A Miner Case of Depression

267
Wed, Jan 9, 2013 - 1:23pm

Avert your eyes, if necessary. This is not for the faint of heart.

I figured that today would be a good day to check in on some of our favorite miners again. 2012 was a rough year for many of the companies in the sector and the charts below tell the tale. A couple of items to note:

  • I've used 2-year charts because so much of the fun in the metals began two years ago and 5-year charts contain all the shenanigans of 2008, which simply distorts total returns.
  • Note that, for most equities, a major disconnect occurred at the silver price peak of May 2011.
  • I compared the GLD and the SLV to the S&P.
  • For the miners, though, I compared them to either the GLD or the SLV, in order to gauge performance relative to the actual metal. Not that GLD or SLV are actual metal, mind you. The simply serve as a proxy for price on these charts.
  • The candlesticks are the shares themselves. The lines are the comparisons, either S&P, GLD or SLV.
  • I chose these stocks because we've mentioned/followed them before here at TFMR. Feel free to post your own charts in the comments if you feel I've left out a few.

Let's start with GLD and SLV. Since 1/1/11, gold is slightly ahead of the S&P but silver is slightly behind.

The old question is: Do you want the good news first or the bad news? In this case, do you want to see the winners first or the losers? Hmmm...I don't know. Let's start with the losers...those stocks that, for the past two years, have horribly underperformed versus physical metal. First, here's the HUI (Amex Gold Bugs Index). As you can see, the index tracked physical pretty closely through the first four months of 2011 and then it went straight to hell in a handbasket.

And look at these nasty, little devils. MrT pities the fool that be stuck owning these.

Perhaps you thought it would be "safe" to "diversify" into an ETF like the "GDXJ"? Nope.

Or maybe a nice, open-ended fund (so that your advisor cold make a commission - hey, he's gotta eat, too.) Uhhh...not so much.

So, are there any stocks that are, at least, tracking along with physical? Well, there's CDE. Sometimes it beats SLV, sometimes it doesn't but, in the end, it's been hanging in there.

And Silver Wheaton has been tracking silver pretty closely, about as you would expect.

And Randgold is fun. It tends to outperform bullion when price is rising and underperform when price is falling. For equity options players, this is a good one to follow and trade.

So that's all the bad news. How about the good news? I found two actual winners!! Two stocks that have actually outperformed physical metal over the past two years. One junior gold miner and one junior silver. Remember, though, that past performance is definitely not a predictor of future returns. Caution is always warranted.

So, what's the point of all this? Why even jack around with these damn things? Just buy physical metal, take delivery and forget about it. And don't tell me about your IRA. There are plenty of companies out there that can help you to buy bullion within that thing, too.

Stack, stack, stack and BTFD. Your only winning move.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()
Does Feb19 Comex gold close above $1250 on Friday?
YES
76%
NO
24%
Total votes: 173

  267 Comments

ancientmoney Bill of Rights · Jan 9, 2013 - 2:59pm
LVStrapped · Jan 9, 2013 - 3:01pm

Picked up 30oz of fine 999

Picked up 30oz of fine 999 silver silver eagles yesterday, and the LCS was picked dry. Silver running $2 over spot and eagles running 3.50 to 4.00 over spot. I love stacking!!!! 

ancientmoney · Jan 9, 2013 - 3:03pm

Greg Mannarino says:

Mannarino states that the Fed’s threat to stop QE is pure propaganda designed to stall the rally in gold and silver that was getting underway last week.
He states that if the Federal Reserve were to stop printing money, everything would end, and the collapse would be so incredible that people would literally eat each other in the street!

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

This was a topic of Turd's a few days ago . . . full article is at Silverdoctors.

boatman · Jan 9, 2013 - 3:04pm

royal gold

has an excellant looking chart.

tho took a hit today.

RedRiver · Jan 9, 2013 - 3:05pm

Missed one

You missed my favorite, New Gold, NGD this one ticks all the boxes!

Horst · Jan 9, 2013 - 3:08pm

pbfurn

Well, basically it was all luck. I got to the game a little late. Who'd have thought miners would take such a beating after they already were cheap?

Whereby I have to say that miners might not be the great bet that some make them out to be.

Ore grades are declining, energy costs are rising. SRSRocco has gone into detail on this. Miners barely break even right now. Since 2000, on average, precious metals prices have resembled the mining cost. Yep, not only gold and silver have gone up ~7fold, mining costs have gone up by the same multiple. So where are the profits for the mining companies supposed to come from?

In case of a PM market mania, physical availability might go towards zero. In that case, people will pile into mining stocks, most likely those that are still cheap. But don't count on it to happen this decade. So some exposure to mining stocks is good at this time, but don't bet your house on them just yet.

Katie Rose · Jan 9, 2013 - 3:15pm

I won't spend money on miners

when I can spend the same amount of money on a greenhouse.

