I will leave the discussion of a long-term $10+ target for Tyhee for another day. For now, let us look at a realistic intermediate-term target.
Ratios tend to revert to their mean. Most historic ratios involving gold, gold stocks, and Tyhee are still so far out of whack that they are orders of magnitude outside where they have been for the first 7 years of this gold bull market. This is a remnant "hangover" of last year's panic crash. However, I believe these ratios will again revert to their mean during the gold bull market.
Here is my intermediate-term target for Tyhee, based on NO IMPROVEMENT in the company fundamentals and only on these ratios returning to their norms:
[You can check the accuracy of all these ratios by going to www.stockcharts.com and typing in $GOLD:$XAU and $XAU:TDC.V]
A) At many points during this gold bull market, the XAU/Tyhee ratio was around 300/1. This means it took 300 shares of Tyhee to buy one share of the XAU index. Today it is around 1300/1. Thus Tyhee would need to increase 4.3 times with no increase in the major gold stocks just to revert to this historic mean.
B) At many points during this gold bull market, the GOLD/XAU ratio was around 3/1. This means it took 3 shares of the XAU index to buy one ounce of gold. Today it is at 6/1. Thus all gold stocks need to double with no increase in the price of gold just to revert to this historic ratio.
C) Finally, I believe we will see $1500 gold within the next two years, conservatively.
When you factor together all these ratios reverting to their mean, which I believe they will, and gold moving to $1500, you have the following calculation:
Tyhee = 15 cents
A) 15 cents X 4.3 (Tyhee to XAU reversion to mean) = 64.5 cents
B) 64.5 cents X 2 (XAU to Gold ratio reversion to mean) = $1.29
C) $1.29 X 1.3 (Gold appreciation of 30%, from $1150 to $1500) = $1.67
Thus, my intermediate-term target for Tyhee is $1.67, or an 11-bagger, based on a slight appreciation in gold and reversion to historic norms for ratios between gold, gold stocks, and our gold junior stock called Tyhee.
If you believe "this time is different" and thus "gold stocks will never be valued relative to bullion as they were in the past" and furthermore "Tyhee will never be valued relative to gold stocks as it was in the past", then you will reject these calculations. I believe that these ratios are still out of whack, that they will revert, and that in a mania they will even overshoot these norms. For example, I reject the idea that juniors will permanantly be undervalued because they require financing and after the credit crash, financing has become scarce. In my view, financing for legitimate projects whose assets are appreciating will continue to be available as it was in the past. Financing for a 500 sq. foot condo in Miami Beach is another story.
Note that these calculations do not figure in potential positives, such as an increase in resources, advances in permitting, advances in building a mine, etc. Nor do they include potential negatives, such as dillution.
Hysteria
