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Brent Cook discusses recent actions by some of the senior producers

Big Al
February 17, 2014

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Discussion
4 Comments
    CFS
    Feb 17, 2014 17:38 AM

    For a major mining company to increase its profitability, we need either a gold price increase, or a decrease in costs; i.e. a depression.
    Given that I believe the US is going slowly into a monetary collapse (a mini-Wiemar style inflation), I believe the way to maximize profits from mining companies is investment in companies which are increasing resources. It is a bonus, if the company has a small existing production base with which to finance operations increasing resources.
    However full portfolio diversification is more important during these times.

      Feb 17, 2014 17:24 PM

      Yes it is Take a look at the situation concerning AdameraMinerals and KinRoss.

      Sorry about the spelling.

    Feb 17, 2014 17:38 AM

    A few observations…
    1. the write downs, which reflect the revision to perceived value (at the lower gold quote), can get reversed. A higher gold quote, downstream, will correct a lot of things in a hurry.

    The mining industry is somewhat unique in this way. Often times, if a company is on the ropes, there is little if any hope of recovery. But in the mining space, a bull market in the price of the underlying metal can turn a marginal company into a particularly profitable one.

    2. The situation is self correcting, to a point. To the extent that the production can not come on, in an environment of weaker gold prices, the supply is impacted (which will be a positive force on prices downstream).

    Feb 17, 2014 17:25 PM

    Interesting point Relic