Loading ...Financing and Debt in resource companies
Finally found a post where financing data is charted. credit contraction in resource sector since 2009 clearly shows up how GSR has been trending higher during this period.
All markets are driven by credit expansion/contraction.
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The Debt Time Bomb: Amend, Extend and Pretend
With a decade’s worth of languishing gold stock share prices, the appetite to keep funding these burning matchsticks continues to fall.
Equity financings on the TSX and TSX-V are down 70% in a decade. Don’t believe me? Check out the chart below.
http://news.goldseek.com/GoldSeek/1556629600.php
Edit :
Following chart shows credit dried up in PM sector post 2012 while the general economy rnjoyed abundance of free money after tax cut. .
Very interesting and obviously well researched Article Bikoo. Thanks for posting.
More pain ahead ?
PS….this is why Spock is leading the industry towards crypto financing .
Necessity is the Mother of Invention
Agree. He (Spock) is smart and like to be in his circle, All this free money went to general economy and did not spill over in resource stocks. GSR chart divergence from Credit spread is real indicative of the condition.
“All this free money went to general economy and did not spill over in resource stocks.”
This is an important topic, and I’m looking forward to the article.
But I suspect that all the free money went NOT into the general economy, but into debt based financialization. Eg, share buybacks rather than investment in plant and equipment or R&D.
If you ever read Antal Fekete’s work … published widely on PM sites for years, he expressly argued that low rates would actually impoverish the world, by incentivizing folks to consume their capital stock (depreciation over time would exceed new investment). (Others claim high hurdle rates are needed to ensure only great uses for capital are pursued, not every fantasy project. Ie, via malinvestment.)
Now … to the extent that cheap money HAS gone into some sectors (social media?) this begs the question why here not there?
Yes I read every article Prof Fekete wrote. When u find the article please post here for members.
Thanks.