After the initial growing time for lettuce, parsley and other winter crops, we get a return from our greenhouse every single day. It's winter and we have over one foot of snow on the ground, yet the greenhouse is producing all the wonderful cold weather crops we can eat.

Don't get me wrong, I believe in metals and stacking. I've been stacking for a number of years. But when something clearly is not working (miners, playing the market) why not put your resources into something that does work???

A 12 x 24 greenhouse is a miraculous thing!

Friends call mine "Katie's Jungle" because it's just about impossible to get into in the summer. Lots and lots of happy plants. wink

HiHo_Silver · Jan 9, 2013 - 3:35pm

Gold and Silver Registration in Illinois

https://www.thedailybell.com/28559/Gold-and-Silver-Registration-in-Illinois

First the guns, then the pensions, then gold… They can't get to my coffee stash though, I'll eat it before they can take it.

HiHo_Silver · Jan 9, 2013 - 3:44pm
StevenBHorse · Jan 9, 2013 - 3:45pm
beinki · Jan 9, 2013 - 3:46pm
goodwill ancientmoney · Jan 9, 2013 - 3:47pm

@Ancientmoney: Re IRA

Thanks for your response. I am completely on board with you. In doing research on this topic, I found a company called Broad Financial. They have a product called a checking IRA, which directs you to set up an LLC and transfer the assets into the LLC. They claim you can set up a gold IRA and take physical possession of the physical metal. ( provided it meets the accepted coins etc... allowed ( ie. eagles, maples, etc...)

ancientmoney StevenBHorse · Jan 9, 2013 - 3:50pm

@StevenBHorse . . . Thanks!

I have one, got it for a few bucks at a estate sale. 

Maybe the only miner I can make alittle money on.

ancientmoney · Jan 9, 2013 - 3:57pm

@Bill of Rights . . . explain this to Obummer gun-runner

The war on guns will likely be as effective as the War on Drugs. By the way, let's not forget that Eric Holder and Obama are still responsible for a few hundred gun deaths from Fast and Furious, a clandestine CIA or FBI gun-running operation to Mexican drug cartels.

clip_image003

Hoping to learn · Jan 9, 2013 - 3:58pm

Mr.Fix and ancientmoney

Thank you both for the props and kind words of hope, I need them.I have been first once before when I was actually trying, so keep on trying, it is possible. I do not wish ill for the world or our economy, but I wish we had a small scare to wake up the masses to the danger that lay ahead of us if we do not get our act together. I feel China will be the leader in making this move whether it be in hoarding the metal itself, or in mating their currency to gold or to a basket of sort. When another country adopts a Gold backed monetary policy, they will push aside the U.S. as the reserve currency of the world. I wish I was smart enough to profit from what will happen. Any thoughts out there on what to do besides stacking?

Bill of Rights · Jan 9, 2013 - 4:01pm

LMAO!

Harry Reid slipped a amendment into the Patient Affordable are Act (Obama Care) to keep the NRA on his side during his reelection bid..

Senate amendment 3276, Sec 2716, part c “Protection of Second Amendment Rights”
Government cannot collect: “…any information relating to…(A) The lawful ownership or possession of a firearm or ammunition”
https://www.youtube.com/watch?v=cBtVMdBuWww&feature=player_embedded Ha ha ha ha Liberal Idiots...
Urban Roman · Jan 9, 2013 - 4:03pm

LCS Report

Went to the LCS over lunch ... it's quite a small LCS. They were out of silver. As in bulk silver, the 90%, the generic rounds, the scratched-up ASEs. Or at least they didn't have any that they wanted to part with at spot+1.25. 

So I looked at their gold. ... Ended up buying a few Dos Pesos coins from Mexico. Smaller than dimes. For the attractive price of $82.

ag1969 · Jan 9, 2013 - 4:09pm

So if I am reading everything correctly here today......

Obama is considering taking away guns with an executive order, but executive orders only apply to the executive branch, ergo, the executive branch is going to have their guns taken away and everyone else need not comply. What a happy day!

Hoping to learn · Jan 9, 2013 - 4:17pm

tonight 7 pm

Larry Kudlow is doing a report tonight at 7 pm on CNBC about Obamas gun control actions.

ancientmoney Hoping to learn · Jan 9, 2013 - 4:28pm

@Hoping to Learn . . .

What else to do besides stacking? Maybe learn Mandarin . . .

ancientmoney HiHo_Silver · Jan 9, 2013 - 4:32pm

@HiHo_Silver . . .

Thanks for that link re" IL bill on PM reg. Here is some context, taken from the article:

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

"Thanks to economist Gary North for this one. The bill, Illinois SB3144, passed the state senate in the spring and was handed off to the house this fall. With three amendments introduced in the house, it now sits in committee (see ilga.gov for progress). But we're not ready to announce from our perspective that this is the rollout of an elite dominant social theme

That's because we haven't seen enough of a run-up. The power elite we analyze seem to promote themes with significant intensity. This news is not being marshaled at a high level among many mainstream publications, from what we can tell.

