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.

Gold/Mining/Energy : Golden Hemlock(GHE) -- Ignore unavailable to you. Want to Upgrade?

To: Robert Dydo who wrote (538)	11/10/1997 4:27:00 PM
From: Hugh M.	Read Replies (1) \| Respond to of 909

Mr. Dydo my friend, you are very quiet today, considering the action and stability of GHE. Let's hope we form a new base here for the next run after a major has been anounced. If gold was anywhere near 350.00, we would have seen this pop over 1.00 for sure, sigh. Hugh

To: Robert Dydo who wrote (538)	11/12/1997 7:54:00 AM
From: Steve Johnston	Read Replies (1) \| Respond to of 909

You are right in saying that most majors have sold their gold forward at decent rates. HOWEVER, these rates are at prices per ounce (say $380 U.S. or so) that were expected by shareholders, based upon earnings prior to the gold price meltdown. Investors are scared that gold may not climb above $330-$350 per ounce U.S. in the foreseeable future meaning that future earnings will get killed, as the hedge prices available will eventually drop (i.e. what idiot will continue to buy forward at $380 if gold prospects continue to be weak). Given this, most majors are writing off high cost mines/projects on their balance sheets. Because the balance sheet, by definition, must balance, these asset write downs must be accompanied by a corresponding hit on earnings. Although this does not immediately affect cash flow, it does reduce shareholder value, causing angry calls to IR departments. As well, it doesn't take a genious to see that, longer term, continued gold weakness will shrink revenues, hence cash positions. I'm afraid this creates a "hunker down" mentality right now which prevents majors from expending cash until they see some clear indicators of better days to come.