I wondered too about that statement. I would have to believe it was amiss. But what is important to keep in mind is that the Fed inevitably raises rates until they break something. It is not too difficult to realize that the U.S. government and the Fed are running out of real options on the current track. At some point, the Triffin dilemma adds more and more instability. Unfortunately, time is not on the side of the reserve currency, especially with two political parties that are both scared stiff of taking away the public punch bowl; and they continue to kick the can down the road while pointing the finger at everyone but themselves, while they very often get the first drink. It is not unusual for traders in general to get ahead of themselves and gold traders are no exception. The weak hands will be wrung out as is necessary. This can take longer than many think, but some real fear, hate and loathing is needed before the precious metals and miners can move higher. The long view has not changed and the current administration has poured more fuel on the fire. I concur with the essence of what Don has stated many times -- that the keys to this precious metals vault are patience and perseverance.
While I am optimistic on the longer term, in '08 debacle in the S&P500, down 40% is about what gold stocks have done recently. Was that a bull market hiccup, or a bear market? With enthusiasm ebbing, I just see financing for developers being difficult. One company, which will remain unnamed, has a $100 million cap, and needs $200 million for a plant, and the 43-101 was just downgraded slightly. DNRSF has that handled with the Zancudo plant, and the Aguablanca plant, but at a great cost, as the stock was $5 in 2022, so down over 90%, with gold more than doubling since then. This could be a financing issue. If gold rallies back, maybe we see consolidation, aka, takeovers, but this is a tough financing environment, somewhat suddenly. I think that's reality, at least for the moment.
Just a question on Kevin Warsh. Why would sounding like a hawk result in lower real rates? Wouldn't they be higher real rates? I think some of the miners with non precious metals in size are in a better position. Take DNRSF, for example(if they'd ever stop issuing shares), they have a 5 year takeoff agreement with Boliden, for zinc, in one of their Spanish properties. Boliden owns the only zinc smelter in Western Europe, in Finland, and has a $15 bill+ market cap. Stock still acts poorly, but I think partly due to this nasty forced conversion, where fully diluted share count went up by 100, 000,000. They just did a deal with Trafigura for $7 million offtake, plus they gave them 3 million warrants(which I don't like, but price ok) exercisable for 2 years at CAD$1.00, about 75% up from here. I value a bit differently than you. On Spain, the 43-101 shows in situ assets of $5 billion. I'll venture 10% production per year, or $500 million. The big names, B, NEM, AEM, prior to the rally, traded at 3x revenues, then in rally, over 4X(AEM was much higher than the other two), so that's sort of a base. So, if DNRSF trades at 3X $500 million(ex Zancudo) that's $1.5 billion, or just over $3 per share. Not bad from here. But they have to stop issuing shares. NEM and B only have a bit more than 2X their share count. Hopefully, Zancudo can finance Spain. I hope so.
Mike,
I wondered too about that statement. I would have to believe it was amiss. But what is important to keep in mind is that the Fed inevitably raises rates until they break something. It is not too difficult to realize that the U.S. government and the Fed are running out of real options on the current track. At some point, the Triffin dilemma adds more and more instability. Unfortunately, time is not on the side of the reserve currency, especially with two political parties that are both scared stiff of taking away the public punch bowl; and they continue to kick the can down the road while pointing the finger at everyone but themselves, while they very often get the first drink. It is not unusual for traders in general to get ahead of themselves and gold traders are no exception. The weak hands will be wrung out as is necessary. This can take longer than many think, but some real fear, hate and loathing is needed before the precious metals and miners can move higher. The long view has not changed and the current administration has poured more fuel on the fire. I concur with the essence of what Don has stated many times -- that the keys to this precious metals vault are patience and perseverance.
While I am optimistic on the longer term, in '08 debacle in the S&P500, down 40% is about what gold stocks have done recently. Was that a bull market hiccup, or a bear market? With enthusiasm ebbing, I just see financing for developers being difficult. One company, which will remain unnamed, has a $100 million cap, and needs $200 million for a plant, and the 43-101 was just downgraded slightly. DNRSF has that handled with the Zancudo plant, and the Aguablanca plant, but at a great cost, as the stock was $5 in 2022, so down over 90%, with gold more than doubling since then. This could be a financing issue. If gold rallies back, maybe we see consolidation, aka, takeovers, but this is a tough financing environment, somewhat suddenly. I think that's reality, at least for the moment.
Hi Don,
Regarding Agnico Eagle and it's 40% fall, do you think this is an attractive buy now? Or do you still think it doesn't have great upside from here?
Thanks.
Just a question on Kevin Warsh. Why would sounding like a hawk result in lower real rates? Wouldn't they be higher real rates? I think some of the miners with non precious metals in size are in a better position. Take DNRSF, for example(if they'd ever stop issuing shares), they have a 5 year takeoff agreement with Boliden, for zinc, in one of their Spanish properties. Boliden owns the only zinc smelter in Western Europe, in Finland, and has a $15 bill+ market cap. Stock still acts poorly, but I think partly due to this nasty forced conversion, where fully diluted share count went up by 100, 000,000. They just did a deal with Trafigura for $7 million offtake, plus they gave them 3 million warrants(which I don't like, but price ok) exercisable for 2 years at CAD$1.00, about 75% up from here. I value a bit differently than you. On Spain, the 43-101 shows in situ assets of $5 billion. I'll venture 10% production per year, or $500 million. The big names, B, NEM, AEM, prior to the rally, traded at 3x revenues, then in rally, over 4X(AEM was much higher than the other two), so that's sort of a base. So, if DNRSF trades at 3X $500 million(ex Zancudo) that's $1.5 billion, or just over $3 per share. Not bad from here. But they have to stop issuing shares. NEM and B only have a bit more than 2X their share count. Hopefully, Zancudo can finance Spain. I hope so.