6.08.2006

ONE FOR THE ROAD


Just wanted to update everyone on one of Jimmy's greatest columns on the gold market from May 9, the beginning of the huge selloff in the gold stocks. If you don't believe me, check the charts and I suggest you check your guru:

"When I got into this business there were, literally, dozens of investible gold mines. The South Africans traded like water. The Canadians were plentiful. The Americans were so plentiful that you never knew which to reach for.

Now you can count the number of truly investible gold companies on one hand. And that's the problem.

Who knows how high Goldcorp (GG:NYSE) , Barrick (ABX:NYSE) and Newmont (NEM:NYSE) could go. There is not only a gold shortage, but more acutely, there is a shortage of gold stocks!
Let's take Goldcorp. Everyone acknowledges this is the best of breed. It isn't hedged out like Barrick and it isn't challenged to find gold like Newmont. Given that's the case, it can go up endlessly as gold goes higher. It is the Occidental (OXY:NYSE) of the group, the one most levered to the underlying commodity. I know I have championed the stock for 20 points.
I keep waiting for IPOs in the group, but there aren't any. I keep waiting for the secondaries, but we don't get them either. Supply of these stocks is as tight as the supply of the precious metal itself, and demand is as strong for the shares as for the bullion in Iran, China and India, the three most voracious gold bugs on earth.


I usually like to say that the bull market will last until all of the equity deals get prices -- that's what happened with pretty much every other bull market in the last 20 years, destroyed by supply. Not going to happen in gold. We just don't have enough of either!"

I don't write this stuff, I just report on who wrote what and when. My question is why does he need to take such strong opinions each and every day. My guess is that he knows many will be wrong and a few will be correct and its the correct ones folks will remember. Well lots of luck with this one.

2 Comments:

Blogger AJ said...

Hi David,
Could you tell me what this statment means please - "GoldCorp isn't hedged out like Barrick ".
Thanks,
AJ.

10:40 PM  
Anonymous Anonymous said...

I have been looking for sites like this for a long time. Thank you!
»

7:26 PM  

Post a Comment

Subscribe to Post Comments [Atom]

<< Home