell/hear, a lot of hedges unwinding and the proceeds are going into dollars. Another thought - a 50% retracement of the 2001/2 - 2008 gold run would go to about $640, so that's as good a number as any.
In the meantime, reinsurers doing well. PRE (Disclosure - I hold) was at about 0.85 of book before earnings and jumped today. IPCR (I also hold) at about 0.6 of book after today's earnings report and will hopefully jump tomorrow. These guys run a pretty conservative ship investment wise and it's starting to show. With AIG going under and less conservative types hopefully going out of business, maybe premiums will move up soon.
I think the ags are looking good for the long term, because the demand will still be there (VMI, MON, POT only - I never got the runup in BG - it's a middleman). But it may be early there.
CIEN trading at about 0.7 of cash by the way, but this is only a trader until there's a little more technical sign of a meaningful rally.
Anyhoo, it's real tempting to dive in at all these "bargains," but if SP earnings at 60 next year (who knows) and assume a 10x multiple at bottom, we've got a long way to go on the downside, and, unlike Warren B., I don't want to commit my precious capital and endure a 40% downside. |
