My figures are just the figures. The "true" worth of the company is an unknown. The market worth of the company is a known which reflects many facts about its past performance and expectations about its future performance.
Based on its known market worth yesterday and its trading pattern relative to the US gold price since December last year, one would have to conclude that it was probably oversold in Dec and is overbought now, that's why I have pointed to the average value of my relative strength ratio of 5.3 giving an implied share value of $8.25. Having said this I doubt that the price will reach this value unless the gold price falls further or the current gold price sustains it current level for many months to come.
As you know if you have read my posts I think the US market will run out of buying momentum long before interest rates are lifted in the US. What's more I think the continuing deterioration of the iron ore price is an ominous sign for China. The only way for them to avoid a hard landing is to start kicking the can down the road as the US has done. That means an expansion in their credit markets when they should actually start to deleverage them. The US has kicked the can so far down the road that they appear to have lost theirs.
Hot US dollars may be leaving China at the moment, but the US doesn't have a firewall in place against China. China holds huge US denominated foreign currency reserves in the form of US government debt (US bonds). Should we see a meltdown in the Chinese economy due to credit miss management (as the weakening iron ore price could be signalling), the Chinese will need to access their foreign currency reserves to top up their credit markets (kick the can down the road so to speak) to avoid a rapid crash (collapse) in their GDP growth back down to world average sustainable levels (where they should be aiming to get to in the longer run).
If they have to manage a credit crisis of this type in the near future they will have to liquidate some of their US bond holdings just at the time when the US Fed will be trying to normalise their financial system by effectively removing their own bond holdings from their balance sheet. It doesn't take a genius to figure out, that in this scenario, the bond market can not cope with this much liquidity at the same time. This spell a major problem for the great US financial con job. Couple with this the equity markets topping out when liquidity seizes up to the fact that the great printing presses have stopped and we could have quite a pickle on our hands.
I know knockers out there will point to the facts of the market as they stand now. But that is the easy way out. How could you ever be pointed out to be wrong if day after day all you point to is the bleeding obvious day to day facts.
Being contrarian is the only way to go in markets categorised by asset bubbles in virtual all asset classes (US equities, US bonds and by consequence the US dollar). I wouldn't be surprised that when and if the shit hits the fan, in the stampede out of long term US bonds, China wouldn't be looking to diversify its foreign holdings into other less US centric asset classes.
I am taking this current move downturn in the POG as a "golden" buying opportunity for gold stocks and will accelerate my accumulations if and when the POG falls further.
So far the NCM share price hasn't entered my buying radar. There are better value gold stocks out there at this stage IMO.
SilentO
NCM Price at posting:
$10.03 Sentiment: None Disclosure: Not Held
