Miners Have Totally Under Performed the Market - [both silver/gold miners]. Not happy.

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lordbyroniv
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Miners Have Totally Under Performed the Market - [both silver/gold miners]. Not happy.

I thought miners were leveraged to gold/silver?

What a disaster!!!

I would have been better off buying synthetic drek like SLV/GLD/DGP.

Cruel cruel world.

Edited by admin on 11/08/2014 - 06:09
Pyrat
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I feel your pain - just like Bill Clinton

Unfortunately, unlike Bill, I really do feel your pain as I own some miners too.

The best explanation I've heard for this nonsense is that some hedge funds and investment banks have been doing a paired trade where they hedge their precious metal purchases with shorts of miners, or perhaps they are hedging their shorts of miners with a purchase of precious metals. It doesn't seem to make a lot of sense to me. Over the long run, miners (obviously) tend to do better when the price of their output rises.

Other analysts have suggested that if we go back into recession (actually, we never came out of recession) that the market will plunge again and when the paddy wagon comes, they take away the good girls with the bad. In such a scenario, you have people fleeing out of the miners or shorting them in anticipation of a crash this fall, and movement into the physical. If timed right, such a bet would pay handsomely. But it is still far from certain we're going to see another big downturn.

So it isn't a fun situation at the moment. I like the long-run macro outlook for the physical and that should mean higher profits for the miners. However, if we get a short-run pull-back, it can still be gut-wrenching.

Jasper Puddlemaker
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Pyrat wrote: Other analysts

Pyrat wrote:

Other analysts have suggested that if we go back into recession (actually, we never came out of recession) that the market will plunge again and when the paddy wagon comes, they take away the good girls with the bad.

I agree with that part.  Being someone who invests and speculates in the miners I can say that I am holding a lot more cash at the moment than is normal for me, precisely because I think a fast and severe general market downturn is likely, and will take the miners with it.  But I still have my core position, so if I miss out on a few percentage point gains if the market takes off now no big deal.

I don't really agree with the original premise that "miners have totally under performed the market" though.  My mining and exploration portfolio is up several hundred percent more than the metals.  The miners should be doing better considering where metals are, but the right stocks have had incredible increases throughout this bull market.  We are still at the phase where someone who picks the right companies will outperform the metals; someday, when the public jumps in, even the crap companies should outperform if history repeats, but we are not there yet.

Pyrat
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Panic sell off today. What's the story.

Gold and silver are hitting record highs. Earnings look good. The economy looks bad. United States deficits will continue to run wild. Unemployment is terrible. Europe has troubles. We'll probably see a QE3. So, what to do? I know let's dump all our mining shares.

My whole watch list is red and some are down more than 10%.

I don't think the logic that miners are risky but physical is safe makes sense in terms of a paired trade: short miners buy physical. Would you dump XOM because oil prices are hitting new highs?

I sure wouldn't. I'm looking to place stink bids today, but I hope I'm not too early.

Jasper Puddlemaker
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Pyrat wrote: Gold and silver

Pyrat wrote:

Gold and silver are hitting record highs. Earnings look good. The economy looks bad. United States deficits will continue to run wild. Unemployment is terrible. Europe has troubles. We'll probably see a QE3. So, what to do? I know let's dump all our mining shares.

FUBAR! <lol>

Same with me; everything is tanking 3%-8% at the moment.  My portfolio is a mix of  junior producers and royalty, but mostly high-quality explorers.  Nothing I panic over since I know it might take a 1-3 years for most of them to prove out their deposits.  I can't wait to add more, but my biggest mistake is usually buying back in too early during these panics.

Pyrat
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What can you do - LOL

I had a stink bid get hit today and I'm already losing money. I should have bought puts on the S&P. I had the perfect signal. Yesterday I read an article by Jim Cramer saying he was buying back into the market.

Some of the movement is being driven by margin calls. Some people are liquidating everything. As they say, when the paddy wagon comes. I still don't know if this is too early to jump back in. I'm still expecting a scary fall.

maravich44
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GPL Great Panther.

on sale now.

Jasper Puddlemaker
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In case anyone missed JS's share comments...

I suppose everyone has already seen this, but just in case here are some share-related points Jim Sinclair posted this weekend.:

-------------------------------------

5. Thursday and early today you may have witnessed the last great attempt of the Short Cabal to discredit gold shares.
6. Various member of the voluntary Short of Gold Shares Cabal are quietly looking towards the exit.
7. There are quite a few hedge funds now seeking quality gold share positions where the leverage might exceed the percentage leverage left in gold itself.

