Minyan Mailbag: Words of Wisdom
...valuation depends on what gold price you place in your model...
Why does Hecla (HL) lose money when Gold and Silver are going up? Even though trading at huge multiples, the Street seems to love Yamana (AUY). What am I missing? Even DRDGOLD (DROOY) looks better on a chart than HL. Any words of wisdom or some rocks I have not overturned?
I hope all is well. I also miss reading your regular drivel on Minyanville. I am sure you are busy draining pubs and having a great time racing horses or playing football, etc.... Long HL, AUY, Newmont (NEM), Pan American Silver (PAAS), what are your thoughts?
Yep, holiday at the beach with Hong Kong Long finishes Sunday and I will be back on deck for Monday, January 9.... not too much boozing (as I have the kids with me), and my horses are spelling at present and are getting ready for the big races in April-June, but I am preparing a yearling and my mare is for sale at Easter. I will be selling by auction and just want "out" of the whole breeding game. I prefer metals to horseflesh. Gold and silver are behaving as expected, so generally it's very quiet here for us. Hot weather though, we had 114 degrees here on New Years Day! Yep, 45 centigrade in the city centre!
I haven't looked at HL for some time and am not overly enamored with management there. HL mine resources are not reserves from what I can remember so they shouldn't perform as well as say PAAS, Silver Standard Recources (SSRI) etc... HL is not alone in underperformance - see Golden Star (GSS) and Nevsun (NSU) for starters. NEM is only 10% higher than in Jan '04 with gold $100 lower!!
I personally own DROOY, GSS, NSU, Goldcorp (GG), SSRI, PAAS, Agnico-Eagle Mines (AEM), and Silver Wheaton (SLW) - a fair mix of majors and lesser lights that I think have some serious upside. GSS and NSU owe me a lot!!!!
Remember, valuation depends on what gold price you place in your model and I note that the average 2006 price of analysts surveyed is about $525.... What is valuation based on $625 or higher??? I think we will see an average gold for the year north of $555 with a spike above $600 before June. I also reckon we'll get a crack at $478 at some stage this year so I am keeping some powder dry for that instance.
I will be back scribbling my drivel on the 9th of Jan -
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