Lately we've been subjected to quite a lot of negative news and bad publicity surrounding the South African golds and DRDGold in particular. The objects of this bearish sentiment range from the strength of the SA Rand to mining- and worker-related issues at the SA mines.

Regardless of the reason for the current bearish outlook, this is all part of the cycle of fear and greed and it doesn't mean the end is here! It's a cycle that has repeated itself many times over in virtually all markets and at times in individual stocks, including DRDGold. (Remember back in the mid-'90s when seemingly everyone was super bullish on DROOY? That was just before the crash in DROOY's price in 1997-98. Now some of those very same advisers are telling everyone to sell and give up on DROOY at the low part of the cycle!)

According to a recent newswire article by Nicky Smith, DRDGold, formerly Durban Roodepoort Deep, was considering shutting down a third of its South African production, it told a group of fund managers at last week's mining Indaba in Cape Town. Ilja Graulich, the investor relations executive, said the proposal to cut production was one of a range being considered and had come from the company's discussions with its shareholders and institutions. He added that nothing had been decided on how to structure the South African operations to deal with the ever-virile rand.

The article went on to point out that in the past 18 months the company has had to cut 6,000 jobs (DRD currently has 14,000 employees). In the past 12 months it has cut South African output by about 70,000 ounces, the article said. The company produces about 560,000 ounces a year in South Africa while its Australasian operations produce about 350,000 ounces.

The article referenced a nameless fund manager who was quoted as saying that DRDGold had a strategy session at the weekend where the proposals had been considered. It was after this session that fund managers were briefed in Cape Town.

In recent weeks there have been suggestions in analysts' research reports that DRDGold would shut down all its South African operations. This kind of talk is typical at bottoms where everyone becomes myopic from focusing too much on the current depressed prices and lack the foresight to see the road ahead.

Emotions always come to the fore at extremes along the price cycle -- either fear or greed -- and fear is definitely the strongest of the two. This is why bottoms are often much more emphatic than tops when the trend finally reverses.