Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Minyan Mailbag: Navigating Precious Metals


Gold miners should mine gold, not trade gold!

Hi Laurie,

It's hard not to agree with what you are writing, at least for me. Kudos for rhodium. What do you think of palladium? I know that there is a slight excess of supply but it looks quite out of whack with, say, platinum.

I noticed some Aussie producers (i.e. Resolute) are increasing their hedging commitments (and the stocks do not move). Do you think they do it because they expect the gold price to go down OR because they are forced by banks ?

Keep up the nice comments.

Minyan Valerio

Hi Valerio

I am literally flying to get a plane to NZ but thanks for your nice words.

Rhodium is to precious metals what vanadium is to steel - that's what got me all toey on rhodium back in 2004. Research the metal. Illiquidity is a huge problem and counterparties are rare. Physical is as rare as hen's teeth.

Re: Aussie Producers - many are forced by banks in their financings. I doubt Resolute is. They are just "taking advantage" of high Aussie gold prices thinking they are getting 20 year highs etc. - they discount the inflation adjusted levels which basically doubles the price they should be comparing to. I don't own 'em and won't when they do dumb stuff like hedging. They don't understand that gold is money and all the other reasons I talk about for owning metals.

Further, if they hedge the gold price without hedging their energy costs and other floating costs like interest rates etc., they are on a hiding to nothing, IMO. Energy is a massive cost and they have literally one leg on each side of the picket-fence. Fixed price on a product with unknown future costs is dangerous. With no pressure on costs they are OK, but I reckon they will get "poled" by energy.

Many hedgers think they are "smart." Barrick (ABX) still does and is copping it up the clacker to the tune of about $5 BILLION. Maybe they will win, but I want 100% upside to the massive precious metal bull market that we are in the early stages of. They have just thrown away the optionality that is a gold/metal equity. Gold miners should mine gold, not trade gold!

Ciao mate!

< Previous
  • 1
Next >
Position in gold

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos