Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: hdrjr who wrote (48321)	7/21/1999 11:22:00 PM
From: double-plus-good	Respond to of 95453

hdrjr, (OT, again) My research in the gold areas has been pretty limited. If you look at the 4 or 5 dominant players, their charts resemble those of the major oil service stocks as they continued to bump along the bottom of support at OSX 40 something. Newmont, Barrick and Placer appear to run pretty similarly. Even as the gold price continues to plummet, there appears to be a level beyond which traders will not allow the producing company stock's to fall. I picked NEM because they are unhedged on gold price and if my contrarian spirit is going to make me some money in options I want some juice and volatility. Its also well followed and one of the first surrogate stocks that blips on moves in the POG. Kind of like picking CAM or SII off the bottom we had in the OSX. Any mini-rally should see at least a couple of point move. That being said it may be tempting fate to buy options if the price of gold really does continue to fall. One would have to expect that the gold stocks as well would eventually break their support levels. If you go back and look at the last throes of the OSX death march there was capitulation in some stocks as the final bearish prediction of $5/barrel oil was made in the Economist. VTS made it as low as 8 and change I believe. SII was at or near 20 as well. On the other hand, it appears the whole investment community and every hedge fund is short gold. There appears to be an immense amount borrowed against stocks, since the interest rate on the borrow is so damned cheap. My view of it is that if the situation which makes shorting gold so easy were to change, there could be a very bizarre episode in the gold pits. For me its a purely contrarian play and I'm not betting the farm. But it sure looks like odds I'm willing to take going into Y2k with a stock market precariously perched on the edge of absurdity while every baby-faced hedge fund manager is short gold. I've got Sept calls which have the right length fuse IMO, as whatever might happen ought to happen by then. If not then my other stocks will do well, and they're only options after all. I look at it as an all or nothing bet. So that's my OT view of it. For all the folks who have gone perma-bear on gold and all the very true statements about is non-intrinsic and irrelevant character, I wonder what would happen to that psychology in a market panic. FWIW ++good