RE:RE:Gold at $1940...war politics or macro economics?Retiredgeo wrote: Here is the counter argument:
As the broader markets sink day after day the pool of bargain hunters becomes exhausted. When the last of them are gone stocks go into freefall and we get a market correction. Panicked investors sell their gold first and their small caps second to cover margin calls. Gold goes down $200/oz and stocks like NFG loose 60% of their share price in a couple of days!
I don't know which way the market is going to go. I'm watching my investments by the hour.
Well anything is possible. I think back to 1987 when the market crashed and the baby was thrown out with the bath water and everything got crushed, gold stocks included. Personally I dont think the market will crash but rather go through a long period of low or negative returns due to inflation or stagflation as global economies struggle due to high energy and commodity prices that translates into less money for the average person. Gold will do really well in this environment. And New Found Gold is tightly held by insiders and have a loyal shareholder base of investors from NL who are in it for the long term. There is a lot of gold along the Appleton Fault and surrounding area so there will be a whole lot more gold discovered along strike and at depth. It is a very valuable high grade gold discovery. The drills are turning night and day so value is continuously being added whether the market recognizes it or not. The number of ounces will go up significantly with 14 drills and over $115 million in operating cash. NFG isnt in any rush to go back to the market to raise more money so very little dilution to existing shareholders as a result going forward. The company is very well positioned. I see little downside risk as a result. Yes it is always possible NFG takes a short term hit if the price of gold dropped suddenly by $200 an ounce but it would be short lived in my opinion. I really dont think gold will take a big hit like that but again anything is possible short term with so much craziness going on in the world. Longer term the price of gold will be going much higher and Im confident NFGs share price will do well. I just dont see any easy way out of the mess the world is in right now. Gold and gold equities will do really well going forward. Is anyone watching the big gold majors like Barrick and Newmont? They are always the first movers in a gold bull run and they are making strong moves upwards right now. Gold bugs will eventually move some of those profits into companies like NFG. The huge gains made in the gold majors will always trickle down to the juniors. Still very early days guys. Give it time. This latest gold bull run is still in its infancy. The best is yet to come for the sector.