Day: July 28, 2011

The dollar has no intrinsic value II

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A year ago I mentioned that my in-laws were in India November and unlike previous trips, the U.S. Dollar was no longer accepted by vendors.  About a year ago, my next door neighbor was in his home country of Burkina Faso.  In previous years, the premium for exchanging US dollars for CFA (the Franc of French Africa) was reasonable.  But when he was there last summer they started with 16% premium and negotiated from there.

Jim Rogers is right–the US has already lost its AAA credit status.  When vendors and money changers overseas have rejected the reserve currency status of the dollar, small players, then the rest of the world will not be far behind.  My utter rejection of dollar began in January 2009, as documented here.

thanks to Zerohedge

Goldcorp: notes

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Well, it seems that those who say you can’t time the market are right.  Yesterday I sold a put on Goldcorp (Jan 2013, $52.50 for $9.40); on April 28, I bought back my last position (July $45 $4.60) for $0.33 on April 28 when GG was at $56.  Then, Goldcorp announced yesterday after hours that they were cutting their production forecast by 9%.  The Globe & Mail decided to highlight this aspect of their announcement with the headline: “Goldcorp scales back production forecasts“.  Sometimes I wonder if the major media wants industry to do well.  Their focussing on the negative all the time is quite ridiculous sometimes.  (As I write, GG share price has dropped $2.10 from yesterday’s close).

But the announcement was not at all bad news.  Their 2Q reports says that revenues are up 62%.  If the share price goes down because of the cut in the production forecast, then it probably represents more of a buying opportunity than it already is.  As it is–and this applies to GG as much as any gold miner–gold mining companies are a bargain compared to their typical price vis-a-vis the price of gold–see Fabrice Taylor and Monty Pelerin (here and here).  I will sell another put if the share price drops to $45.

Update:  TD Newcrest has downgraded GG from “Action List Buy” to “Buy” and lowered its target price from $70 to $68.  (Price is now down $2.76).

Note: All prices in U.S. dollars (which has no intrinsic value).