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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Enigma who wrote (47950)	2/4/2000 2:00:00 PM
From: goldsheet	Read Replies (1) \| Respond to of 116811

A theoretical explanation; A gold stock is like a call option with a strike price equal to the total cost of production. (leveraged, so it moves at a higher rate than the commodity) If gold is $280 and cost of production is $220, then the margin is $60 If gold goes to $300, then the margin goes to $80. A rise in bullion from 280-to-300 is 7%, while the margin rises 60-80 is 33% I would expect margins to be reflected in earnings, hence in expected stock prices. My analysis of 4075 data points tells me 3.75 is the average leverage number for gold stock prices vs. gold bullion prices.