Mike Larson – The Shift Toward Value and Safer Assets Continues, How Much Longer Will This Continue?

February 18, 2022

Mike Larson, Editor of The Safe Money Report joins us to recap the recent market moves that continue to favor safer investments and sell growth and tech stocks. He points to a couple key divergences within the markets that further show money flows are very different this year. We also ask just how long some investors can hang on to the losing growth trade. 




Click here to learn more about Mike’s Safe Money Report.

    Feb 18, 2022 18:59 AM

    SPQ :
    NatGas Has Topped
    PMs Topping

    Feb 18, 2022 18:22 AM

    2nd & last tranche -CDE @ 4.229. still 14% cash.

      Feb 18, 2022 18:46 AM

      There is something bad happening at CDE.

        Feb 18, 2022 18:39 PM

        They missed analyst earning estimates, slightly reduced their production projections for 2022, and mentioned that their capex went up slightly on their development project, so some selloff was warranted, but not nearly as much as we’ve seen the last few days, so it’s been a typical emotional over-reaction and dump of shares in CDE, like we’ve seen many times in other miners. Coeur isn’t going out of business and didn’t suddenly become 20% less valuable overnight, especially if Silver, Gold, Zinc, and Lead can continue moving higher in 2022.

        I’ve traded CDE for over 12 years now, and when it moves (up or down) it moves big. I’ve made a lot of money in Coeur over the year and it had great moves during most of the big rallies in silver/gold stocks in the past. Because sentiment is so negative towards it lately, it is becoming increasingly more interesting to me as a mid-tier producer of precious and base metals. The other kicker moving into 2023 will be them bringing their Silvertip mine back into production (which they were punished for last year and are still being punished for this year when people do crude year over year production and economic comparisons, without factoring in they have a player in the penalty box that eventually be back out on the ice and scoring points again in about a year).

          Feb 18, 2022 18:57 PM

          Also, as for today’s action, the vast majority of the PM mining stocks are in the red on the day, so that action is just par for the course. I picked up a bit more CDE today at $4.28.

          Feb 18, 2022 18:09 PM

          I confirm CDE can move very big, quickly. In the 2007-08 debacle I bought near a low and it doubled in less than a month.

          Feb 19, 2022 19:06 AM

          Yeah, some are worried that for Coeur to finish their Rochester Expansion development, that they may need to raise to dilute shareholders, and that was a big negative reaction from the earnings call announcement and another reason, besides the earnings miss, and lower projected gold production for this year that CDE sold off so hard.

          However, a few things to consider. As Taylor noted in his piece:

          “Once the Rochester Expansion is complete, production will ramp up to ~8 million ounces of silver per annum and ~77,000 ounces of gold at lower costs, with an average annual free cash flow figure of ~$90 million FY2024 to FY2034. This is based on estimates of a full year of commercial production in FY2024, and it will certainly help Coeur not only to pay down its debt but enjoy a major increase in consolidated free cash flow. However, while this growth is impressive and will drive meaningful earnings growth, the elephant in the room is the weak balance sheet.”

          However, I’d disagree with assigning so little value to Silvertip, as it was already in production up until a year ago, but Coeur took it off-line to explore, expand, and optimize the future development and production of that project and it will be a key contributor to the company again, but Taylor usually errs on the conservative side of estimates, and doesn’t assign much value to development projects, which is not how I personally approach valuing companies. He wants to wait for them to put out their updated economic study first before giving Silvertip much credit, whereas I’m giving it much more credit as mine that was just in production and is getting a reboot that it’s a significant player on the company’s roster of assets, and is just getting a facelift.

          You can see the hesitancy here from T.D. though:

          “Obviously, one could assign value to Silvertip and the Rochester Expansion, which is not entirely captured in FY2023 earnings estimates (only partial growth at Rochester). However, the wild card is if there will be additional share dilution which could offset some of this earnings growth. Given the uncertainty and the fact that a new study will need to be completed on Silvertip to have confidence in a start, I think it’s still too early in my view to assign much value to the British Columbia asset.”

          Again, I’d disagree and say it is not too early to assign more value to Silvertip, but to each their own. I’m sure he’ll update his outlook once the updated economic study comes out for the restart, but at that point the value arbitrage will be more obvious to most investors and analysts, and right now the market isn’t giving them much value for Silvertip at all, and and is punishing the company for the funds needed for the Rochester Expansion, but not giving them value for how significant that will be for costs, margins, and future revenues and free cash flows in 2024.

          Also, everyone is so confident in the future dilution for the Rochester Expansion that they are completely overlooking the big ace in the hole that Coeur has in Sterling, that I don’t see being discussed anywhere. The company’s Sterling development project in Nevada was picked up when they acquired Northern Empire [which I was in when taken over by CDE], (next to the old Corvus Gold projects that Anglogold Ashanti which I was also in when AU acquired them last year, and is also adjacent to Anglogold Ashanti’s own Silicon deposit). Well that Sterling project has increased in intrinsic value in an underappreciated way. Even though AU has been very tight-lipped about Silicon and their plans with the Corvus acquisition, clearly they see a major project there in Nevada along the Walker Lane trend. At one point I thought Coeur may go after Corvus as well to bolt on their projects to Sterling, but now it is increasingly more likely that Coeur will offload Sterling to Anglogold Ashanti, and that would help fund the Rochester Expansion and reboot of Silvertip, without being as dilutive as many are projecting. It makes sense now for Sterling to come into the Anglogold Ashanti umbrella and that would be an accretive divestment for Coeur. Just some food for thought.

    Feb 18, 2022 18:41 PM

    Gold Markets Break Major Barrier

    Christopher Lewis – Thu, February 17, 2022

    “Gold markets have exploded to the upside during the trading session on Thursday as further tension around the Russia/Ukraine border situation has people looking towards safety trades. That being said, the market is very likely to continue being volatile, so would not surprise me at all to see a sudden pullback. I am not calling for that, I am just saying that the market is so concerned about the latest headline now that pretty much anything is possible.”

    “On the other hand, it is just as possible that we may finally break above the $1900 level and go looking towards higher levels. The $1920 level is the next barrier, and then after that we could have a run towards 2100. I think that eventually happens, but it does not have to happen now and that is the point of my analysis. If you are going to buy gold, hope for a little bit of a pullback towards the $1880 level in order to find value.”

    Feb 18, 2022 18:02 PM


      Feb 18, 2022 18:33 PM

      Duly noted Doc. If we get any follow through rallies in the PM sector for the balance of Fantastic February, as the expected Q1 Run we’ve seen in January and February starts to wrap up… would it be wise to trim some runners back to raise funds, to be able to pounce on the March weakness you are suggesting?

      Feb 18, 2022 18:46 PM

      Doc, Beware this year’s positive super bowl indicator for the markets with the Rams win. LOL

    Feb 18, 2022 18:52 PM

    Berkshire Hathaway’s Charlie Munger Says Government Should Ban Bitcoin — Calls Crypto ‘Venereal Disease’

    by Kevin Helms – 23 hours ago

      Feb 18, 2022 18:41 PM

      God bless Charlie. I hope i have cause to worry about vd when I’m 98.