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mmmm. . . e-mail from SBK

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Brazen
Super Contributor
The Credit Suisse Standard Securities gold analyst made the following comment, "Over this month, negative sentiment towards gold equities widened yet again. However, we believe gold equities remain in value territory and that the downside risk of gold equities of around 10% is outweighed by the upside potential of 20-30%. We believe that the same lacklustre sentiment seen at this time in 2005 is being seen now. We believe gold equities as a group will outperform towards year-end."
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17 REPLIES 17
SimonPB
Valued Contributor
lotsa believing ... I believe faries will fly me to the moon.
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Preston
Super Contributor
Simon is Karma a name of share or does he work for Standard Bank. I am confused or it is a Trading terminology?
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SimonPB
Valued Contributor
karma is the lady at the door.
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TJH
Frequent Contributor
Keep the faith Brazen, keep the faith. When there is blood on the street, buy (tomorrow) You were bullish at R138 and I said R103. We almost here now. (it will probably go much lower intraday)
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Brazen
Super Contributor
I remember when you said 103. I thought you were having some kind of an episode. And, Simon, your imagery is touching. Wierd. But touching.
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Not applicable
Tjh.....a truism which I think you are alluding to is that "the market is a very efficient mechanism with which to transfer wealth form the impatient to the patient".....
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Wizard
Super Contributor
That theory still misses the finishing touch.'providing that few brain cells are working!'. 27 years on someone would still be waiting to make money on Gold if they bough right at the top.
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TJH
Frequent Contributor
Very true lad. I still get caught out.
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TJH
Frequent Contributor
They would be a "patient" in a mental hospital.
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Not applicable
What is this obsession with Gold shares??? Just take a look at the PE for GFI ... that's quite scary, even at curren price levels for the share. If someone can make money going long on Gold shares (consistently over a sustained period using a workable system), I'll give them a 21 pig flying salute. Also notice that our inimitable eternal Gold Bull the Roff (funny how that rhymes with the Hoff) is plugging Penny Stocks this week on Summit.
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Not applicable
or they would have to resort to flogging TA newsletters and presenting TV programmes...and they would forever be "happy chappy's"....even when gold falls 5% just after they predicted the rally will happen in a matter of days
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Brazen
Super Contributor
If only the gold miners could find a viable way to get the stuff outta the ground (consistently over a sustained period using a workable system). . . but that's really the 21 pig thing again innit?
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Not applicable
Although GFI's PE seems high at 27, it is much lower than the 150 odd it was a couple of years back. And since then it went from R70 to R140 to where it is now. Even from R70 to R110 in two years isn't so bad if you take out all the noise. 25% annual return; still much better than leaving your money in the back - and you got some dividends. The reason for the PE lowering is because profits are going up faster than the share price, so that the PE is playing catch up. Look at where SEQ projects the PE in a couple of year's time. If you consider that the average PE ratio of the S&P 500 was 20 at the end of June and 30.9 for the NAS 100, then you might consider that perhaps GFI isn't that overvalued. And what happens when the might of the investors in the USA start moving their capital into our markets? Our shares will pick up and I expect, from all my reading and research over the past couple of years that GFI and other gold shares will also pick up.
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Not applicable
the back is meant to be the bank, but for all intents and purposes it could have been the back of the bed :)
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Not applicable
Don't entirely disagree with you H - was talking as a trader (and not an investor). Still, from an investment point of view (and I don't only trade, I also invest), if I had put my money into a general equity unit trust, over the past 5 years I would probably have earned a return that would have been double the return I would have earned if I had put it into a gold unit trust, at far less risk (much less volatility). That's not to say that things will change over the next 5 years (or a rolling 5 year period beginning in the previous 5 years), but (as an investor) I want both value (indicated, inter alia, by good company with a lower PE) and dividends (which have historically been lower from gold shares than from other sectors).
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Not applicable
Another thing, H, its a bit misleading to compare PEs of SA companies with their counterparts on the S&P and other markets in developing countries - as an emerging market, it is inevitable that we will always have a risk discount in the prices of our shares, so our PEs are - all else being equal - going to be lower.
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Not applicable
I agree. I just think there will be a rerating of who is a developing country and who is a first world country in the next couple of years. eg China overtook Italy as the world's 5th biggest economy last year, but China is still considered a developing country. Once the USDX breaks down below 80, the USA might also be considered to be a developing country with high inflation, low savings. They might be able to learn something from Argentina, Yugoslavia or Zimbabwe, all countries who have had to weather major financial storms in the past 15 years.
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