Loading ...THE GREAT RESET IN MINERS
A FAILURE TO LAUNCH
This Chart of PM Miners ( XAU) vs the Price of Gold…SAYS IT ALL. I havent looked at it for a few years
PM Miners are a wealth killer and have been underperforming Gold for Decades
We had what appeared to be a breakout in 2020…but a funny thing happened on the way to the moon
What happened you ask ?
NOTHING THATS WHAT ! See that Peak in 1996 ? That was the Great Bre-X Era mania. I was there . I had a Stock Bandore Resources..Explorer in Timmins Ont. went from $1.40 to $14 in less than a year . Then the head geologist at Bre-x the Overhyped Miner which caused this Raging Bull in PM Stocks…Jumped out of a helicopter in Borneo and took the whole sector down with him..25 years and still falling !
OH and my miner which I never sold …went from $14 to 14 cents before disappearing altogether
gold bug = brain dead
It’s an addiction ..have some compassion Boomer
What, compassion for myself??? 😉
There is something that standard charts don’t usually capture but should.
Shares outstanding.
When you own a share, its seldom a CONSTANT portion of the enterprise value.
So if you are looking at an industry that floats tons of warrants or employee stock options, those steadily dilute.
Are miners more guilty than other sectors? I don’t know. I will say PERHAPS.
But IMO, charts should be streamed as OHLCV SO, where SO is shares outstanding.
If there’s a core feature of WS fraud, this is it.
Stocks like Hecla are trading at much lower values than even the charts show you are absolutely right.
Pedro raises a great point about shares outstanding BUT it isn’t fraud. Most juniors and explorers don’t have revenue until a mine is developed and operational. Therefore, just as a tech stock with a new product might issues shares to fund development, miners issue shares to fund their exploration and development until they have a producing mine. It is part of the life cycle for a miner.
Its not fraud in a legal sense. Its fraud in a Wall St. marketing sense.
IMO, a share should be defined as a constant fraction of EV, and priced accordingly.
The general public doesn’t understand you are buying a melting cube of ice, and that’s part of the “fraud” of Wall St.
Just because its institutionalized, doesn’t make it less so.
Agree with you there. Whenever I research a miner that I am not familiar with I always look at two things. The chart to see it’s ATH price and the number of shares and total market capitalization to see how much dilution there has been over it’s history.
This multi-decade under-performance of the $XAU relative to $GOLD occurred as short-term interest rates were taken lower from around 5.5 in 1996 percent to near zero today.
It defies logic, but the chart doesn’t lie. However, I’m thinking that if reinvested dividends are factored in, the picture wouldn’t be quite so dismal.
I am wondering if this was all orchestrated somehow?
Will we see more of the same going forward, or have we turned the corner now? Is the $XAU a screaming buy today?
Good point about the reinvested dividends Homer. Why I prefer stocks like NEM and GFI that pay a decent dividend.
Yes, CM, those annual dividend yields are on the rise, and some larger companies are projecting 4 to 5+ percent dividend yields for next year.
Now that NEM stock price has finally cratered back down to earth, it is looking more attractive to me.
Also, I am partial to AEM with a forward annual dividend rate of 3.75 percent.
I think that it is still a little early to be buying shares of large cap miners though.
Perhaps early December will be better timing? I don’t know. Anything can happen over the next 3 months.
Sir Homer,
Some long term gold analysts wrote about NEM earlier this week.
NEM up 3% today on above avg vol.
All bulls mostly flushed, with gold going below 1680 today. 10 minutes before Wall St closes for the week.
And some here were mocking a Tweeter who has regularly posted long term FedEx versus Silver ratio chart
That ratio did spike up today.
Just my observations.
GL
Howdy GL,
I did notice that 3% upward move for NEM today. A technical rebound, perhaps? Key indicators (MACD and RSI) look constructive.
However, I don’t think that the price of gold has bottomed out yet. Spot gold could break below $1650, and possibly $1600 will not hold.
NEM could be a good short-term play here. I don’t know.
I don’t know about comparing FedEx stock with physical silver. The price of silver much more volatile than FDX. So, one would expect to see a lot of spikes in a ratio chart (up and down).
I’m thinking that the recent low of $17.40 for spot silver (late August) will be retested, and it might not hold. We shall see.
Yes the ratio spiked but was because Fed Ex dropped. The 2 are so disconnected it is a joke to even use the comparison. What next from that wizard, silver compared to toilet paper?
Yes, the spike in the ratio is because FDX rolled over and fell out of bed in after hours trading yesterday, for a loss of 22% in less than 24 hours. Yikes!
Does that quality as a crash? How much lower can FDX go? Is this just a dress rehearsal for the real when they turn the machines off?