Company balance sheets and business practices are much improved today, led by Barrick Gold, which started its transformation in and looks fundamentally cheap today. This was a signal that a rally was on the horizon in the precious metals equities, and we are seeing the same signs today.
Reading this, and looking at the chart above, you may ask yourselves, is there opportunity in precious metals equities today? Think about that for a minute. A specific example, and probably the best example representing the poor capital allocation, and largesse, of the precious metals producers is Barrick Gold.
Looking at the charts of gold, Time is precious silver, why did these precious metals rally so much from their lows, which occurred before the broad equity market bottomed, to their highs? Additionally, of the remaining debt outside the maturities, almost all of it matures after Precious metals stocks peaked inthen bottomed in lateahead of the broader bottom in commodity equities.
Thesis The relative strength of precious metals equities is improving relative to the precious metals themselves, which is occurring alongside an improvement in fundamentals, building the foundation for a future significant price rally in precious metals shares.
With the benefit of hindsight, we know now, that the world was actually stuck in a dis-inflationary cycle from early to earlyas Time is precious growth disappointed led by China, which reversed inand global capital flows were recycled back to the United States. However, ineven before the precious metals equities rebounded, which occurred at the tail end ofand earlythe relative strength of precious metal equities versus their respective underlying precious metals started to improve.
After leading the commodity equity rally inprecious metals equities have lagged over the past year. The answer, is yes, in my opinion, with several caveats. The GDX is comprised of the largest precious metals equities in the world, and it was demolished.
In practice, Barrick has pulled back their growth at all-cost expansion, selling mines to emphasize core properties, and most importantly, reducing debt, as the chart from their Investor Day Presentation shows. Despite the massive capital spending, this project has never been fully developed it has not yet produced any commercial production and it has resulted in horrific expenses and write-downs in value for Barrick Gold.
From the perspective of a market historian, a market generalist, and someone who has followed the precious metals sector and equities for over two decades, why has there been such dramatic underperformance of the precious metals equities versus the precious metals themselves over the past 20 years?
Precious metals equities are looking constructive relative to precious metals, and this is occurring while fundamentals continue to improve. Obviously, this was a brutal decline, yet silver prices still held up better, just barely, than the large-cap and small-cap precious metal equities.
The list of mistakes is legendary at Barrick, including unwinding their massive hedge book at material losses near the precious metals market peak, and the missteps at Pascua-Lama, however, the culture of the company has been transformed over the past five years. I believe the answer has been in poor capital allocation by the precious metals producers.
Introduction I have a long history investing in and analyzing precious metals and precious metals equities, as an investor, analyst, and portfolio manager, and I have owned the precious metals equities in size on various occasions over the past twenty years.
This is frequent topic of discussion in The Contrarianand I believe recognizing what happened from this time frame, and what could happen in the future, are going to be the primary drivers of investment returns going forward.
Author, StockCharts Clearly, the precious metals producers have not kept pace with the gains of precious metals themselves. Now, look at the chart below, where the performance of gold in the color gold is plotted against the performance of SPY in the color black over the last 20 years.About Spot Prices for Precious Metals.
Precious metal prices are indications only. Spot prices may vary among different websites and sources. Call Goldline for the most current spot prices. Feb 08, · Enjoy our time is precious quotes collection. Best time is precious quotes selected by thousands of our users! Read the latest stories about Precious Adesina on Time.
I have followed precious metals & precious metal equities for nearly two decades. Precious metals stocks peaked inthen bottomed in lateahead of the broader bottom in commodity.
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Jun 10, · Time Is Precious Quote: "Imagine there is a bank account that credits your account each morning with $86, It carries over no balance from day Home Country: US.Download