gold production at $90 an ounce!!, page-17

BH!, or others,

Are you able to do a chart, over the same period, comparing 'TRY' with 'GOLD' (the A$ ETF), over the last 3 years?

My charting ability is terrible, so don't know how to compare two different value equities on the same 'scale'.

What I think it would further point out is the massive value gap that exists between the fundamentals of GOLD the metal in A$, and an unhedged gold producer like Troy...

This opportunity exists for many other gold producers, of course.


A similar opportunity emerged during the commodity boom with other commodity producers, like those in Zn/Pb, Ni and Cu. The equities went up, but far more slowly than the underlying metal. Eventually, when the market caught on, those equities had a massive and rapid rerating which closed the value gap.

Current gold equities are starting from an incredibly low base due to the GFC. Also, many believe we have only just begun on the current gold bull...

It is also worth considering that unhedged gold equities' profits are always 'geared' to the gold price. This is because any % gain in gold creates a LARGER % gain in profits.

e.g. A producer of gold at cash costs of A$800oz when selling at A$1,200oz, makes A$400oz. If gold goes up 50% (to A$1,800oz) their gross margin increases from A$400oz to A$1,000oz, a 250% increase. (Of course, cash costs can rise due to increased input costs, royalties etc.), but you get the idea.

So Sandstone is more highly geared to the gold price than Mamao is.

So, in actual fact, gold equities, on a forwards earnings basis, should go up MORE steeply than the underlying metal, due to this gearing effect.

The fact that they DON'T respond quickly enough INITIALLY in a bull market creates a huge opportunity ...

Y

Thanks in anticipation of someone's charting skills.