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Non-Tech : Invest / LTD
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To: Lucretius who wrote (3603)10/1/1998 8:11:00 PM
From: 007  Read Replies (1) of 14427
 
Some random gold thoughts.

To what extent do you think the S. African golds are discounted due to political risk as opposed to being truly a bargain?
If the discount is due to political risk, then it can only be an advantage if that risk diminishes.
Another factor is their currency, which I would guess will appreciate against the dollar. Of course, you normally want to hold equities in the currency that is appreciating, but with gold mines selling at world prices, I'm not sure that's going to help. Comments?

On the American side, I think NEM has shown itself to merit a prominent position in any gold portfolio. It has been outperforming others and today's move came on a new 12 month volume high.

I think ABX is being held back a little by the hedge. Not that there's anything wrong with the hedge - it's money in the bank - but simply because a higher sales price has already been discounted into the stock. So the hedge prevented ABX from dropping as fast before, and it likewise should keep it from rising as fast now. Unwinding the $400 hedge at this time does not make sense to me because it is profit taking that greatly increases future earnings risk. Of course, it would send a very bullish message to the market and probably cause a gold/xau rally.

Silver stopped it's move early today as dec silver hit 5.50 and backed down to close negative. It will be interesting to see how effective it is as a leading indicator for gold.

The global financial situation seems to have gone public today. I would expect a strong open tomorrow and it will be interesting to see if the traders fade the first wave of paranoia. Me, I'm in for the long haul - I hope.
007

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