gold & some gold stocks - musings

  1. 9,081 Posts.
    Gold stocks are destined for a major re-evaluation in the light of the steadily increasing gold price which is, mercifully, not a war-driven momentum.

    Once the penny drops that the uptrend for gold is for real and will last a long time - then we will see the rush into gold shares.

    The lull has allowed for a rational re-evaluation of gold stocks and their potential.

    Taking a longer term horizon, one gold producer to watch is EMP, as it is on track to take advantage of growth initiatives and substantially increase production. It has a major foreign company firmly ensconsed on its share register and that company bought into EMP at around 77c (which is significantly higher than the current market price of around 59c).

    I still like CRS as it is debt free and sitting on a pile of cash. Reserves are continually being upgraded (allbeit in small increments) - but it does have a robust exploration programme that is likely to yield good results.

    I have gone off LHG a bit (despite the dividend) as it is becoming a high cost producer and is slow in taking steps to remendy this. Still, LHG should rise in line with a steadily firming gold price. I note that "The Intelligent Investor" currently has a sell on LHG as a result of an analysis of LHG's last quarterly report.

    Huntley, on the other hand, is quite upbeat about EMP's meduim / long term prospects.

    As for GYM - I am not totally convinced about its prospects in the medium term. Capital raisings worry me and could indicate that cash flow is a problem. GYM may "come back" and suprise on the upside but I think there are better plays out there.

    SGW has certainly risen from the ashes of late and those who bought in around the low area of around $1.40 are sitting on good profits. I sold out of SGW to take advantage of the recent rise as there is just too much suspicion and uncertainty in the market re. this stock and its hedging position (not to mention its high cost of gold production).

    I feel more comfortable with gold stocks that are actually producing, although I do have a position (acquired a long time ago) in a range of out and out gold specs just in case the gold market goes absolutely crazy.

    I prefer what is happening now - an orderly rising price for gold as it makes higher and higher waves. The current price action has a sense of solidity and assurance about it.

    The yellow metal is still very much technically in uptrend.

    Good luck.
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