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Pastimes : The Philosophical Porch

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To: Rarebird who wrote (4946)	11/21/2009 6:19:35 AM
From: Real Man	Read Replies (2) of 26251

Fundamental situation is rather interesting. Gold production peaked in 2001 and is currently declining. Mining stocks trade at high multiples of their M&I reserves in the ground, they can't find any more. Simply put, the lack of reserves makes GDX expensive and gold cheap. This does not mean gold stocks won't rally as gold goes manic, but I think the metal will lead this time like it did back in the late 70-s. Some miners did not rally and declined until 1979. BWDIK? Take Barrick gold, for example. High margin producer with 138.5 million Oz of gold in the ground. At $1150, all this gold is worth 159 Billion. ABX is worth a quarter of that.

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