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[tomterrific14]

As of Friday's close, ABX's price relative to gold price was .042 (28.59/681)........that ratio is lower than the .048 when Gold was at 270 in Dec 2000 and the .056 when Gold was at 260 in Jan 2001....in July 2002, the ratio of ABX to Gold was .049 when Gold was at 300....those dates were opportune times to have bought ABX , gold and stocks in general............stated simply, ABX's current stock price reflects 260 to 300 per oz Gold.....and the XAU/Gold ratio is close to historical lows as well...even more so (if FCX which is grossly outperforming all major gold stcks is factored out of the XAU...assuming it is in that Index).........The DJ US Precious Metals Index ratio to Gold shows simliar undervaluation......It wouldn't be surprising to see Gold Stocks outperfrom the metal on the upside by much more than their usual 3 to 1....and to give much less ground than usual in a selloff in the metal..............fundamentally, of course, there are reasons for such low valuations for major Gold Companies....the much larger costs due to the higher oil pice, for one.....and the now greater hedging vehicles available....inverse funds, etc......but still the premium paid for gold stocks, which afer all are long term call options on the POG is at historical lows........in terms of the XAU, it's a 20 % premium for an at the money call on the price of Gold with at least a 15 to 20 year expiration date (as major golds have at least that much reserves at current productions rates.......it's like paying around $2500 for an at the money call on a 100 shares of the Dow Jones Average with a strike price of 13000 with 15 or 20 years to expiration....above 15, 500 is breakeven......

[Cirrus]

I started buying ABX Jan 09 calls a couple weeks ago--on weakness. I want to buy more and will this week. ABX is by far the best large cap gold stock at current valuations IMO. They are virtually finished closed the pile of hedges they had. NEM and GG are overvalued vs ABX. I think the Jan 09 calls are a really outstanding low risk/high reward way to play ABX and the sector. It's almost a now brainer.