What is driving the share price ?, page-9

Standing back from all the day-to-day noise - (as a usually long term buy and hold investor) I don't see too much difference between SAR and a lot of the other gold miners performance in the last year or two.

MrModesty makes good salient points about factors that drive the price of gold (QE, worldwide deflation, negative interest rates, fiat currency wars, crypto-currency bubbles, fear & uncertainty etc). There's no doubt all of these things feed into the world wide macro-economic story - and they are all good reasons to hold AUD denominated gold producers due to the magical inverse relationship between the US$ and the AUD/price of gold which Jake Klein from EVN among others is always talking about.

The story really has been that valuations in some of the really large gold producers have shot upwards with the price of gold and some are considered overvalued (NST, KLA, NCM etc). The story of the mid-size companies has been interesting with an increasing amount of corporate takeover activity as companies rush to acquire ounces cheaply from smaller companies that are in development or have good exploration potential and/or spare mill capacity. The other big story for me was that as AUD domiciled australian gold miners shot upwards, the ASX listed African miners and developers went absolutely nowhere - until a few months ago when they all moved en-masse upwards as well....

For the really junior early-stage explorers - its still a struggle to raise capital and some of them are still in the bunkers and inactive. I think this is all a side-effect of the turbulent history of gold prices in the past which has meant that not a lot of exploration and replacement of gold reserves in the ground has happened. You know you are in a gold boom when exploration stops being a dirty word and starts to appear on the presentations of the majors.

Remember we have had a few spectacular failures and near death experiences in the gold industry this year (WPG, EGS, BLK, GGY etc - I am sure there may be a few more) so its still possible to lose your shirt in a relatively favorable gold environment if you stuff up mine planning, resource calculations, contractors, mining methods etc. Others and myself have often said that good managers can make the worst busted-a%#e "scungy" gold mine make money and bad management can stuff up a really high grade simple mine if they are incompetent.

The other risks of exchange rates, and price of oil/energy and rising wage costs and lack of staff due to a boom cannot be discounted - we haven't seen them yet, and I emphasize, yet.

The previous gold boom was interesting in that a lot of smaller Australian producers were gobbled up by the North American majors while the market was asleep at the wheel. Eventually things got a bit silly and a fair bit of shareholder wealth was destroyed with assets sold off cheaply, which was the foundation stone of some of the current crop of successful mid-tier gold miners. This time we have different.

This time I have spread my risk far and wide from majors down to well-run juniors and mostly (but not entirely focused on relatively "safe" jurisdictions. I realize this means I might miss some of the best of the maximum technical trades sometimes, but better to take your profits and maintain some cash to pick up bargains as they appear, sometimes the market is efficient at re-pricing gold stocks but sometimes it isn't. Personally I've just learn t to accept that as an opportunity rather than a problem.

To return to the original question - SAR is siting right in there in line with the rest of  my basket of other "australian goldies".