Forum Archive Index - February 2003

["soarer2" <soarer2@xtra.co.nz>]

www.gold-eagle.com - this site has everything you need ( Yes some of the
articles are biased towards Gold, but this site has made me considerable
amounts of money ) If your interested in Gold and the REAL state of US
equity markets take a look.

Gold - Long



----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Tuesday, February 04, 2003 1:28 AM
Subject: Re: [sharechat] Gold (was no subject)


> Hi Travis,
>
> >
> >
> >So, the long term buy and hold is pretty ordinary.
> >We'd have to determine a fair price.  Can anyone tell
> >me how to value gold?  Is gold trading at a discount
> >to its future cash flows or well below net asset
> >backing?  Obviously these can't be answered because
> >commodities can't be valued with tools that investors
> >usually use.
> >
> >
>
> I guess the answer is to use tools that investors do not normally use
> then ;-).
>
> How to value gold?   From a strict 'supply' way of looking
> at things you have various producers around the world operating
> different mines.   These mines have a cost of extraction.  The market
> price above the cost of extraction will determine the profitability
> of the mine.  I haven't done this work myself, but I believe it is
> possible to get a handle on this side of the equation.
>
> Of course the market price is determined by the demand, and this is
> where things get a little trickier.  There is the industrial
> demand for gold (gold teeth, layering on CDs, jewellery etc.) which I
> guess we could analyse in some detail.  Overlayed on this is
> what I term the 'fear' demand of gold.  People are stacking up on
> gold because they perceive it to be a 'safe haven' material.  People
> buying gold today may consider it a bargain at $US360 an ounce.   But
> is it still a bargain at US$450 an ounce? $US550?  Have there ever
> been any studies on this type of thing?  And the problem for New
> Zealanders and Australians investing in gold is that we are earning
> 'down under dollars' that are outperforming the American ones.  So
> how do we manage the exchange rate risk?
>
> I'm not raising these points just to raise the ire of the gold
> brigade.  I freely admit I don't know everything about investment and
> when you have seasoned investors like Sir Ron Brierley and Tony Gibbs
> of GPG taking a position in a gold company you would be foolish to
> dismiss gold out of hand.  I'm kind of hoping that some of the gold
> brigade might come up with some intelligent debate on this subject.
> Unfortunately fear inspired staements like:
>
> "We are facing the imminent threat of World War 3, America is melting
> down so we should all invest in gold."
>
> doesn't cut it for me.
>
>
> >
> > ... which is why they are the exclusive domain of
> > speculators, and obviously not speculators that care
> > what the long term performance of the asset class is.
> >
>
>
> And perhaps I should add here that based on a discussion in another
> forum, Travis doesn't automatically lump all speculators together in
> a basket as 'bad'.   He admits there are good speculators and bad
> speculators.  I guess what defines a good speculator is someone that
> remains disciplined and has a suitable exit strategy.  So my second
> challenge to the gold brigade is to tell us how you would go about
> designing a suitable exit strategy for gold.  Anyone?
>
> SNOOPY
>
>
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "Stay on the upside of the downside,
> Anticipate the anticipation!"
>
>
>
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