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 : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (24290)	7/9/2006 2:19:28 PM
From: bruwin	Respond to of 78773

I’d go along with much of the initial comments in your message E_K_S. You may be interested in the following, which my good friend Dr. Karl Posel included in one of his books, entitled "Investing in Gold on the JSE" (Johannesburg Stock Exchange). He concluded that there are 5 variables that need to be considered when evaluating a Gold producer. Before detailing these, he made, what in my opinion is, a very relevant observation .... "There are bound to be many differences between a gold producer and an industrial company of the manufacturing type. The CARDINAL one is that the gold producer does not determine the selling price of its final product." I suggest the same could be said for many other metals as well. The variables he outlined were :- 1)Cost per ton of ore milled. 2)Grade of ore, eg. gms per ton 3)Revenue received per ton of ore milled 4)The Time Rate of Change of the Revenue/Ton 5)The Time Rate of Change of the Cost/Ton The values of the Revenue/ton and Cost/ton unfortunately do not necessarily remain constant from quarter to quarter. To further complicate matters, the Time Rate of Change of each of these two quantities is also to be different. Needless to say, to come to an meaningful evaluation when having to consider 5 variables requires some "adequate mathematics" !