But that won't make it a meme, in our view. You see, there is no fear-based justification. Ideally, such a significant move would only come after due provocation. Notice a renewed push for gun control is being launched after two terrible shootings in particular that received extensive nationwide media attention.

This is how power elite promotions work. The provocation is widely disseminated and the result flows naturally out of the issue at hand. Whether the issue at hand is merely an unfortunate incident or something else is an argument for another day. In this case, the provocations seem strangely lacking.

In fact, we mention a dominant social theme above but it is not one that has been brought to bear.

As it has not, we provided a rationale that might work. The purchase of gold and silver has to be tied to some national security issue. That's how things seem to work currently.

But we're not aware that such a justification has been offered regarding this state bill. That rationale surely would involve "terrorists" using gold and silver to pursue various nefarious acts."

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

Maybe the airplane loaded with gold that recently landed in Turkey will all of a sudden turn out to be payoff to Russia by Iran for high-tech missiles or something . . . gotta make the people think, "gold bad, govy good, guns bad, govy good."

Hang10-Hawaii · Jan 9, 2013 - 4:41pm

Constitution 101 for my elected officials

As many of you may have gathered from my previous posts, I write to my elected officials every Friday (it makes me feel better, even tho it does no good). I even send them pocket sized copies of the Declaration of Independence, Constitution and Bill of Rights for Christmas :-) I start all of my correspondence to them with the following... -------------------------------------------------------------------------------- Dear Mr/Mrs Congresscritter- May I remind you that the oath you took when entering office was: “I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God” I’m assuming that since you took that oath with no reservations, you believe that the Constitution is the supreme law of the land, and in plain language clearly outlines each individual's natural rights, states' rights, and the limited powers delegated to the Federal Government - and that it means what it says. The most important part of the Constitution is the Bill of Rights, which codifies our natural rights. Natural rights are innate, and not granted by the government – they are to be protected by the government. Regarding these rights, the Declaration of Independence clearly states “that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.” ---------------------------------------------------------------------- I then follow my little intro with whatever gripe I have about their dereliction of duty - in the example below, it's regarding their stupefying view of the Second Amendment. --------------------------------------------------------------------- Since you took an oath to “support and defend the Constitution”, I fully expect you to protect the Second Amendment, which reads: “A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed” You’ll note that there are no caveats, qualifications or restrictions on the types of arms or the manner in which individuals may bear them. This was not an oversight. The 4th Amendment uses the qualifier, “unreasonable”, in the context of searches and seizures. You’ll not find anything like that with regards to the 2nd Amendment, so all of the current verbiage being used today, like “common sense”, or “reasonable” etc., are totally irrelevant. It’s very clear that the framers of the Constitution envisioned a well-armed population capable of forming up into a militia to protect their sovereignty. ------------------------------------------------------------------ Obviously, your mileage may vary with this approach, but I have copies of the hundreds of emails I've sent to them over the years. The response rate from my House Rep is about 15%, for my Senators it's between 1 and 2%. No wonder their approval rating is less than 10% these days. I'm sure I'm on some list somewhere. Oh well, at least I'm in good company here in Turdville!

ltcolkilgore HiHo_Silver · Jan 9, 2013 - 4:45pm

HiHo_Silver

Good thing I never buy more than $499.99 at a time...

winkwinkyescool

tyberious · Jan 9, 2013 - 4:48pm
Hoping to learn ancientmoney · Jan 9, 2013 - 4:54pm

sound advise

learn Mandarin....That's the same advise Bruce Willis gets in "LOOPERS"

Maybe Hollywood does understand some things.

ancientmoney Bill of Rights · Jan 9, 2013 - 4:56pm

@BoR . . . what sweet irony!

Reid infects Obamacare. Yes!!!!!!

I wonder how Obama will word his Executive Order to ban guns without undoing Obamacare?

ancientmoney Hoping to learn · Jan 9, 2013 - 4:58pm

@Hoping to Learn . . .

was Loopers worth going to see?

achmachat · Jan 9, 2013 - 5:01pm

Mandarin

I learnt some Mandarin... on top of that, I am fluent in 5 other languages and understand and communicate in some more... now what?

should I ask around if somebody needs an interpreter for their travels?

by the way... I think the fastest way to learn a language is when your parents in law don't speak anything else. That's how I know Mandarin...

ancientmoney achmachat · Jan 9, 2013 - 5:09pm

achmachat . . . re: Mandarin

what to do now? You may have a leg up in dealing with the Chinese, who seem to be in line to inherit what the west is about to lose. Especially if you are still pretty young (under 50). The Chinese may come to own much of what Jim Willie refers to as the Untied States . . .

jaw777 · Jan 9, 2013 - 5:12pm

@Bill of Rights

Thank you for that post. 1000 hat tips to you. It made my day. Although I still plan to take delivery of my new Beretta M9a1!

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