Loading ...This Era’s Homestake Mining
Last week I posted about Hecla Mining and my belief it will be the Poster Boy for this silver bull market. Today I post about a gold stock that should also be a nice companion holding. This is a quote taken from an interview recently with Bob Moriarty. He can be a bit of a clown but he also gets a lot of calls correct. “…The Dow Jones peaked, I believe, on September 5th at 295 and then it declined at the end of October, and then it crashed at the end of October. Between September of 1929 and July of 1932, the Dow Jones and the general stock market declined 89% to 41. That’s going to happen again. But if you go back to the great depression, the number one stock during the entire depression was Homestake Mining.” Although I wasn’t around during the 1929 crash and subsequent depression, I was an owner and big fan of Homestake Mining in the late 70’s early 80’s. I am guessing that Homestake was a well established mining company in 1929 and not just a rock or junior that then became a major. My candidate to be the Homestake Mining of this period is Newmont Mining. The stock market and the economy have become increasingly likely to crash over the next 3-4 years. Even were that to occur, NEM is likely to not only survive but to thrive. 
“the number one stock during the entire depression was Homestake Mining.”
You are ignoring the main reason for its performance.
Back then, before 1933, the dollar was still locked in value to gold.
And banks weren’t terribly safe places to park your savings either.
So nothing else was AAA.
Even gold itself was subject to theft (from your neighbors) or the IRS (if in bank boxes).
The Dakota gold discovered that made up Homestake was found and discovered in the 1870’s. It was one of the prime drivers in the Indian wars of the time in this region. What’s important to understand about Homestake in the 1930’s was its performance was the demonstration of what happens in a post bubble contraction (PBC). This is alluded by Pedro in that the gold price was fixed and later raised, while the input costs to production declined due to the depression. This same dynamic lies in front of us. With a contraction in the economy that is coming (IMO) oil prices and commodities should decline (for a time) and lead to this same result. NEM will be like other well run big cap gold stocks such as Barrick that will do well. This performance will be “good enough” but bigger bangs will be awarded to development plays if you can find the right ones.
Didn’t forget anything. Yes gold was backing the dollar but it was valued just as you stated. This time around with the dollar not backed by gold, gold becomes EVEN more valuable. So NEM and any gold miner with good fundamentals will outperform regular stocks just as they did then.
Not if their nationalized…
There is always a buzz kill out there
72% of managers with AUM have pledged to only invest in ESG. Miners are the opposite of ESG. I am on a list of such managers and the ethics of the decision are clearly spelled out. Institutional money loses access to primary dealer handouts with violations of the agreement. Facts do not matter. Feelings rule.
Has anyone read “The Mandibles” by Lionel Schriver?