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"The gold miners are a source of death of insanity," says Hugh Hendry, who just completed his...

"The gold miners are a source of death of insanity," says Hugh Hendry, who just completed his chat at The Buttonwood Gathering. Countries who weren't interested in your mines at $300/oz. will be very interested at $3K, he adds, explaining why he's long the metal and short the companies digging it up.
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Comments (4)
  • jbassbia
    , contributor
    Comments (387) | Send Message
     
    Central banks have resumed buying - article http://bit.ly/MWC1hH Oct 25
    25 Oct 2012, 12:33 PM Reply Like
  • Uncle Pie
    , contributor
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    I watched Mr. Hendry's presentation online and did not find it too compelling. His main point is that high gold prices would correlate positively with governments going broke and therefore confiscating privately owned gold mining interests. Well, maybe, but not too likely if you keep most of your gold mining investments in places with fiscally responsible governments like Australia, Canada, etc. A bigger risk is that desperate governments would just tax you to death.
    25 Oct 2012, 01:59 PM Reply Like
  • Likely Gaseseses
    , contributor
    Comments (251) | Send Message
     
    A similar view could be had about energy resources, but despite all the nationalism surrounding energy resources as oil prices and (presumed) oil scarcity make everyone increasingly nervous, companies like Exxon, Royal Dutch, BP, etc don't seem to be teetering on the brink of insolvency.

     

    Anything done to restrict/regulate access to oil through production restrictions (like OPEC) or taxes just raises/maintains the price of oil and the profits of the major oil companies.

     

    I wouldn't rush out to buy small gold miners operating solely in countries that seem to attract political upheaval or have regular natural disasters, but if you buy a fund that hold the major miners and some of the smaller ones or if you buy big operators who, as Uncle Pie says, mostly operate in stable countries you shouldn't have a problem.

     

    If the price of gold rises faster than the cost of extracting it, the miners could throw in a bit of leverage to magnify your gains.
    25 Oct 2012, 07:16 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Not sure long gold and short miners makes sense, but will have to watch the Hendry presentation.
    30 Oct 2012, 01:41 PM Reply Like
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