Hamilton - Gold Stock Panic Levels

Not so sure there's a panic in gold stocks, there really hasn't been one in many stocks for months.

There is a crisis of confidence, mostly brought about by "the gold price will crash" camp, who are the overwhelming majority. They might have some technical justification based on their view of the chart, but mostly people blithely ignored rapid currency depreciation or short term interest rates, and prefer to believe that fleeting speculative prices are the norm in gold and are not here to stay.

So this would mean that if gold were to "crash immediately" then this would shut down just about every gold miner on the planet, since they have gone out of their way to dilute their shares massively, process volumes of barren rock below their cut-off grades, demand massive capex expenditures leading to overwhelming deficits, in short, there's been a rush to systematically destroy the investment case just about everywhere you look.

Never underestimate the ability of people to kill the goose that lays the golden egg.

A very good discussion in this article:

http://www.safehaven.com/article/24821/gold-stock-panic-levels

1. If you are worried about the company having to finance, add up the total revenu ytd. They already have as much money poured into the project as they did at the end of fiscal 2011. By the end of April, next month, they will have poured ~$130m. into the project in the last two years. The orignial capex in the PEA was ~$51m. for a forseeable project of 10years duration running two mines. We are a little beyond that now.

Run your cursor over the chart:

http://www.bloomberg.com/quote/GBN:CN/income-statement

2. A hostile bid can't happen outright, but any prospective investor wanting to buy a large chunk of shares such as Luxor did with Crocodile Gold will have to settle for a smaller percentage with GBN.V. GBN.V management doesn't want that. They want to fully control the company from a minority standpoint.

stockcharts.com

-F6