travelling nicely, page-5

Well Dhuy I hope you sold at $3.08 yesterday because the way things are looking, if you didn't take profit you may be waiting quite a while longer for the opportunity to take it again.

The dynamics of owning Lihir or for that matter any gold stock have changed dramatically over the last 2 years. Consider:

1) Strip mining the island is relatively easy. Deep pit underground mining is something they have little experience in and that is precisely what Ballarat represents. Remember the cave-in kerfuffle only a year ago? Remember the downgrade at Bendigo because it's not always so simple to delineate resources and reserves? It has been stated that the topography of Ballarat is little changed from Bendigo. At the moment Ballarat is wishful thinking and that's all. It may be a winner; it may not.

2) The Equigold merger brings with it an exposure to West Africa. That scares the hell out of me given the enormous sovereign risk of any mining operation in Africa. Again, this too is wishful thinking. Yes, it may prove to be a bonanza but with the poverty in Africa can you really be confident the next civil war won't be on your doorstep in the Ivory Coast? This too may be a winner...and it may not.

3) ETF gold holdings have fallen dramatically lately further exacerbating falling share prices.

4) The USD is on a rebound at the moment. Sure, this is almost certainly short term, but another reason to stay on the sidelines.

5) Jewellery purchase (read GOLD) around the world is dismal. Kitco.com has commented on this for many months as it is the underlying support for a sustainable advance in bullion. Much has been written about the Indian wedding season and the dormant import demand for bullion in India.

6) There's more scrap gold sales in the market now than there has been for decades!!

7) Remember the Hedge funds and the fun we had watching gold skyrocket when they were in the market? Well, they're not in it now except perhaps on the sell side with derivitives!!!!

8) But worst of all, is the now real possibility of global recession. Sure, all those USD's will fall through the floor but don't count on a corresponding increase in your gold stocks. If the Dow capitulates and visits 9000 where do you suppose LGL and NCM will be?

Guys, I'm not a pessimist, I'm a realist.I could go on and on with reasons why you wouldn't want to take new positions in gold stocks right now.

For day traders and speculators...go for it if you have the stomach. For long term investors, you're already in gold so you'll probably hold and ride out the turmoil.

What scares me is all the tremulous nonsense I read on HC from the optimists who somehow think that Lihir will transcend all the global turmoil and turn 180 degrees shortly with the next gold rush.

I sometimes wonder if they are the same people who believe in the Tooth Fairy.