"The forward price earnings (PE) ratio of gold miners was 30-35 in 2005-2006, compared to less than 15 for world equities, but the situation has flipped.

Valuations for gold firms have slid so much they now trade at a discount to the market, with a PE of 10 versus nearly 12, according to Thomson Reuters Datastream.

At the same time gold companies struggled to control costs in far-flung locations, investors were presented with an easy way to invest in gold bullion through exchange traded funds (ETFs), which have attracted $130 billion of investment."

Reuters Gold Mining Summit

To really eliminate any Black-Scholes option-pricing model held against a gold mining company share price vs. a treasury option, you would take into account the leverage, 20X, plus yield on treasuries, plus average gold price rise. (average gold price rise would be currency depreciation plus inflation)

So your dividend yield would have to be on the order of roughly 25%! If the gold price rise abates, then one variable is eliminated in determining the dividend yield.

The company is presently throwing away roughly 30 - 50% in "investments" and unaccounted for "acccounts payable", and there's still more in inventory buildup.

Food for thought.

-F6