Take physic, pomp

Gold miners > Gold metal, continued

Mentioned on Tuesday in the post The gold price and PM miner divergence, the subject has been on my mind all week so here’s another chart, showing a slightly longer timeframe that takes in pre/post Ukraine invasion:

The main issue is the fading volume, that needs to improve at some point. Then the tendency for concentration in the biggest Tier 1 names (NEM and GOLD now out-performing) doesn’t help, but there’s no denying how the miners have been strong in our warlike days. Gold bullion has done well enough by holding handily above the U$1,900/oz line (though goldbugs will shake their fists at the unfairness of it all after any $10 re-trace…it’s so unfair) but for once, the miners are leading the metal.

That nice Mr. Market seems to have finally realized even the mediocrity running most PM miners can’t help but return free cash flow at these market prices, so any company with a reasonable amount of financial nous is money-printing in 2022 and will deliver real profits to real bottom lines, just like companies in the serious business world. And yes, knock them for other things but the serious boards start with NEM and GOLD, both saw their credit ratings upgraded last month for good reason. Among smaller companies Wesdome (WDO.to) comes to mind but frankly, after that ideas for candidates peter out quickly and it shouldn’t be that way. FNV and WPM for sure, but they aren’t miners per se. AGI, maybe. Any suggestions? Please don’t say AEM, SAND or KGC.


    How about SSR? Dividend now looks comparable to WPM and AGI.


    How about maybe the newest member of the GDX, KRR.to? I’m not sure how much more it can run up, but it looks like it’s still running up (but isn’t everything?).


    Why bother with gold miners?

    Over longer time periods diversified miners like BHP, Freeport McMoran, Rio Tinto or Vale have outperformed the goldminers by large margins.

    A Beaten Down Prospectors Cabin In The Woods The Deep Dark Woods of British Columbia 02/04/22 9:35 am

    The Risk-to-Reward ratio for Gold Mining companies is not attractive … considering you can buy a Canadian bank stock that pays a better dividend with nearly zero risk ….. the Gold Miners need to pay a much higher dividend than the bank stocks in order to offset their risk profiles


    Yamana and Endeavour


    Mandalay Resources


    I mentioned it a few weeks ago, and will again today. Polymetal International. 9th biggest gold miner in world, trading at a massive discount. 40% production out of Kazakhstan. Not sanctioned. It is up 170% since I mentioned, but fair value is still 500% higher.


    NVO, clearly.


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