PeakTrader.com

[arthur]

Gold has rallied recently, in part, because the U.S. dollar continues to depreciate. Currently, DROOY is relatively undervalued compared to NEM, which is the gold leader. Most of DROOY's mining production is in South Africa, and the RAND has appreciated resulting in lower profits from exports. However, DROOY has expanded gold production in Asia. It may be best to buy DROOY stock and hedge with NEM puts to take advantage of an arbitrage opportunity. If gold rises or stays high, DROOY may rally more than NEM. If gold falls, DROOY may fall less than NEM.