With commodities running what’s it going to take to drive the junior resource stocks higher?
Brien Lundin, Editor of The Gold Newsletter joins me for a broad look at the commodity sector, which is running, and why precious metals are lagging. As much as commodities are breaking higher, some to all-time highs, the smaller stocks in these resources are not sharing in. We address what needs to happen for the retail investor to start allocating money towards the junior stocks.
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That’s always been an interesting concept – how much metal do the companies hold in reserves (since cash is trash…).
I believe both First Majestic and Endeavour Silver had held back metals in different quarters when they believed the prices were lower than where they’d be in the following quarter, and that seemed like a wise strategy. There is the larger question/concept though of why more mining companies don’t hold at least some inventories of metals on their balance sheets, which have the potential of appreciating more relative to the fiat cash. Due to pressure from institutional investors for growth and cash reserves, I doubt many larger producers will start stacking metals in any meaningful way, although it is a nice notion.
Jason – It occurred to me you may be asking this question, due to Michael Saylor bringing up this same point to Frank Giustra in the Bitcoin versus Gold debate that was hosted on Stansberry a week or so back.
Daniela Cambone just brought onto her show Josh Crumb, to further explore the reason that more companies don’t borrow money at a cheap rate to buy gold for value appreciation, versus their tendency to pay out the cashflow in a dividend. Michael Saylor is clearly biased because his company Microstrategy bought Bitcoin and had a nice return on it, and he is wondering with Gold producers don’t buy gold and hold it for the same reason. Of course most institutional investors would not approve of this and want to see the cashflows and dividends, but it is still an interesting thought to consider.
This point is brought up at the 5:35 min mark on the recent interview with Josh Crumb.
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Goldman Sachs Advisor Weighs in on Bitcoin Gold Debate;
NOW THAT IS A GREAT COMMENT……
I would think , most should consider holding some REAL MONEY….. 🙂
Tier One Asset’s, kissing cousin , JPM. likes it… lol
Silver is STUCK…….. as long as the CFTC, SEC are corrupt… silver is stuck in a rut ..
Back in Aug…. there was HOPE….before the election… Now the Game goes on, same as before the Trumpster, held out a little hope for the Hopeful, that things were going to change. NOTHING has changed , the Govt. is in FULL CORRUPTION WORLD WIDE.
JMO……..or just a Mini RANT… 🙂
Dear Jeery. Sadly you are correct about silver.
I wrote the Senate finance committee and told them to leave the PMs out of their tax plan since they failed to Regulate and lost the right to tax that area. I also mentioned that they need to get rid of the “Corporate Person” for felony convictions under Citizens United, stop Civil penalties for criminal acts and convict “real people” for criminal actions who are not “too big to fail”. I wonder which trash can that suggestion landed in.
Guys, don’t let short term action corrupt your assessments of silver. It has performed superbly following its August high and is building a strong base from which to launch its next big move. In fact, silver has never acted so well following a high in the metals. It is still up 120%+ since the low last March while gold is up about 20%, just one-sixth as much.
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=D&yr=1&mn=2&dy=0&id=p90810863495
(SAND) (SSL) Sandstorm Gold Royalties Announces Record 2021 First Quarter Results
29 Apr 2021
> Record attributable gold equivalent ounces sold1 of 17,444 ounces (Q1 2020 — 13,393 ounces);
> Record revenue of $31.0 million (Q1 2020 — $21.3 million);
> Record cash flows from operating activities, excluding changes in non-cash working capital1 of $23.0 million (Q1 2020 — $14.4 million);
> Average cash cost per attributable gold equivalent ounce1 of $307 resulting in record cash operating margins1 of $1,470 per ounce (Q1 2020 — $314 per ounce and $1,279 per ounce respectively);
> Net income of $5.0 million (Q1 2020 — net loss of $10.3 million);
> Capital: As at March 31, 2021, Sandstorm has a strong balance sheet with over $140 million in cash and over $52 million in equity and debt investments. When combined with an undrawn revolving credit facility of $225 million, strong operating cash flows, and the sale of non-core investments, Sandstorm expects to have significant capital available to propel the Company into the next phase of growth.
Copper Boom Is Just Beginning for the CEO of Biggest Gold Miner
By Daniela Sirtori-Cortina – April 29, 2021
“Copper may be flirting with record highs but the metal is far from peaking as the energy transition revs up,” according to Newmont Corp. Chief Executive Officer Tom Palmer.
“Futures hit $10,000 a metric ton on Thursday for the first time since 2011 as mines struggle to keep up with surging demand. Newmont, the world’s largest gold producer, is increasing exposure to copper through several “mega projects,” Palmer said on an earnings call. Even if just one materializes, copper will account for 15-20% of the company’s total output by the end of the decade,” he said.
Lawrence Lepard: The Fed Is a Runaway Printing Machine
Palisades Radio – Apr 27, 2021
“Tom welcomes Lawrence Lepard of Equity Management Associates back to the show. Lawrence discusses the collapsing global debt bubble and what it would take to avoid a a major economic collapse. The system would need to generate enough inflation to grow GDP, but that would likely require further debt.”
