DRD Gold Ltd (DRD)

[Vi]

The POS should go back to 8 now. Other miners are pretty
expensive, SA are dirt cheap. For a good reason - gold hit
75 year lows in 2005, in RAND terms, inflation adjusted.

This chart explains a lot, the 2001-2002 surge and the subsequent
dump. Inflation is 8.4% in South Africa. However,
gold bull should enter a mania phase now, which should take
care of this. DROOY's profits improved steadily since 2005.
However, it still can go belly up. The majors, such as HMY, GFI,
and AU are less risky.

ZAR is South African rand, their currency, plotted against the
dollar. Up means
down on this chart - the number of ZAR needed to buy 1 dollar.
Drooy dug itself out from a deep slump and has been profitable
for the past couple of years, even started to pay dividend,
although the rand strengthened dramatically since January.

Drooy should be making money at this gold price. 11% margin,
judging by the previous quarter, but it may be less due
to the electricity hikes. My main positions are gold, silver,
GDX, and GDXJ, and HUI tracking portfolio, but I am overweight
RSA miners. I don't expect outsized gains in HUI like gold
bulls saw back in 2001-2003, but South African miners could
easily see such gains, because their reserves are priced
at a tiny fraction of their Canadian counterparts. DROOY is
currently trading at $3.1 per Oz of their gold reserves and
resources. Canadian miners are much safer to gold fluctuations,
but many are trading at $200-$400 per Oz, so they don't offer
as much leverage to soaring price of gold.

FWIW, HUI went from 35 to 500.