March 6, 2012 at 7:01 am #17591
I’ve been feeling like Joseph of Egypt the first 6 years into his predicted trend. My mining stocks have taken a 30% beating, even as the prices of the metals continue to rise. As far as I can see, the fundamentals have not changed, nor has the trend. Fiat currencies around the world are self-destructing, and the most likely effect is a rash of hyper-inflation melt-downs. This will probably preserve the privileged position of the US dollar for several years, but the trend seems unavoidably hyperinflationary in the USA, too (after the RE and bond bubbles deflate). Even during that “stagflation”, consumer prices are going to rise.
So what do you think of holding on to the mining stocks through 2012? Will the recession of 2012 change anything?
Will the Fed decide to deflate rather than inflate, as they did in the 30s?May 9, 2012 at 6:27 am #27219
I am not sure (of course), but what it seems right now is that the time is ripe to buy some select ones that I have had on my radar for some time. Too bad that for some I can buy no call options (they are too small companies).
I am no expert — this is my opinion only, but I am about to buy some shares and some call options.
NejcMay 9, 2012 at 2:06 pm #27220
Hi Jonathan,i lean towards the conclusion,that we are approaching a bottom in mining shares,as well as uranium in general!!
We might not have reached the absolute bottom yet,at least for gold,and silver shares,but i am convinced,that you will never have the chance to buy exactly at the market bottom!!Most junior producers either in the gold,or in the silver sectors,see a P/E ratio of 2-3,a ratio i have never seen that low in my whole life before!
We do have a buyers’strike,and NOW i can suggest to load up on quality mining shares in an extensive manner.
As a value investor,and contrarian,i seldom have seen such a terrific opportunity to buy Mr.Market!!
Be welcome to drop me a mail… firstname.lastname@example.org
…for some advice i might be able to offer you!!
As a sidenote,everyone has to do DD on his own,this comment is solely based on my personal judgement,and is definitely not intended to be seen as investment recommendation!!
Good luck,and carpe diem,
Martin;))May 12, 2012 at 5:22 pm #27222
I currently own some producing jr mining stocks. I think the long term trends are still in place for the precious metal to rise. Something I have been thinking about is…..why dont these jr mininning stocks, which are producing and generating strong FCF, re-organize themselves as MLP’s? The business models are the exact same as down stream energy MLP’s, the stock prices would see an immediate boost in valuation as the market re-rates them, and it would open them up to a whole new investor base. We are already beginning to see the major players issue dividends. I am surprised activist investor groups have not been more “active” in the space. Seems there is meaningful upside to the investment by simply changing the corporate structure to an MLP and making them more shareholder friendly. Is this thought way off base? Any thoughts are appreciated. Thanks Jim GrafMay 13, 2012 at 3:21 am #27223
James Sinclair of Mineset fame has been telling everyone basically what has been stated above. The big boys can drive down prices for a period of time but need for QE will win out in the end driving prices higher. There are concerns with the deflation developing that gold will be sold to cover lost bets like the recent JPM 2 billion dollar loss or the coming loss in derivatives. This could drive prices down for awhile. The supposition is that prices will be higher in the future. The question then becomes can you sit and tolerate losses if they develop until that happens.May 13, 2012 at 1:55 pm #17938
If mining stocks are meant to be part of the PM investment hedge against fiscal chaos, one thing I have not heard mentioned is the possibility of government nationalization of the mines. It would be pretty hard to hide a mine from the government. In the event of severe currency disruption with forced return to some sort of gold standard currency I wonder if PM mines would be the first victims of nationalization in order to generate viable currency.
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