RE: RE: Smf is great Co. but africa problems basedThanks Wes, good post.
I was thinking along the very same lines, and yes I'm frustrated. The disconnection between the POG and SP of gold stocks is perplexing. Common sense tells us that when the price of a product goes up and the relevant costs of producing that product does not keep up, there has to be a windfall to the bottom line. If a company makes more money it's SP should go up. Right, isn't that the logic?
Yes, the POG hike may not be for the long term but even at $1,200 per oz, all gold companies should be rolling in money, consider the average cost of production of most gold miners are around $400 to $500 per oz. Few companies have costs exceeding $600 per oz. If they don't have hugh administration, or non operating related costs, financing charges (this could be a big item), or taxes, they all should be very profitable.
SMF's case is the most perplexing. It went from the darling of the fund managers to the target of hedge fund leeches around mid December 2010. Why? Who knows? These hedge funds have to plague someone and I guess we are the unlucky one so chosen.
At this point, I can think of several possible ways for SMF to be unshackled:
1. A buy-out by a major
2. An announcement of a hugh new find
3. A 2010 YE result that sweeps everyone off their feet
4. A revised new guidance for 2011 that tops the last one issued
5. POG hits $1,500 and keeps on rising
6. Pray and hope the shorters/hedge funds are tired of SMF and move on to haunt someone else
If we are lucky, all of the above!!