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.

Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Ken W who wrote (29075)	9/27/2002 1:23:26 PM
From: Sergio H	Read Replies (1) \| Respond to of 29382

I think the answer is simply liquidity and ease of trade in comparing one instrument to another. Trading the underlying metal calls for more sophistication. Wouldn't you agree? I've got a research project going for tonight. Going shopping. Could be interesting. Sergio

To: Ken W who wrote (29075)	10/3/2002 4:22:19 PM
From: LAWRENCE C.	Read Replies (2) \| Respond to of 29382

Ken, Gold stocks are a leveraged play on gold. Assumption 1: The cost of mining the gold is X units of currency in the local currency. Say for ex. the cost of mining the gold is $275. At Cost Profit $275 $25 $300 $50 100% increase in profit on about an 8% rise in price from $275 to $300. Assumption 2: The sale price is usually in dollars. Assumption 3: When the price of gold is rising the profit on the gold mined will a higher percentage than the rise in the price of gold. Assumption 4: When the price of gold is rising, the gold reserves are worth more. Assumption 5: If the local currency declines versus the dollar and the price of gold is stable or rising, the mining of gold by that company will be more profitable. Assumption 6: Gold has some intrinsic value for industrial use and as a currency. Assumption 7: Paper money depends on confidence and can be increased at will by a country. Assumption 8: The dollar is expected to continue to fall over time due to continued US trade deficits. Comments: A slow decline is seen as desirable. How many US dollars will China want or need? Assumption 9: Gold is a hedge against falling local currencies. Assumption 10: The current US trade deficit is not sustainable. Fact 1: A lower percentage of Europeans are investing in stocks US or otherwise. Fact 2: US dollars have been flowing to other countries due to US trade deficits. As you mentioned there can be fraud, cost overruns, etc. LC