Under valued, page-332

If I can throw my two cent into what has been a mixed discussion as someone with a degree majoring in economics.

RRL by a number of measures as a business has strong fundamentals, while yes not perfect, for the current asking price it is profitable with a great P/E, P/B and a leadership team that isn't incredibly senior but has been with the company long enough to have a grip of operations.

the problem is with GOLD ITSELF. look at FEX, GRR and FMG, compare these price charts or the chart of any iron company to the price of iron right now.

it is the very simple principal of diversification, when you peg your entire business to something like a commodity when that commodity goes does confidence in your business goes down because your profits tank.

now gold is at multi years high, it might not seem like it as first but look at the 5-10 year charts, gold is doing incredibly well.

fear is lying in what is set to happen with gold, as a gold investor you need to understand what gold is as part of the global economy and be honest with yourself, gold has very little real world application in commercial or manufacturing sectors.

gold derives global value partially from jewellery / luxury but mainly as a inflation hedge, as a counter to holding cash.

in essence when you know this, the biggest threat to gold is the value of cash as they have an inverse relationship.

now gold has been on a runaway due to interested rates ( the time value of money) being effectively zero.

but what has the federal reserve been considering since unleashing inflation through large scale cash printing during COVID-19? increasing interest rates to deflate and taper the money supply, if this happens gold goes down, as there is now value in holding cash.

anyone spending time on HotCopper discussing a stock is not impacting share price, it is hedge funds and instos.

they know everything above a lot better than us and if you compare RRLs chart to fed announcements while not perfect you can see a decision making trend.

this is the real threat to gold, gold stocks and RRL. don't mince words, yes there are other factors that underpinned how efficient the business is and these really matter, but number one is how much money they get when they sell an ounce and while we don't have any issues now, the next 3-4 years could see a big change.

now my personal take, I think interest rates will increase and we will see a new price floor for RRL and gold, no party lasts forever. but I didn't get into this business to make a quick buck and commodities are boom and bust, so I will either hold through the next boom or sell on bust and rebuy the bottom.

food for thought