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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (25909)	1/17/2003 2:58:14 PM
From: nspolar	Read Replies (1) \| Respond to of 36161

GC, agreed. Early next week a crucial period. eom.

To: Crimson Ghost who wrote (25909)	1/17/2003 3:01:37 PM
From: Canuck Dave	Read Replies (1) \| Respond to of 36161

Agreed with one caveat. The strongest gold stocks up to now have been the ones with the lowest cash costs of production and no hedges. For those issues, a 1% increase in the gold price at 350$ isn't nearly as important as to say an undeveloped junior with projected costs of 330$ per ounce. As long as the US dollar continues to ratchet down and trade deficits set new records, I'm still bullish on the price of gold. Just my opinion. CD

To: Crimson Ghost who wrote (25909)	1/17/2003 3:24:37 PM
From: Broken_Clock	Read Replies (2) \| Respond to of 36161

An interesting view George. here's some thoughts on that- If a sharp correction is in the cards, I find it hard to see just how far down it can go. PDG(my fav) is at 11ish. It has refused to drop below 8 all through this gold bear. XAU is 75ish. The low was 45. I find it hard to believe that the xau can drop too far with earnings looming. Take FCX for a prime example. They posted 41¢ for the quarter. No too shabby for an $18 stock in this market. Even at Andy Smith's $330 call for year 2003 gold, FCX would make about $1.60 which is P/E of 11 or so. So let's say the market is telling us something different from all prognosticators...that is, that gold will drop through the floor. That is big time deflation which is hyperinflation for the US dollar. That is one scary scenario. Greenspan is fighting that tooth and nail. Anybody else want to step in and guess what's up?

To: Crimson Ghost who wrote (25909)	1/17/2003 4:20:19 PM
From: BSGrinder	Read Replies (2) \| Respond to of 36161

I think the disparity between the gold price movement and the gold stock action has to do with the nature of the buyers. The great surge of physical buying that underlies the POG is mostly directed towards wealth protection rather than speculation. The Chinese, Arabs, and Japanese are transferring their savings into gold to avoid the increasingly obvious inflationary way currencies are managed, particularly the dollar. This flow is based on a longer-term strategy, and does not reverse itself rapidly. The gold shares, on the other hand, are part of a still incredibly frothy, speculative stock market, where traders and fund managers are still looking for "hot" sectors and stocks to boost performance. These holders are incredibly weak hands, who often don't really understand the fundamentals underlying the rise of the gold price. They are following the price action of stocks, and are quick to take profits at various points indicated by technical analysis. Lacking a belief in the "story" of gold, they are also extremely nervous, and are ready to transfer out of gold stocks for any new hot sector. These speculators are currently overwhelming the "smart" fund money that is slowly building positions in the gold shares. As a result, rather than viewing the gold shares as "not behaving well," I see them as offering unusual value whenever they get dumped by the speculators. Most shares are cheaper now than when gold had not broken out of it's $330 resistance. I don't think we'll see these prices for long. That is my view of the gold stock/POG dichotomy, for what it's worth. /Kit