-------------------------------------

I never bet against Jim :)

For those who are relatively new to this sector, remember:  Sub-groups within the sector have their own bull phases.  The majors, the juniors, and the explorers have their own group timelines.  Don't expect all the groups to launch into mini-bull phases at the same time; they take turns.

Chicken Little
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Weak Mining Stocks

Posted on another thread. Better here. Apologies for 2x post.

OK…….That’s it. Enough beach time. Enough hugging kids and wifie. I have tried to stay away from the fray for several weeks, but things sure are getting interesting and I can’t resist the lure of Turdville.

I have some thoughts re: the PM miner weakness. I can’t claim this as original idea ( I think I first heard this on a KWN Metals report from Dan Norcini) but it piqued my interest and I throw it out here for discussion.

The theory is this: The miners are weak because what we are experiencing right now is currency devaluation. There is a race (dollar, euro, pound yuan) to the bottom. The nation that is most successful in devaluing their currency will achieve a huge international trade advantage. As a result TPTB and individuals are attempting to preserve wealth. Historically, wealth preservation is most efficiently achieved through ownership of commodities, and in particular PHYSICAL GOLD, not paper = miners.

This may explain somewhat why gold is leading and silver at this moment anyway is lagging as silver is considered by some to be an industrial commodity and less so a preserver of wealth (relative to gold).

If you look back at the big run up in PM prices during the 70s, the driving force was inflation. Interest rates were 20% on home mortgages during the late 70s. It was during this period of high inflation that the miners exploded. Some silver and gold miners went up several 1000 percent. We are presently in the early stages of the inflation cycle and hence physical gold is the current champ. As we move deeper into the inflation cycle more of the public will want to participate and protect their purchasing power and they will do that by purchasing low cost miners (paper). Gold at $2000 will be out of reach for many.

Patience is the key here. There will be a trigger at some point the miners will blossom. It might be a merger. Someone might start paying a dividend in the form of metal. Some miner might hit the mother load.

You may have read about Golden Phoenix purchasing 500 000 of its own shares and then canceling the shares. What a great way for a company to increase shareholder value. This may be just the start. PM miners are flush with cash and they need to do something with it. A share buyback program would be great.

Anyway, just my thoughts. Hope we can have some discussion. Thanks Turd for the great site and great insight.

Disclosure: Long EXK, GPL, TK, CMA, and WS

Regards,

Chicken

Invisible Hand
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Thanks for the info Chicken

EXK is disappointing me today. I pulled up the silver chart first thing this morning and was thrilled... for about 5 seconds until I pulled up the EXK chart.

Hopefully we'll see some mid 11's soon. yes  

tread_w_care
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misery loves company

and SVM is making me miserable.

I keep seeing better and better buy prices.  It's got to track silver's ascent at some point?  Right?  RIGHT?!?

__________________

"When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it." - Frederic Bastiat http://en.wikiquote.org/wiki/Fr%C3%A9d%C3%A9ric_Bastiat

lordbyroniv
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My disgust / anger /

My disgust / anger / frustration / madness has only deepened since I started this thread.  :(

I think we need ETF's and ETN's need to go the way of the dodo b4 we will see any action in miners.

Who knows when that will be?

I knew gold and silver were going up........damn,..my execution clearly sucked.

WTF was I thinking??  Wall Street is a crooked crooked lot.  :(

Wooooooooooooooooo izzzzzzzzzz mmmmmmmmmeeeee

Chicken Little
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Woe Is Me

“Disgust, anger, frustration, madness”: strong words Lordbyroniv. What did you think was going to happen when you put your hard earned cash at risk in the PM arena? Did you imagine you would become rich in a day, a month, or a year.

Assuming you did your DD, you know this is not a free market. The EE is trying mightily to push its agenda which is to control the rise of PM prices, not to make you wealthy.

Someone much wiser than myself is often quoted as saying his/her most profitable investments were the ones made by making a right choice and then sitting and waiting.

You have done the first part, you make the right investment choice. NOW comes the hard part, PATIENCE.

I mean no disrespect, but your comments seem to indicate a rather inexperienced investor.

I have been accumulating mining share for several years now and I have gone through many ups and downs. I seldom trade. I try to buy quality and I BTFDs. I am confident I have made the right choice, and I am waiting.

No need for specifics, but I am quite happy with the results so far. On average I am up about 4x. I tell you this not to blow my own horn but to offer encouragement.

Stay the course. You know the fundamentals driving these markets. The fundamentals are stronger than ever. If you have chosen wisely, and you have some quality in your portfolio, its value will not go to zero. Eventually the fundos will prevail and you will be rewarded.

Patience lordbyroniv.

Regards

Chicken

lordbyroniv
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Thx Chicken. I needed

Thx Chicken.