Tavi Costa: Government is Trying to Hide Real Inflation
Palisades Radio – Apr 29, 2021
“Tom welcomes back Tavi Costa of Crescat Capital to the show. Tavi discusses why 2021 could be worse due to stimulus and fiscal deficit spending. The Fed has been buying 50 to 60% of all treasuries, and we see additional issuance of longer-duration treasuries. The Fed must continue to suppress interest rates to permit the government to spend and invest at the current rates. This is also required to justify the record multiples we see in the equities and corporate bonds. Investors are starting to buy physical assets to offset this dilution of money.”
SLV: Paper Silver Is Being Abandoned For Physical As SilverSqueeze2 Beckons
Apr. 27, 2021 – Austrolib – Seeking Alpha
> Since its founding in 2006 until February, SLV has been the most popular method for silver investment. Not anymore, with SLV holdings falling fast as the price of silver rises.
> It’s not just SLV. Demand appears to be focused on the physical silver markets as total silver holdings across all paper silver holdings have been falling since March.
This is not bearish for silver at all, see palladium for example, paper holdings of which have been in freefall for 6 years but palladium keeps making new highs.
> The stresses on the physical silver markets are apparent in the persistently high coin premiums and a drain of over 37 million ounces from the Comex since the February SilverSqueeze.
> Craig Hemke at SprottMoney is calling for SilverSqueeze2 on May 1 to coincide with May silver futures deliveries. May 1 is also the anniversary of gold confiscation back in 1933.
The People Have the Power
April 27, 2021 – Craig Hemke – Sprott Money
“With this in mind, a grassroots effort to buy and hold physical silver took hold in late January and lasted into early February. The sudden rush of physical silver purchases drained the existing physical supply and created a stress in the just-in-time delivery system that the bullion banks maintain.”
“The effort was substantial enough that even the LBMA, in their Q1 silver report, admitted to a physical supply strain.”
“Well, how about that? If people acting individually around the globe had caused “concerns about the potential availability of metal” back in February, then why the heck shouldn’t the collective group have another go at it?”
“And when it dawned on me that we are approaching the 10-year anniversary of the most egregious bout of overt price manipulation that many of us have ever witnessed—The May Day Massacre of 2011—the idea crystalized in my head that we should try to find out for ourselves where we stand.”
“If I go out and buy 100 ounces of silver today, there is no impact. But if I and about 1,000,000 of my friends all decide to buy and take delivery of 100 ounces of physical silver over the next few months…well, that’s another thing altogether. It’s not the person who has the power, it’s the people who have the power.”
“And then, if price does move higher, let’s watch closely to see how the supposed “regulators” respond. Over the past year, the prices of many commodities have more than doubled. Copper has soared. Corn and soybeans are up nearly 100% and lumber prices are up five-fold. Curiously, the head of the U.S. CFTC has never spoken publicly about those price moves, which are primarily driven by physical supply and demand. However, after physical demand drove the COMEX silver price just 7% higher on February 1, Commissioner Benham proudly proclaimed that the futures market participants had “tamped down” price. Ask yourself, why is there no concern for any other commodity rising in price but major concern regarding a small rally in silver?”
https://www.sprottmoney.com/blog/The-People-Have-the-Power-Craig-Hemke-April-27-2021
Silver Squeeze 2.0 – A Raid On Physical Silver
Soar Financial – April 26, 2021
“We welcome Craig Hemke, Founder of TF Metals Report and contributor to Sprott Money about the planned Silver Raid and #SilverSqueeze​ 2.0 for #SFLive​ Ep 174.”
Since May 1st is this Saturday, when the markets aren’t open, then it will be interesting to see if there is any action for Friday 04/30/21 for the #SilverSqueeze 2.0 movement, or if it waits until the beginning of next week to manifest.
The first #SilverSqueeze 1.0 did move the needle some along with moves in some of the dual-listed Silver mining stocks for a few days, but then it was done, and nicely marked the top in the Silver price action as new higher margin requirements were immediately implemented by the Comex.
I’m not expecting #SilverSqueeze 2.0 to do much more, and after the first one fizzled out pretty quickly, it’s possible there won’t be as much momentum behind this one now the most retail investors realized moving the needle on the Silver market is a much different animal, compared to moving up the shares of Hertz or GameStop or AMC theaters.
This is likely going to be another fleeting market moment, and it’s unlikely we’ll see any big move or anything that sticks. Having voiced my reservations, as someone with a large portfolio of Silver miners, I’m always happy when there is any focus put onto the Silver markets, and this tiny niche sector. It would be nice if a percentage of new retail investors find the Silver space and decide to stick around and learn more about the precious metals and related miners.
Ever Upward!
Great comments……
Thanks OOTB.
Sometimes expressing oneself is cathartic. Buy more silver…buy more silver…
NEM: https://postimg.cc/7JZDKHgW
Now testing 2 year high volume level.
Trying a new theory today: Since they alternate days with my miners, I moved some money from those stocks that underperformed over 8 months into those that performed the best. There is no fundamental or technical reason supporting such a move, but the there is no fundamental or technical reason for some doing better than others. The things I do….hmmm
Another busy week for the wolfster. Appreciate all the info being shared so I will quickly add that anyone interested in the black wolf copper it will be releasing drill results next week….for uranium buffs here’s a great interview with Rick Rule about it. https://m.youtube.com/watch?v=UIWGmrnYJFI
How about if they start owning some gold and silver on their balance sheets. Next time Corey interviews a gold/silver miner, ask them how much of their product do they stand behind on their balance sheets. Thank you