5 replies to this topic

[Hacky]

The Rand seemed to break support today prompting me to exit most of my South African gold stocks. I'm not seeing any support until about 6 Rand = $1, another 10% down. That also looks like it might be weak support. Any views on this?

Rand Converter

[uncleharley]

Based on your chart, the Rand has been dropping for two yrs. What is significant about todays drop?

[Hacky]

There had been some hints that perhaps the SA govt might help in the exchange markets, but todays drop seemed to quell that for me. Looking at the 3 month chart it had been building a bit of a base around 6.85, that was what had given way today. Still bullish on gold stocks, just looking for different countries where the weakening dollar might not be as dilutive as what I perceive for the SA miners and recent underperformance.

Mineweb article

[scott in Wisconsin]

I'm confused.
The rand has been going up in value relative to the US$ for 2 years, and looks to continue.
Does that always hurt S. African Gold stocks?
Hasn't the price of gold in US$ gone up enough to compensate for the decline in the value of those US$ to S. African Miners?
Can someone crunch the numbers for me?
Thanks.
Scott

http://finance.yahoo...R&t=USD&a=1&c=3

[Hacky]

Scott, IMO the rand has been gaining too much strength to compensate for the rise in gold price. The miners expenses are largely paid in Rand, their income is in Dollars. An ounce of gold gives them approx 2640 Rand today, in January 2002, when gold was about $290/oz, they received 3480 Rand for each oz they sold. It's true that their profits are more valuable when translated back into dollars, but the exchange rate is affecting profitablity of the mines. This is, IMO, why the SA stocks generally are underperforming and why I am searching for miners whose currency is a little less strong. Note that in the indexes shown on the web link that the SA miners are represented in the index. Consequently, the other miners generally will be outperfoming their SA counterparts by more than the index shows.

Relative Gains of SA Stocks

[scott in Wisconsin]

VERY clear and helpful. Thanks very much. What Silver miners to you like? Scott