A few comments about precious metal prices and mining

[Bumble]

1. Silver, platinum and palladium are primarily industrial metals, so it is no surprise that their price has fallen considerably. Industrial metals are not a clever thing to own in a recession. Copper has also fallen sharply.

2. Gold is mostly used for jewelry and as a monetary metal. Demand for jewelry could fall in a severe recession, because it is a discretionary purchase. Gold remains a safe haven asset.

3. Gold miners tend to work in remote locations and may reasonably be expected to be less affected by the virus than other more consumer-facing businesses.

4. Fuel costs make up about 20-25% of the expense of a mining operation, so cheap oil is good for gold miners.

5. The high value of the dollar (DXY is over 100) depresses the gold price, but it has less impact on gold miners because most of their costs, such as wages, are in local currency.

6. Junior miners are finding it harder to get financing, and are more likely to finance themselves by selling a royalty. This is good for the royalty companies, because it will enable them to snap up royalties at distressed prices.

[HawkHybrid]

the most sensible thing anyone has come up with all week.

 

especially this.

2 hours ago, Bumble said:

1. Silver, platinum and palladium are primarily industrial metals, so it is no surprise that their price has fallen considerably. Industrial metals are not a clever thing to own in a recession. Copper has also fallen sharply.

(this is why silver has dropped. not manipulation, multiple

years physical volume dropped in minutes, or any of the

other conspiracy theories out there)

industrial demand for what currently amounts to ~60%

of physical silver is expected to fall.

coins and bars, only account for ~20% of physical silver.

coins minted could increase by 80 million toz(50% increase)

and have little to no effect.(it's happened before)

 

HH

[Notafront4adragon]

4 minutes ago, HawkHybrid said:

the most sensible thing anyone has come up with all week.

 

especially this.

(this is why silver has dropped. not manipulation, multiple

years physical volume dropped in minutes, or any of the

other conspiracy theories out there)

 

HH

Nah mate it's all a pysop. @Bumbleis clearly an agent working deep undercover on this forum. 

 

@HawkHybrid I enjoy your analysis, as someone who doesn't own any mining stocks, but is considering in doing so, would you say this is a buying opportunity, and what kind of parameters do you use to value/judge a mining company?

[HawkHybrid]

2 minutes ago, Notafront4adragon said:

Nah mate it's all a pysop. @Bumbleis clearly an agent working deep undercover on this forum. 

 

@HawkHybrid I enjoy your analysis, as someone who doesn't own any mining stocks, but is considering in doing so, would you say this is a buying opportunity, and what kind of parameters do you use to value/judge a mining company?

 

stick with larger more established companies with longer track

records. when choosing a mining company, you are choosing it's

people, it's managers. expertise comes from the technicians,

flow comes from the managers.

imo a better opportunity is still ahead of us unless you want to

trade shorter term. so there is time to research more.

 

you'd use the same tools for miners as for any other company.

the mining specifics are nice to know but for more established

companies you might be able to get away with letting the

technicians summarise it for you. people are flexible, having the

right people should fix problems.

 

HH

[sovereignsteve]

Wait a bit and sixgun will arrive. Thereafter this  thread will soon need moving to the sixgun vs hawk hybrid thread😜

[Bumble]

Royalty companies are probably the safest thing to buy, because they have a low-risk business model. Big royalty companies like FNV own more than 100 royalty streams, so you are getting plenty of diversity. They are expensive by traditional measures, but they deserve to be, because of the way they operate. The big guys are FNV, WPM and RGLD. Smaller ones are SSL/SAND, OR, MMX, EMX, MTA, ELY, RZZ. The other way to diversify is to buy funds like GDX, GDXJ, or the Sprott funds SGDM, SGDJ.