I needed that.

So if not up on Monday...I am to bail?

;)

bobby
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lordbyroniv wrote:o worry

never mind

Invisible Hand
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LOL Sounds like a good plan.

LOL

Sounds like a good plan. wink

I'm just going to think happy thoughts and be thankful that were not still in the summer doldrums.

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Summer doldrums

Well perhaps the summer doldrums have hit the miners, but certainly not the metals. Gold hit  ANOTHER NEW HIGH  this week, and looks poised to break 2000$ usd sometime in the next month. Along with silver should approach 50$ again, and sooner or later ( we would all prefer sooner) the good profitable miners should separate from the bearish general markets.

While other businesses we see reporting diminishing earnings , banks still struggling,  we see the miners like SVM , RVM , etc reporting blowout earnings , and going down in price instead of up. They are following the general markets for some reason, and  eventually that has to end. If silver does get 50$ and gold to 2000$ a miner like SVM will report even stronger earnings, and growth is slated to grow 100% in the next year.

This is one of those rare buying ops where the market has it wrong, and is selling anything and everything in a rush to get to some sort of safety where they arent losing money. The reason why physical gold and silver are gaining even more popularity, as they are not some paper promise, this is  real money that cannot be debased.

Perhaps one day down the road, the miners sitting on huge lumps of US dollars will instead begin paying the dividend in ozs of silver , or grams of gold, as a way to attract those investors who want real safety. I know i would buy into that .

mouser
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Summer doldrums

Well perhaps the summer doldrums have hit the miners, but certainly not the metals. Gold hit  ANOTHER NEW HIGH  this week, and looks poised to break 2000$ usd sometime in the next month. Along with silver should approach 50$ again, and sooner or later ( we would all prefer sooner) the good profitable miners should separate from the bearish general markets.

While other businesses we see reporting diminishing earnings , banks still struggling,  we see the miners like SVM , RVM , etc reporting blowout earnings , and going down in price instead of up. They are following the general markets for some reason, and  eventually that has to end. If silver does get 50$ and gold to 2000$ a miner like SVM will report even stronger earnings, and growth is slated to grow 100% in the next year.

This is one of those rare buying ops where the market has it wrong, and is selling anything and everything in a rush to get to some sort of safety where they arent losing money. The reason why physical gold and silver are gaining even more popularity, as they are not some paper promise, this is  real money that cannot be debased.

Perhaps one day down the road, the miners sitting on huge lumps of US dollars will instead begin paying the dividend in ozs of silver , or grams of gold, as a way to attract those investors who want real safety. I know i would buy into that .

mouser
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I think peeps are beginning

I think peeps are beginning to believe that possibly gold and silver miners may be a smart place to park cash in the current turmoil in the world and the markets.Nice to see some more  of these get back to 52 weeks highs.

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miners had a good day for the

miners had a good day for the most part, and as players return to their desks I expect to see more attention being given to the mining group. And, yes, tread_w_care, SVM is an excellent vehicle; be patient as it is still summer.

Ernie Pantusso
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Silver Miners squeezing the shorts

I apologize if this article was already cited on the forum... It seems there are silver miners who have decided not to wait for the market or the official controlling bodies to get rid of illicit shorting

I alerted my readers last week that a company called SilverCorp has just figured out they are being fucked in more ways than one, but mainly from ass-pirates or short sellers if you will.

I quote, "The Company is purchasing its own shares because it believes that prevailing market conditions have resulted in Silvercorp's shares being undervalued relative to the immediate and long term value of Silvercorp's portfolio of producing and development properties in China and Canada.

The Company notes that the short interest position in its common shares has climbed from 3.6 million as of July 29, 2011 settlement date to 9.6 million as of August 15, 2011 settlement date, the most recent date for which short interest data is known by the Company. Under the existing NCIB the Company intends to acquire up to 10 million common shares. All common shares purchased under the NCIB will be cancelled."

...

Then I stumbled on today's news, in which another, normal, non-tinfoil-zerohedge-silverbugcrazy company- namely that of the entire Pan American Silver Corporation have said the EXACT SAME THING.

I quote, "Pan American is undertaking the Bid because, in the opinion of its board of directors, the market price of its common shares, from time to time, may not fully reflect the underlying value of its mining operations, properties and future growth prospects. The Company believes that in such circumstances, the outstanding common shares represent an appealing investment for Pan American since a portion of the Company's excess cash generated on an annual basis can be invested for an attractive risk adjusted return on capital through the Bid."

http://silvergoldsilver.blogspot.com/2011/08/ceos-of-silver-miners-saying-we-will.html

1 SilverCorp

2 Pan American Silver

3 ... ?

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