Goldman Sachs who predicted the drop in POG is now clamering to cover its own shorts. Their credibility, IMO, has been tarnished because, as a merchant banker, they issued their forecast without declaring their massive short positions in gold. It was like a massive downramp.
RRLs drop in Share price had 2 components: (a) drop in production in Mar qtr due to storm (b) drop in POG.
Re (a) The market looks forward and production is now back on target so that drop in SP for storm reasons are in the past
Re: (b) IMO, despite the POG drop April 14-15 to $1350/oz, this qtr is likely to average $1500/oz ( Current Qtr to date average $1440 ) with the POG trending up.
The additional 3000 ozs of gold produced for June Qtr vs Mar Qtr should mean an extra $4.5 mil in the kick while $100/oz price drop over the qtr should mean $7.7 mil less in the till; that's a net loss of $3.2 million or 0.07c per share or 14c less per share value on a 20 p/e.
Today's SP is down 53c on that of 12th April which is overcooked IMO.
Once sanity is restored and once we get closer to ex-div, IMO, we should see the SP revisit $4. Mr Market seems to believe Goldman Sachs rather than other more credible at-arms-length commentators.
As the POG retraces and as the shorts dry up we should see an orderly SP lift.
Cheers and good luck to all long term holders
Moorookamick
RRL Price at posting:
$3.45 Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)