Gold > $1100 - I'm Speculating with DROOY

Currencies from Kitco.com:
Miners from Scottrade:
24-Hour Gold from Kitco.com. Notice that the price has moved above 1100.

Here is DRD Gold. The graph is showing signs of deterioration, but I am buying below $6.00 as a speculation on a return above $7.00. There are some articles below which report some problems with DROOY.

From MineWeb.com:

Gold's big taboo

Six of the world's major gold diggers truly sweat for cash, and hoodwink with headlines.

Author: Barry Sergeant
Posted: Monday , 09 Nov 2009

JOHANNESBURG -

Don't be fooled by high dollar gold prices, don't be hoodwinked by flattering headlines from gold companies, and don't deny the patent overvaluations. The world's major gold producers are sweating for free cash flow, the ultimate test of underlying performance.

The numbers can be aggregated from historic reports, and the latest set of quarterlies from global Tier I gold miners AngloGold Ashanti, Barrick, Goldcorp, Newmont, Yamana, and Kinross. Gold Fields and Harmony report with 30 June year-ends, and will be included in future surveys; Australia's Newcrest and Lihir, and Russia's Polyus are excluded, on a quarterly basis, on the basis of publishing limited details in quarterlies, and Buenaventura and Freeport-McMoRan are excluded as diversified metal miners.

The aggregated numbers for the six gold majors selected show that the grouping produced free cash flows of US$1.058m in the first nine months of the year, with free cash flow defined as operating cash flow minus cash outlaid on capital expenditure. The calculation of FCF excludes cash from selling/buying assets, cash spent on acquisitions/sales, and cash spent to close out hedge books. Of the free cash flow generated by the six companies in the first nine months of 2009, more than half, at US$554m, was paid out in dividends. Read it HERE.

From the Daily Pfennig this morning:

"The IMF issued a report this past weekend that isn't helping the dollar... The IMF said that there are "indications that the U.S. dollar is now serving as the funding currency for Carry Trades" was one of the things that hurt the dollar... The other thing was that the IMF felt that the dollar was still "overvalued"... Which in anybody's book means it can fall further!

The IMF also said that the euro had "experienced the most appreciation among major advance economy currencies and that it remains on the strong side of its equilibrium."

Hmmm... So... First it was the silence by G-20, and then the slap in the face by the IMF that has the dollar on the run this morning... I wonder what direction this will go once the New York traders arrive at their desks, and see what the overnight markets have done to the dollar... My guess is they will first take some profits, and then add on to the dollar's woes... But that's just a guess, who knows what those "fickle" traders will do!

So, like I said above, the euro, A$, Swiss are all moving higher VS the dollar... But the "winner" for best performing currency overnight is the New Zealand dollar / kiwi! At one point overnight, kiwi traded at 74-cents... It has since given back some ground, but the move overnight was impressive! Kiwi got a nice bump when Dairy Giant Fonterra raised their forecast dairy payout... With farmers' incomes representing .7% of the GDP, this was good news for the economy, and thus the thoughts begin to switch to a rate hike by the Reserve Bank of New Zealand (RBNZ), which just last week was downplaying any such rate hike... This might change their mind..."

The result of the drop in the dollar is gold at 1106.40 and silver at 17.67. The Gold/Silver Ratio is 62.61 which remains very high. Silver will catch up, but not for the time being. This is a bit strange, but if we are or when we get to the third phase of the bull market in precious metals, silver will spring to catch up with gold.

Overview from ETrade.com:

DROOY Company Overview

DRDGOLD Limited (DRDGOLD) is an unhedged gold producer and has operating gold mines and exploration assets in South Africa. During the fiscal year ended June 30, 2009 (fiscal 2009), the Company produced 247690 ounces and declared Mineral Resources of 56.4 million ounces and Ore Reserves of 6 million ounces. The Company focuses on improving the potential of existing South African underground and surface retreatment operations and expanding surface retreatment activity. Its operating segments include Blyvoor, Crown, ERPM, ErgoGold, Ergo JV and Offshore. The company's subsidiary is DRDGOLD South African Operations (Pty) Limited (DRDGOLD SA). On March 31, 2009, the Company acquired 35%interest from Mogale Gold (Pty) Limited. On February 28, 2009, DRDGOLD, through its subsidiary, Argonaut Financial Services (Pty) Limited acquired a 50% interest in Witfontein Mining (Pty) Limited.

According to most reports that I have seen, DROOY is at best a HOLD and at worst a SELL. It has rebounded from its low of the day. It is now bid 5.66, ask 5.67, last 5.66, high 6.01, and low 5.52. However for me, it remains very volatile and possibly a good stock for cautious trading.

BULM last 0.67; AMNP 0.765; CYRS 0.324; BYDDF 9.30; DOW +152+ at 10176+; gold 1107; Silver 17.67.

Best to each, Doug