With gold sustaining its record highs in price of well over $1,100 an ounce, I have updated the EGO model.
I changed my income statement using a 2010 gold price of $1,100 instead of the $1,000 that was in my model. My valuation changed to $15.59 to get me at a new price target of $16, which is 17% upside from the closing price of $13.63 today. (11/23/09)
Going forward, we bought half a position in EGO at $12.91 and are up 5.5% already with another 17% upside for 22% total upside. The gold price may fall during this 4th quarter and EGO may fall with it. If this happens, we can turn EGO into a full position if we get in cheap enough. If the gold rally continues, EGO should hit my price target. For the time being, I think EGO is a hold.