Posted by dodgerdog on 14th of Jul 2008 at 03:15 pm
One thing I brought up to Matt awhile ago was the fact that Oil
and Natural Gas was moving up much more rapidly than precious
metals which hurts profits of the miners. This factor is
weighing especially hard on the juniors which have lagged
tremendously since they will need a ton of money to develop their
properties with costs soaring for fuel.
Today, ABX took an unprecented step by purchasing Cadence Energy
to serve as a hedge against these rising fuel costs. Mining
stock prices (unlike Gold Bullion) are impacted by profits which
are negatively impacted by rising fuel costs. Just think
about this transaction - ABX chose to buy an energy company versus
some Junior Mine - very telling IMO.
I suppose so, but the rationale I had to get into them longer
term is that they are selling at outrageous discounts, of 30 &
50$ /oz gold in the ground, which should still well offset increase
production costs and hopefully even liquidity issues esp with gold
now near 1000$.
Posted by paige386 on 14th of Jul 2008 at 03:25 pm
one thing to keep in mind on the miners are ones that are in
countries that subsidize the price of fuel like Mexico and China.
Their costs shouldn't go up as much as others.
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Posted by dodgerdog on 14th of Jul 2008 at 03:15 pm
One thing I brought up to Matt awhile ago was the fact that Oil and Natural Gas was moving up much more rapidly than precious metals which hurts profits of the miners. This factor is weighing especially hard on the juniors which have lagged tremendously since they will need a ton of money to develop their properties with costs soaring for fuel.
Today, ABX took an unprecented step by purchasing Cadence Energy to serve as a hedge against these rising fuel costs. Mining stock prices (unlike Gold Bullion) are impacted by profits which are negatively impacted by rising fuel costs. Just think about this transaction - ABX chose to buy an energy company versus some Junior Mine - very telling IMO.
I suppose so, but the
Posted by kreem on 14th of Jul 2008 at 03:25 pm
I suppose so, but the rationale I had to get into them longer term is that they are selling at outrageous discounts, of 30 & 50$ /oz gold in the ground, which should still well offset increase production costs and hopefully even liquidity issues esp with gold now near 1000$.
NG
Posted by drorlando on 14th of Jul 2008 at 03:17 pm
Downgraded and already taken hits for this, IMO...one to watch. Good point Dodgerdog!
one thing to keep in
Posted by paige386 on 14th of Jul 2008 at 03:25 pm
one thing to keep in mind on the miners are ones that are in countries that subsidize the price of fuel like Mexico and China. Their costs shouldn't go up as much as others.