You do the HUI Pukey and you screw yourself around. That's what it's all about.
I'm sorry. I don't mean to make light of the losses we all are incurring in the pig miners. I guess we should know better. That's what hurts. When you're dealing with market caps between $500MM and $1B, it doesn't take a lot of dough to manipulate things. Oh boy, there I go again, Mr. Evil Conspiracy is in the house. I guess my simple, obtuse little brain can't figure out a way to explain things so I must rely again upon the "evil conspirators" of The Cartel.
Since I'm such a simpleton, maybe some of the MBAs and PhDs in the audience can explain this one to me: Back in 2009 and 2010, Barrick Gold paid nearly $3B to "buy out" all of the hedges on their books.
Apparently, management was so confident that gold was headed higher, they wanted to maximize future profits. They no longer wanted to limit future profits by hedging. At the time, it sure sounded like a great idea. Hmmm. At today's closing price of $44.30, ABX is now at the same price level that it was in November of 2009. Interestingly, in November of 2009, gold traded around $1150. So, in the past 18 months, gold has increased in price by almost 35% yet the now fully-unhedged ABX is unchanged over the same time period. Hmmm. Full disclosure: I do not own a single share of ABX so this is not sour grapes, just an observation and, yes, I know that ABX has a market cap of about $40B.
If Apple can hold the cost of making a MacBook at $400 but, over the course of 18 months, they find that they can increase the retail price of a MacBook from $1150 to $1540, you'd expect their earnings to increase and, with that, a much higher stock price.
If Ford could make a cars for $4000 but, over the course of 18 months, they find that they can increase the retail price of a car from $11,500 to $15,400, you'd expect their earnings to increase and, with that, a much higher stock price.
A miner, however, can hold their costs stable and see the retail cost of the metal skyrocket. Their earnings increase commensurately. What's their reward? Nothing but a bunch of pissed-off shareholders who stomp away in disgust.
Here's a picture of the HUI. You'd think it would find support near 500 but I thought it would stop near 540, too, so what the heck do I know? At this rate, 450 or even 400 may be in the cards.
Lastly, here's just a sampling of some of my favorite miners. There's a oxymoron for you..."favorite miners". Kind of like "favorite punishment" or "most-likable demon". If the PMs have indeed entered their summer doldrums/consolidation, maybe you can put in some stick bids on a good-till-cancelled basis and pick up one of these pigs at a cheap price in a few weeks.
That's it for now. I'm off for more electroshock treatments. More later after I come to. TF