This Cheap Gold Miner Is Ready To Glitter Again [View article]
A good article. Gold shares seem uncommonly cheap right now, especially considering central banks' opening of the monetary spigot. Then there's the seasonal running into September. Bought AU @ 31.57 yesterday, and added other gold shares.
This Cheap Gold Miner Is Ready To Glitter Again [View article]
Price to Book is a totally meaningless concept when valuing a resources company, such as mining or oil and gas. The value should be based on the value of the reserves they find, minus the cost to develop, not what the accountants say they spent on it. EPS and the ability to go into new ventures and grow also count in the valuation.
AngloGold Ashanti: Losing Its Luster [View article]
In concept Fly Boy is right. One should consider reserves and prospective reserves, as well as near term earnings. But earnings, or cash flow, are the mother's milk, for dividends in the dividend discount model, or for future expansion and extension of reserves, in the discounted cash flow model. My main point is that ratios like price/book and price/sales are meaningless for a gold mining operation, and anyone trading on the basis of such ideas will lose his shirt.
The article also marked AU down for having a relatively high cost per ounce. From an investor point of view, this can be both a disadvantage and an advantage. If you are a gold price bull, it is an advantage, because of the operating leverage -- you get more bang for the buck if the gold price rises (greater percentage increase in profit margin).
AngloGold Ashanti: Losing Its Luster [View article]
This article is just silly. What do book value and price/sales ratio have to do with analyzing gold stocks? What matters most is earnings power relative to the stock price. In this regard, AU is the best buy among the major golds, having the lowest price/earnings ratio, based on Marketwatch consensus numbers.
Consensus is $2.72 for 2009 for a PE of 11.5 times at the current price. Some analysts, such as UBS, have estimated over $3 for 2009.
By comparison, the respective PE's for ABX, NEM and GG are 18, 22 and 44!
As for debt, the interest coverage ratio is a comfortable 6.2 times, not far short of Barrick's 7 times (12-month trailing basis). Yes, AU is more leveraged to the price of gold than other majors, and yes, the gold price is under pressure from potential IMF sales. On the other hand, the great reflation attempt underway now by the US and other major countries guarantees the debasement of their currencies. The gold price will hold up, and go up. Your short position will prove to be unwise, except possibly as a very short term trade.
This Cheap Gold Miner Is Ready To Glitter Again [View article]
This Cheap Gold Miner Is Ready To Glitter Again [View article]
AngloGold Ashanti: Losing Its Luster [View article]
The article also marked AU down for having a relatively high cost per ounce. From an investor point of view, this can be both a disadvantage and an advantage. If you are a gold price bull, it is an advantage, because of the operating leverage -- you get more bang for the buck if the gold price rises (greater percentage increase in profit margin).
AngloGold Ashanti: Losing Its Luster [View article]
Consensus is $2.72 for 2009 for a PE of 11.5 times at the current price. Some analysts, such as UBS, have estimated over $3 for 2009.
By comparison, the respective PE's for ABX, NEM and GG are 18, 22 and 44!
As for debt, the interest coverage ratio is a comfortable 6.2 times, not far short of Barrick's 7 times (12-month trailing basis). Yes, AU is more leveraged to the price of gold than other majors, and yes, the gold price is under pressure from potential IMF sales. On the other hand, the great reflation attempt underway now by the US and other major countries guarantees the debasement of their currencies. The gold price will hold up, and go up. Your short position will prove to be unwise, except possibly as a very short term trade.