Why are gold stocks with strong fundamentals dropping?

J

Jones75

I have Barrick Gold and Newmont Mining stocks, two precious metal companies with solid fundamentals. However their stock prices just keep going south, along with the U.S. $.

Plus with all the stimulus injected into the economy, (inflation) nothing. I know Warren Buffet bought into Barrick this past spring, but then liquidated his shares in the early autumn. Can anyone guess why he would do that?

I'm clued into finance/economics, so this whole situation is leaving me perplexed.
And please don't say it's bitcoin. There can't be that many people that don't understand hard currency.
 
1-Gold has been drifting lower the past 4 months. Miners likely to follow.
2-Buffett trade? I think that's more his team of investors rather than Buffett himself. Buffett would be more long-term. Team pulls out quicker and invests in stuff Buffett wasn't a big fan of such as gold & technology.
 
Jones75 said:
...
I'm clued into finance/economics, so this whole situation is leaving me perplexed.
And please don't say it's bitcoin. There can't be that many people that don't understand hard currency.
More...

Folks like this may have something to do with it. They are now spamming finance channels with their warez.




 
OptionsOptionsOptions said:
Perhaps people do consider Bitcoin to be better than gold for safety of funds. I just bought my first $100 worth of Bitcoin last week and I have no gold.
More...

Safety? Did you notice what Bitcoin did last March when it dropped 60-70% in less than a month? How about Dec 2018? Same case. It does very well in an risk-on environment and gets killed during hard risk-off. We're in a risk-on environment with yields slowly moving higher. Gold does not do well under those conditions. The vaccine and lack of stimulus is also weighing on gold.
 
Most of the larger gold miners are ridiculously undervalued at $1,800+ gold prices.
Many of the big gold miners will produce their entire market cap in free cash flow every 5 years at these prices.

They are reducing debt, increasing dividend yields and launching share buybacks.
If gold just stays above $1,800+ these companies are just raking in free cash flow.
Share prices will have to increase. Many of these will have net zero debt in 2021 they way cash is flooding in.

Here is some data I organized into a spreadsheet a few days ago.

AAA_Gold_miner_predictions_2021.JPG


BMW_Miners.png
 
I was actively trading GLD, SLV, and SIL futures a few months ago but I would not touch them now. I have tried a few long term bull spreads on GLD, but it all fizzled out and I am out. Our reason is not to ask why but follow obediently what the market is telling us. I am getting into BTC as well. I find it like an alien planet but so far coinbase gave me free money just for my trades. I am still ahead albeit not on appreciation but on freebies.
coinbase.com allows dollar-cost averaging...it is amazing just how much BTC money is at coinbase. I rather buy BTC and average than GLD where there were issues and suspicions on the amount of physical gold. Basically, it comes down to it, who do you trust?
 
Last edited:
Real rates are expected to rise, which is not great for gold.

If the price of gold is going to remain +/- 10%, then you can plug in those ranges into a unit economics model to forecast revenue across these firms. Apply your margins and you’ll arrive at an EPS number. Multiply by forward PE...
 
The US Treasury has $1 trillion in debt maturing in the next 15 days.
All of it has to be rolled over.
And we just need to pray that the same investors will reinvest their maturing debt right back into US bonds. Whatever they don't reinvest, the Fed will need to print and monetize.

Oh yeah, the continuing resolution for fiscal year 2021 has a deadline of Dec 18th.
That will lock in another $1 trillion in deficit spending for the next 9 months.
In addition, they are trying to add another $900+ billion in bailout/stimulus money to the Dec 18th funding bill. Which is all just a down payment for Joe Biden's plans in 2021.

We are looking at $27.4 trillion in US govt debt right now, plus an estimated deficit of $3.5 trillion (or more) within the next 9 months. Also, $6 trillion in US govt debt is maturing in 2021 (the most ever) and all needs to be rolled over, hoping that foreign investors keep their money invested.

Oh yeah, also the Fed balance sheet has grown from $4 trillion to $7.2 trillion in 2020. Expected at least to hit $10 trillion in the next few months. M1 money supply just grew by $810 billion in the final two weeks of November, the most ever. Now M1 money supply is at $6.542 trillion.

M1 Money Supply growth since creation of Fed
1st trillion : 80 years (1913–1993)
2nd trillion : 18 years (1994–2011)
3rd trillion : 5 years (2012–2016)
4th trillion : 4 years (2017–2020)
5th trillion : 4 months (Feb 2020–May 2020)
6th trillion : 6 months (June 2020 - Nov 2020)
7th trillion : probably within the next few weeks.

I'd say gold, silver and bitcoin are setup nicely for 2021.
The only option our govt has is to inflate the debt away.
 
(NVM?) Looks like beginners case study in TA when it comes to ,,going to the south".

If you entered recently - sell & take a small loss.
If you entered in 2015~ - sell & take profit.
If you don't care about that position - leave it, and hopefully it will get another 50% in ~5 years.
 
You must log in or register to reply here.
Back
Top