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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (22849)	12/5/2004 1:35:17 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

Only thing is is a lot of gold shares did not follow. A lot of reasons for that. i think there's only one reason for it: a non-confirmation of gold rally. USD down for 11 straight weeks now, the gold shares are saying trends don't continue forever. the question in my mind is what happens to them in the face of a POG retrenchment and USD countertrend rally.

To: loantech who wrote (22849)	12/5/2004 1:36:46 PM
From: Carlos Blanco	Read Replies (2) \| Respond to of 110194

We got the gold price. We got the dollar fall. Only thing is is a lot of gold shares did not follow. A lot of reasons for that. everything you listed is likely to be true. my own guess is that this year, even with a higher POG, there wasn't enough profit/progress flow-through to the bottom line in the miners and too many disappointments due to things like dilution, increased mining costs, exchange rate issues, etc. thus, i think people/institutions are skeptical of miners and waiting to be "shown the money" before paying up. there are two kinds of catalysts that are likely (& needed) to reverse this thinking in a hurry and cause a sharp sudden upward sector re-rating (assuming the gold price holds at current levels). 1. a series of blowout producer earning releases where the higher POG is clearly delivering the promised leverage via big increases in profits and reserves. if the POG holds @450, we could start seeing some of this in 2005. except, of course, for miners/mines in countries with strong currencies where the POG has not really risen. 2. producers in need of reserves recognizing that a lot of juniors are undervalued and making acquisitions with premiums that reflect the true value of the companies in question. this will cause the prices of all companies in the sector to be reevaluated. opinions seem to be that M&A activity might start picking up in early 2005.