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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: IngotWeTrust who wrote (19810)	12/15/2003 8:47:26 PM
From: sea_urchin	Respond to of 81136

Tutor > 25 year ago data in gold only takes you to the doorstep of the prior gonzo bullrun. Interesting timeframe selection, yes? no? I chose 1978 as the beginning of my data because that's where my records started. The 5-weekly points were simply so that I could plot 10 equidistant annual points on the graph. Being someone who started tech analysis long before the days of computers, I first had to draw all indices, commodity prices and share prices on semi-log graphs and then scale them off those for the computer analysis. I found that the longer the data was, historically, the more accurate the model became and that under 15-18 years it didn't work. Today, many of the original companies no longer exist and others have merged so that there are, in fact, far fewer companies to analyse today than when I started. Other data, eg volumes and value of turnover, changed as result of derivatives representing a far greater portion of the trades, so these, too, were dropped. Of course, had I started the analysis from the beginning of the 70s, a few years before the big gold run started, it would have been very interesting especially if what we are witnessing now is a continuation of the trend which started then. But what I have is nevertheless interesting because it does include the big 1980 bubble. The problem for me was not the gold price data but the values for everything else, eg currencies and commodity prices, because those were not in the newspaper. But remember, for me, drawing graphs has been a labor of love --- it wasn't just a matter of plugging my purchased computer program into someone's database, downloading the data, and then sipping martinis while the program did the churning. I took the data from the newspaper, wrote them into a broadsheet, drew the graphs, then transcribed the data into a computer program which I wrote and continued to modify. In many ways my approach to investing has been similar to the way in which you extract your gold --- painstakingly and bit by bit. > Glad it spared you the wrenching rand vs dollar priced product jiggle. Yes, the rand is indeed a problem because it has become the icon of the ANC government who regard it as a vote of confidence/lack of confidence in it, rather than a means of exchange. To the extent that they don't mind hobbling all export industries so long as the rand is strong and they look good. It's a most extraordinary policy because the mines have taken a helluva big hit. Although I have been interested in gold as an investment, I'm not a goldbug. In fact, you will be fascinated to learn that my interest in gold started when I was a schoolboy in the 1940s. My dad was a gold share investor then and he used to give me all the literature from the SA mines to read. He believed strongly in gold and used to say that the future of SA depended on it. That's why he wanted me to know a lot about it. > do you have an opinion if the pricing of SoAf gold mining shares are more "in tune" with asset valuation model As far as I know, AngloAmerican (and presumably the other groups) regard a rand value of about 8-9 to the USD as "fair" for the industry. At a rand value of R6.4/USD I would think that many stopes have become unpayable and reserves have gone to Hell. As you know, the SA gold mines are the deepest and most expensive in the world and depend for their viability on a very tight cost control. That Anglogold and Goldfields have been able to bring their costs to +/- $200/oz means they have had to cut out all their marginal reserves. This they have done by selling the low grade mines and shafts to Harmony and Durban Deep. In the circumstances, the more the gold price rises the more attractive these mines become because the more the marginal ore becomes payable. Anglogold did another trick. It bought the marginal ore at Ashanti and so was able to, at least partially, escape the double bind of an appreciating rand and a volatile gold price. Of course, if the gold price falls then all these mines will be in real trouble. It's my opinion that, despite all the blah from the government, a strong rand is unsustainable. Businesses, especially those doing exports, will have to go to the wall. Then the rand will fall because it has to and the currency speculators will smash it even more when they smell blood. > do the larger players in your country do the derivative/options whose hedging/who isn't gyration game there? If I read this correctly, I don't think Goldfields is hedged at all and Harmony only a bit. Anglo is, as you know, but has been cutting back on its hedges all the time. But now, with Ashanti, I don't know what the figure is but I have no doubt that Bob Johnson has all these numbers at his finger-tips.