which is more likely?, page-7

Hi Pinto yes I am curious to see what stephoid knows apart from FML having a thinner margin than some gold stocks.

This is the risk calculation done by those who do not bother to dig too deep. They ignore; sovereign risk, debt, hedge value, volcanoes, seismic, rising gold, rising funding costs and other factors.

The margin on FML is small at CRE however increasing. It is quite robust at Coolgardie and at the upper mid range area on a normal basis. If you take the December quarter on face value you are not filtering and have taken a superficial view.

Much of the market 'risk' assessment is poor as you note Pinto I agree with you. If stephoid is referring to margin he must be taking the view gold is not in a long term uptrend or that it is in a bubble perhaps. I happily concede that on a superficial view FML appears higher risk because the operating margin is not very robust - and capex burn is currently high. Appearances are not always what they seem however stephoid has a point here which is correct and he had the right to make it.

I happen to believe that a hedge or large debt are far worse than highish costs because:
- the upward trend of gold will work against your hedge book - mark to market will get worse
- debt could get recalled in a fragile finance system
- margin will increase as gold continues to rise

Which would you rather?

Many posters have gone to considerable trouble to post information as to why costs will fall and production will rise with FML over time.

The missing factor missed altogether is SP risk. You have to look at the whole picture when comparing. When 'apparent' risk is already factored in on the downside, and when obvious trends - and one off events - are not factored on the upside then you can see apparent risk is off target.

Give me FML AT THIS PRICE any day - with operations headed where they are, no debt, no hedge, reducing costs, turning around a 'perceived' anchor (CRE), de-risked mining at Coolgardie (now 3 pits and 2 U/G mines) and loads of upside, exploring exciting ground, managed by capable and honest Management and Board...

But if stephoid has anything else to provide us I am all ears and glad to hear from him. I do want to add that I work with investors across the world and the best of them do 'hit the ball out of the park' over time and take on this sort of 'risk' before the market sees the opportunity. They load up and sit and wait until exuberance and hubris take over from fear at the other end of the spectrum - at overvaluation and then sell.

Risk was awful in late 2008 - my smartest clients were loading up and I was writing "wait till you see the whites of their eyes" - 'bottom is near' etc and talking to people who were running the other way. We were loading up big time. The market was wrong - sellers were wrong - buyers were RIGHT. We went against the 'risk' trading and 'reality' as people became emotional.

Conclusion - market is STUPID, capital is a coward, risk is miscalculated and mis-allocated ALL THE TIME. Perhaps FML investors are a little smarter and better researched than we first appear.

Have a great weekend,
CW

PS) what a joke - QE might not be needed while US$712B is injected on the other side of the pond - 'free markets' what a cynical abberation this is.
DYOR&DD