Quote:
Originally Posted by Tidybuoy
I watched a good interview with Warren Buffet the other day.
He sold certain banks (like Wells & Chase) because they are poorly managed. He is very pro Bank of America.
Be bought into a gold miner, not buying gold per say. He said he is not real fond of buying gold as an asset because it just sits there where as buying a mining company produces something - in this case gold.
The original post here implies that he is dumping banks for gold and that is not the case.
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Precious metal mining stocks tend to outperform the metal on the upside and underperform on the downside. Mining costs are pretty much fixed.
It it costs $900 an ounce to mine the gold and it sells for $1000 an ounce they they make a $100. If the metal goes up 10% to $1100 the profit per once goes from $100 per ounce to $200 per ounce. A double in profit on a 10% rise in metal value. Stock price will reflect that double in profit.