Goldcorp: notes

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).

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