We'll after that we come full circle to points I make in these boards.
1. If your interest in a goldminers is driven by the gold price then you are only looking at a very narrow perspective and this makes you a weak hand. Look at a goldminer in terms of how much money it makes is a better perspective. A goldminer is a leverage vehicle on the gold price long term but never ever ever is a goldminer a lottery ticket on the gold price.
2. Regardless of the gold price direction, M&A is the fastest way to impairment. You introduce a whole host of risks to the company. What a mine is worth LT should be derived on how much money it makes. Acquisitions in a high gold price environment risks overpaying for the mine. Overpaying means a longer timeframe for a gold mine to pay itself. In the meantime a miner will need to contend with a whole host of vicissitudes on top of overpaying - execution risk (think BGL), mine do not deliver to market expectation (NST POGO), unexpected geology (EVN Mt Carlton) etc… there are mining vastitudes outside the gold price. Not saying it will happen to NST on the recent DEG purchase but will be watching developments with optimism and a lot of objectivity with it.
3. I'm sure many here like to talk Monetary Policy, Geopolitics and the lunatic (or Jesus incarnate) in the Whitehouse etc... Not saying these do not affect the gold price. They do and from time to time by a lot. However these are qualitative possibilities that needs to play out. A good business and even better, a good goldminer should be able to navigate these headwinds or tailwinds. Can we statically/quantitatively run a sensitivity analysis on those factors as I have in Post #:79130045. Yes, but not to a degree of reliability. An oz of gold in production is an oz of gold, the AISC, FX delta, Capex change etc those are quantifiable into a valuation. How do you quantify one tweet to the next. A countries action from another. You can't.
4. Last but not the least. Get your head in the right place...
NST Price at posting:
$21.05 Sentiment: Buy Disclosure: Held
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