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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Rob who wrote (3908)	12/6/1997 7:03:00 PM
From: Cascade Berry	Read Replies (4) \| Respond to of 116815

Although I am not a gold permabull- unlike most on this thread, I believe junior golds are now a buy... Barrick Golds reported cash cost per oz in the third quarter was 185/oz. Canada has the lowest average cost per oz mined of the major countries like South Africa, Australia etc. Once those South African mines start to announce shutdowns it will help the remaining domestic producers in Canada and the U.S. And in this deflationary scenario <if it continues> the cost of mining will drop as well - for example, Opec is now increasing its oil production - this will drive energy prices down, leading to lower production costs for any company using energy, including mining companies - and help to revive demand for commodities, particularly in Japan and Asia which are large energy importers, which are very oil price sensitive. I'm seeing the first inklings of a turnaround in gold here - reduced supply coming onto the market combined with better demand from consumers at this price - and a lot of stale news about central bank selling (old news) - providing the necessary "wall of worry" for a bull market, and increasing bearishness in public discourse (for example in this newsgroup - all the bears are now coming out of hibernation at this low price) - where were they a year ago? And there are now substantial profits on the short side which must be unwound. And the Globe and Mail consensus poll of money managers has just turned net bearish on gold - after having been net 70 percent bearish for over two years. This suggests a contrarian position is becoming warranted. At the last major low in gold some years ago the ratio of the TSEGold Index to the TSEComposite got down to about 1.2 to 1 - it is now under .9. This typically reads about 2.3-2.4 at tops from my studies (set last January at 13,000 on the TSEGold Index). So this indicator suggest that on a relative valuation basis the TSEGold Index is VERY undervalued. On these bases, I have placed a considerable amount of money into the gold sector last week, including Barrick Leap Options (25 strike) for year 2000 expiry - giving me two years on a nicely hedged low cost market leader, TVX Gold (Covered Option Write), and Farallon Resources (T.FAN). Other bullish factors include favourable seasonal tendencies in metals in the December to March period, drying up of year end tax loss selling, increased money flows into the Canadian market associated with the RRSP season, and the onset of the winter solstice which generally marks a watershed in human psychology, with increasing ambient light levels of spring encouraging speculation, and a reduction in SAD (seasonally affective disorder/gloom). Silver also looks good - that helps. Hope I'm right - there's some darned good values out there in depressed juniors - go for it. I am....