What we saw today was patent nonsense as far as I am concerned. Like the Battle of the Big Horn, gold equities must be stopped from breaking out. Attack NCM and you seriously attack our XGD Gold Index.
At current gold prices Newcrest Mining Limited appears to be seriously undervalued by the market.
Gold production was 2.527 million ounces for the 2010-2011 financial year. The average price received was AUD$1,349 an ounce.
Gold has soared since the end of the financial year in both US and Australian dollars and is currently about AUD$1,700 an ounce. Gold production is expected to increase, but with just the same gold production, should Newcrest average AUD$1,700 an ounce in the current financial year, then cash flow from gold sales will increase by about AUD$885 million.
moving forward - back of the envelope numbers., page-2
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