one month on and nothing

Doc, Col, Munchy, Macho et al

I have just returned after a month of self exile to find that nothing has changed. It's been a productive period for some: we've seen a short term resolution to the fiscal cliff, we've seen creditors get closer to Mr Tinkler and we've even seen two suitors come back into the mix for BBG after it looked like it was all over for them.

However, for SAR (and all the other mid cap goldies) we've seen a continued deterioration in the stock price. Whilst a new substantial shareholder has come on board in the form of Vinva Investment Management taking up a 5.03% stake at an ave price of 43.6c. I bet they are pretty dirty they are now c.13% down on their investment!!

Notwithstanding this, I am more convinced and resolute in my views on the POG and the prospects for SAR in the long term. There's a school of thought out there that thinks we are simply seeing gold consolidate before it continues its bull run well into the US$2,000/oz+ range. This is based on the lack of real currency alternatives out there, with the euro and yen smelling rotten and the US$ looking to tank if there is any hint of trouble regarding the US debt ceiling.

There also needs to be a re-entry of major investors into the producer segment of the gold market. This segment has all but been abandoned (for reasons I still cannot understand) - Yes, there are inherent risks with production, exploration, management capabilities etc etc but that gets loaded into the valuation methodology and should be reflected in PER's and WACC's etc used to assess each company.

As such (and the main thrust of my post) I predict there will some interest in the producer segment of the gold market very shortly because valuations are so attractive. The big investors will be watching earnings/ production/ cash flow announcements with great interest over the next few weeks. The guys who deliver should get rewarded handsomely by receiving investor dollars. Those that underperform - well, its "goodnight" for them.

I have taken positions in a number of the producers I think are best positioned to surprise on the upside. There are no guesses as to my thoughts with SAR. I've done my research and I am simply waiting.

Good luck to all.

Finally, this year I am going to limit my postings as my schedule has increased substantially and I'll be out of town for days at a time. I'll keep reading the good work from the posters on the SAR thread (my favourite on HC) but will not be as vocal as I previously was.