Date: Wed Sep 07 2005 12:47
trotsky (Hambone) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
true, their balance sheet is nothing to write home about, but who remembers that it actually looked a whole lot WORSE when the stock traded at 75 cents in late 2001, shortly before running to almost $6 over the following 12 months? at the time they were also saddled with a hedge book ( imposed by the inimitable Brett 'let's hedge our arses off at the worst possible moment' Kebble ) that is most charitably described as an unmitigated disaster, plus an electricity hedge with Eskom that provided an additional drag. all those impediments are now gone. in 2001-2002 DROOY was obviously bailed out by a collapsing Rand coinciding with a rising gold price, but i distinctly remember how the rickety balance sheet improved at the time in the blink of an eye to a very solid position.
anyway , the fundamentals aside, the chart now looks really good....definitely one of the better ones out there, long sideways consolidation that indicates there could be quite a run if it breaks out for good.
Date: Wed Sep 07 2005 12:32
trotsky (Egoli) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
here's the Zen answer: what is, is.
the options markets exist, and since the data are published regularly, they convey what is imo valuable information on trader sentiment. as an investor or trader one is almost duty bound to review them from time to time.
Date: Wed Sep 07 2005 11:52
trotsky (Hambone) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"DROOY is such a basket case" - correction, WAS a basket case.
it has discarded the loss making North West mines some time ago. its main asset is now its stake in Porgera, which is among the best gold assets in the world, in terms of size as well as production cost. DROOY's remaining major SA operation Blyvoor is treading water at the current Rand gold price, but has huge reserves potential should the Rand gold price increase. the surface treatment operations in SA have always been, and continue to be profitable ( they're however no big deal ) .
Date: Wed Sep 07 2005 11:33
trotsky (silverfox, 8:59) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
you are forgetting that oil is a fungible commodity. when oil production is taken out in one place, the effect of that ( rising oil prices ) is felt everywhere. if the price were 'controlled by regulations' as you seem to wish for, the result would simply be shortages, as the available oil would be shipped to those places where normal market prices continue to reign ( a lesson the Chinese are just re-learning, and they're also re-learning it in Baghdad, where the government was just forced to impose selective driving bans to conserve fuel - a direct result of state-controlled, subsidized gas prices ) .
the only sensible thing the government could indeed do in order to soften the blow would be to at least temporarily lower the outrageous taxes it levies on petroleum products. that way one would both relieve the financial pressure on motorists as well as ensuring that no shortages would develop. your cry for more regimentation is quite wrong-headed imo.
Date: Wed Sep 07 2005 10:41
trotsky (@pm stocks - sentiment data) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
so what's holding them back? the answer imo is to be found in the large number of open calls in many of the major optionable pm stocks. large open interest at key strikes creates 'options-related resistance' that acts as a powerful drag on price performance. however, this options resistance can also turn into an afterburner powering an advance IF prices manage to get past the strike prices concerned, as all the uncovered calls that have been sold provoke delta-hedging.
THE stock to watch in this context is NEM, the put/call open interest ratio of which has just fallen to its lowest point in a year ( a negative contrarian signal, as it indicates that option traders are now more bullish on NEM than at any time during the past year ) . it has large call OI at the 40, 42.5 and 45 strikes. the biggest support in the form of open put options otoh is provided by the 37.5 strike.
imo NEM must overcome these call strikes decisively, especially the 40 strike, in order to open the way for a bigger advance in the XAU; alternatively we want to see these open calls taken off.
the next problem are the XAU index options. shortly before and after the August expiration, put OI consistently hovered just below call OI , producing a halfway decent , if not overwhelmingly convincing ratio. this has since changed, as in the weeks since the August expiration, call OI has steadily increased from 15,370 contracts to now 23,190 contracts, while put OI has remained almost flat, increasing from 14,720 to only 15,890 contracts. the resulting ratio is now lower than 96% of all readings over the past year. the biggest concentration of open calls is in the September and October 100 strikes, as well as the December 115 strike. after September expiration, the Dec. 115 strike may act as an attractor for prices, but imo we'd need to see a shift after Sept. expiration in the form of more puts being added at higher strikes ( currently, put OI is concentrated in strikes ranging from 85 to 92.5, an upward shift would be desirable ) .
all in all , the current situation is not what bulls would like to see. by way of comparison, during the big advances in the XAU in the first half of 2002 and from late March to December 2003, put OI on average exceeded call OI by a a large amount - 145 puts open for every 100 calls, while right now we have only about 70 puts open for every 100 calls.
a recent positive development from a sentiment PoV is the fact that Rydex fund traders have become a bit less enthusiastic about the sector and have withdrawn about $35 m. from the Rydex pm fund ( which opens the way for money to flow back in ) .
Date: Wed Sep 07 2005 09:56
trotsky (@DROOY) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the 'impossible' seems to be happening - imminent break-out:
stockcharts.com |
