Now that the POG is comfortably above $300/oz., we should expect actual earnings to dominate the relative price action of this stock and many other high cost producers. The basic formula I came up with for South African producers is:
where:
P = stock price
PoG = POG (in U.S. $)
ProdCost = total production costs (in U.S. $)
USDZAR = SA Rand / U.S. Dollar
(Use USDCAD and USDAUD for Canada and Australia resp. Of course you could eliminate the third term by pricing everything in local currency.)
The subscripts (i) and (f) are initial conditions and final conditions, respectively. In simple terms, the future price should be the current price times the leveraged earnings profit gain, adjusted for the Rand/Dollar exchange rate. With me so far?
I just got through testing this formula, and it appeared to work remarkably well when I plugged in $270 for the total production costs. For example:
By this method, either DROOY is way undervalued at 4.18, or it is pricing in a POG of $310.
Of course, this indicator ignores absolute valuation and fluctuations in daily price, but if the total production costs are known, you might find it useful for medium term predictions, based on recent price behavior.
Nota: Acho interessante o modelo aplicado. Agora, utilizo-a como elemento, mais um, de apreciação da cotação de uma determinada acção.
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