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

To: ItsAllCyclical who wrote (82200)	12/20/2000 3:24:14 PM
From: Brian	Read Replies (1) \| Respond to of 95453

JimL: "Does the phrase "risk/reward ratio" ring a bell?" and "Natural gas prices have almost doubled but many natural gas play have remained flat." So lets see here... risk for NG drillers is very low as shortages in NG should last for several years, but they have remained flat. Gold on the other hand is in abundant supply,thus high risk of price never increasing, but gold stock's have advanced. IMO risk would be larger for them to start dropping again. I don't quite get your reasoning. Brian

To: ItsAllCyclical who wrote (82200)	12/20/2000 3:30:07 PM
From: Tommaso	Respond to of 95453

It seems to me that the only thing left to constrain natural gas prices is government control and rationing, which I think is likely now. I would hope that if the government does this, they set a price that stimulates every kind of production. Otherwise we will have a sovietization of the industry. In any case, it may be a mistake to look at the charts and conclude that this is another tech-stock mania. Now it could turn into a mania. I could imagine a Hunt-brothers' type of move, someone buying up all the outstanding futures for the year 2002, say.

To: ItsAllCyclical who wrote (82200)	12/20/2000 4:55:00 PM
From: kollmhn	Respond to of 95453

Being a contrarian is not a bad thing, Jim. It's just that I can't buy into a good reason to own gold, period. While it may be a relative 'safe haven', there is no shortage of it and I see no merit to owning it instead of, say, cash if one is nervous about the future. Gold certainly gave no one satisfaction when we had a genuine "white knuckle" event like the pending world financial meltdown during the LTCG crisis. As for NG, you are correct that a true shortage has yet to be "proven" as you say but, it sure looks imminent, more so than one in gold, wouldn't you say? NG stocks are discounting $3.50 gas. This is a disconnect and those co.s that are financially strong enough can easily buy NG for less than it takes to find and produce it. In fact, some are buying reserves, selling production forward to cover the full cost and will have a portion remaining for free. My point is not to hype NG but merely to query why you would gravitate to a commodity in clear oversupply when the one in short supply isn't even fairly priced in the stocks that produce it. XAU has given little happiness to those that own it in spite of a horrendous ( and deserved) decline in the NAZ. But, the beatings that are taking place in the NAZ are mere give backs of last year's gains. No big deal , IMO (unless you own them, of course). Will a recession ensue? Yeah, probably. Will the wealth effect reverse? yeah. Will it be necessary to own gold? Nah. As for my asset allocation-I'd love to tell you but it would be too financially revealing if I gave it to you truthfully. So, I will say that within that portion that is not cash, munis and a core financial holding, the remainder is 30% drillers and 70% E&Ps (which are 80%+NG oriented). I have zero other stocks.

To: ItsAllCyclical who wrote (82200)	12/20/2000 4:56:53 PM
From: Meridian	Respond to of 95453

JimL Does the phrase "risk/reward ratio" ring a bell? While there are NG stocks that fully reflect this sanguine environment, there are others that do not. Companies that still trade at 3X cash flow and less than 10X earnings using $5.00 gas in 2001. There is a list. The first that comes to mind is Gulf Canada - 50% NG levered, but trading at 2.5X CF and 7X Earnings for 2001 - $25 oil and $5.0 gas. Your glib response to Kollmhm really doesn't capture stocks like this, with exceptional risk/reward ratios.