NEM pro/con:
Con:
1. Newmont is expecting the average annual attributable production at its Minas Conga deposit of about 300,000-350,000oz/year of gold and about 80-120M lbs/year of copper in the first five years of production. (this production is in doubt) seekingalpha.com
2. The cost from "mine to refine" has been estimated to be, industry wide, about $1,200/oz... ... Newmont's cost: $1,295/oz in 2012. seekingalpha.com
Pro:
1. Goldman Sachs advised clients to short gold (a contrarian signal)
2. recent economic weakness globally (Europe, China, etc.) and falling commodity prices (copper especially) indicate QE4 is probable. Serial QE = gold bull market. This has been true, and will continue to be true, no matter what the "official" inflation rate is.
3. $1,200/oz production cost. This is a pro, because it means low gold prices are a self-correcting problem. In the last recession, when oil got below $80, high-cost production (tar sands) and high-risk (ultra-deep water) got shelved, and not restarted till oil got back above $80. The same should apply to gold. Any decline in gold below $1200, for any reason, is likely to last only a few months at worst.
4. disproportionate stock price decline:
gold down 23% ($1924 to $1476)
NEM down 54% ($69 to $32)
5. valuation at low end of LT range:
dividend at all-time high
P/S 1.6, below 2008 low
PE TTM 9, well below 2008 low
P/B below 2008 low
ycharts.com
Anything missing or wrong on this list? |
