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Are the big gold miners cheap or a disaster waiting to happen?

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I am beginning to buy GDX again in a monthly $-cost-average fashion that I'll build up over the next 3-6 months.

I'm prepare to throw a few thousand ££ at it and hold the position over the next 5 years.

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I am beginning to buy GDX again in a monthly $-cost-average fashion that I'll build up over the next 3-6 months.

I'm prepare to throw a few thousand ££ at it and hold the position over the next 5 years.

I think that's an excellent strategy.Trying to pick the bottom on this one is going to be harder than hard.Cost averaging in sensibly would hopefully see you through the lows.

 

Have you considered waiting for Yellen to raise?Soft jobs data today but I think politcally,they will have to raise before the next recession or they'll be unable to cut into it.Just my view.

 

Having said that there's some compelling value stories out there.

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Ratio is now 0.1.

It's the bargain of the century... but that doesn't mean it won't go lower!

 

Some very good analysis here.

http://www.marketoracle.co.uk/Article51166.html

 

gold-ratio-1.png

The problem is that many of the miners have been investing in capital equipment and mines at higher than average prices,taking on debts that may threaten equity holders stakes.

 

The issue as I see it is trying to pick a basket of those that will be left standing and working out the right price point to enter.As above,cost averaging and ETF is arguably the least risky way.

 

I'm still sat out.Waiting.If we get another 20% in physical,it may get better yet.

 

Edit to add.I'm a gambler.I can't help it.

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I think that's an excellent strategy.Trying to pick the bottom on this one is going to be harder than hard.Cost averaging in sensibly would hopefully see you through the lows.

 

Have you considered waiting for Yellen to raise?Soft jobs data today but I think politcally,they will have to raise before the next recession or they'll be unable to cut into it.Just my view.

 

Having said that there's some compelling value stories out there.

 

No I'm not trying to do anything like that, partly because I'm not following the market anywhere closely enough... I don't think it's good to do so - you drive yourself nuts.

 

The point of true cost-averaging strategy is that it's a long term strategy where you deliberately do NOT try to time your buying to take advantage of daily fluctuations in response to what comes out of Yellen's cakehole, but mechanistically feed it in over a period to get a good average longer term price.

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The problem is that many of the miners have been investing in capital equipment and mines at higher than average prices,taking on debts that may threaten equity holders stakes.

 

The issue as I see it is trying to pick a basket of those that will be left standing and working out the right price point to enter.As above,cost averaging and ETF is arguably the least risky way.

 

I'm still sat out.Waiting.If we get another 20% in physical,it may get better yet.

 

Edit to add.I'm a gambler.I can't help it.

 

We have often heard "there's nothing worth buying... QE has made everything is expensive compared to historical values."

 

Well that's clearly not the case with this particular sector. It is perhaps the only thing worth buying on a value basis. Just to get back to the average HUI:GOLD ratio of the last 20 years will bring about a 300% rise in the sector.

 

Just as the market has fallen back in love with tech (who would have thought that 5 years ago?) it will certainly fall back in love with commodities once this generation's hot techs blow up.

 

I don't really know enough about individual shares - that's why I just buy the sector (GDX).

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We have often heard "there's nothing worth buying... QE has made everything is expensive compared to historical values."

 

Well that's clearly not the case with this particular sector. It is perhaps the only thing worth buying on a value basis. Just to get back to the average HUI:GOLD ratio of the last 20 years will bring about a 300% rise in the sector.

 

Just as the market has fallen back in love with tech (who would have thought that 5 years ago?) it will certainly fall back in love with commodities once this generation's hot techs blow up.

 

I don't really know enough about individual shares - that's why I just buy the sector (GDX).

Im with you on that Van.There's a colossal amount of sentiment driving down these prices.Quite who's buying Next Plc at £75 + is beyond me.

 

Newmont $15.42

Down 7% when physical is less than 1% down.???Crazy times

 

barrick $6-10 down 7%

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I still like the Royalty co's:

 

+ They have profits

+ They pay dividends

+ They have strong cash flow, and little debt

+ They are getting cheap again

+ Some of them, like Silver Wheaton (SLW), are buying back their own shares - how many debt-encrusted miners can do that

 

I bought Calls yesterday, and may soon add more

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I'm with you on the debt Doc.I'm of the opinion that there's every chance something like Tesco will end up with a debt for equity swap somewhere down the line-they've signed some horrendous lease agreements/huge pension black hole etc etc

 

Is that a possibility with the extreme debtors eg Barrick?

 

Just asking the question

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