Precious metal miners: fathoming the abyss

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Sun, Dec 10, 2017 - 5:17pm (Reply to #221)
Gwyde
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Pre-positioning for a January rally

For the seventh consecutive year, there has been no end-of-year precious metals rally. About the best we got were some strong September months, after which a new slide was taking grip, occasionally interrupted by a half hearted recovery attempt. After median wages have been lagging inflation for decades, it may come as no surprise that precious metal jewels don't often find their way any more under the Christmas trees of the working class. Whereas for the more affluent, the crowding out effect takes its toll.

2017 is no exception, we've witnessed strong gold prices in August and September and meanwhile, we're down over $150 from the year high. The silver lining being that gold still holds on to a decent gain as compared to last year's December trough. Typically November and December also are the months for tax-loss selling, affecting precious metal miners quite often...

Throughout November we indeed witnessed miners sliding almost relentlessly and leveraging down weaker precious metal prices. SIL/Silver took a dive bringing that ratio to a bottom around Nov 20. HUI/Gold kept on weakening until a few days ago. The gold miner pulse page tells you all in a few graphs.

Despite silver breaking below $16 (and now back to the Dec 2016 low), silver miners more or less ignored excessive silver weakness. SIL/silver recovered, with the silver miner quotes tempering the slide of the metal. The similar story for gold miners still needs confirmation. HUI/Gold bottomed below 0.140 early last week, closing at 0.142 upon a timed uptick of the yellow metal. Seems as though gold bugs are pre-positioning for a January rally.

In the mean time a toll has been paid: the long term gain of our contributor driven Explorer and Junior Miners spreadsheet is down to 3.38%. Several of our strongholds have seen their extended gains trimmed lately. The number of long term advances (7) still balances that of long term declines. 

Gwyde
Sat, Dec 16, 2017 - 2:56pm (Reply to #222)
Gwyde
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Something brewing underneath

American stock markets resumed their uptrend last week. Nasdaq added 1.4%, while the DJ-Ind was up 1.3% and the S&P lagged with a 0.92% weekly advance.

Precious metals have been oscillating over the week, with gold adding 0.55%. Silver is up 1.52% to $16.06 after a disproportionate slide early December. Platinum added 0.72% to $892, yet it posted a historic high Au:Pt ratio at 1.427 only last Thursday: Platinum is historically cheap while Palladium added another 1.71% to $1014, expanding thereby the Pt-Pd price inversion to a record $143 last Thursday.

The HUI miners index kept eroding until precious metals strengthening ahead of the FED rate hike on Wednesday sparked a 3.68% rally. No follow through unfortunately which limits the weekly advance of the HUI to 1.64% with HUI/Gold up only little (0.143) after a rocky ride. Something is brewing underneath... The gold miner pulse page tells more in a few graphs.

The Miners' Performance page shows advances (40) almost balancing declines (42 miners), since last evaluation on Dec 1. Yet both median and average declines receded a little. The long term gain of our contributor driven Explorer and Junior Miners spreadsheet sweetened to 5.81%. B2Gold switches side, joining long term advances (8 stocks) again, which now outnumber declines (6). Almaden Min. and Liberty Gold advanced double digits. Mirasol (-2.45%) and Osisko Gold Royalties (-3.06%) led declines. 

Gwyde
Sun, Dec 24, 2017 - 7:36pm (Reply to #222)
Gwyde
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Lucky break...

Happy Xmas and best wishes for 2018.

The forum post of December 10 "Pre-positioning for a January rally" was rather well timed: lucky break... We've witnessed precious metals recovering from their early December lows with miners responding favorably. Both HUI/Gold and Sil/Silver made a nice recovery. The graphs on the gold miner pulse page illustrate this quite remarkable turnaround.

Yet not all gold glitters equally: the Novo Gold press release caused major havoc. The explorer nosedived 25% with a follow-through 10% slide on Friday. At C$3.55 all speculative rally gains are wiped away. Yet I didn't read anything startling: gold nuggets incrusted in sand/sandstone are far apart, as such any statistically representative sample needs to be larger than the diamond drills taken earlier... and that technique is not easily scalable. Alluvial gold should be concentrated in the seabed near the mouth of rivers or in the riverbed where water speed is slow. Absence of gold on paleo islands was checked.

The gold is where it's expected. Preliminary grade indications are about half an ounce per tonne. This type of ore is very easily processed: free milling, high gold recovery. I will take Novo gold on board the contributor driven explorer and junior miner list at its Friday close. Can it go lower? Of course, but much of the downward risk has waned after the slide, while the upside potential has grown. Last week has been pretty rewarding for the list as it advanced well over 5% to a 11.44% long term gain. Cap weighted we're even better off (+34.3%) since the higher gains are realized for some of the mid-caps such as IVN, PVG and MAG/MVG. Sandstorm made it above break-even again: as such the number of advances (9) now outnumbers declines (5) more conclusively.

Gwyde
Sun, Jan 7, 2018 - 2:56pm (Reply to #224)
Gwyde
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A jittery start of 2018

In the early phases of a miner recovery (or miner bull market if it gets legs) the larger gains are not found among the better miners: instead some risky bets often prove more rewarding. However those also are the miners or explorers which suffered most during the downturn.

For the past month of December, the gold medal among our 'GoldMinerPulse-list goes to... Eco Oro Minerals (EOM.cn). The stock about doubled even though no news hit the wires. Rumours must have been at the origin of the surge. Eco Oro Min. used to be down over 95% on our GMP list. It now mitigated its loss to about 92%... still more than tenbagger to go for break-even.

Miners have been responding to precious metals since New year (they chose to ignore Gold regaining $1300 by end 2017). A jittery response, both up and down: even though gold lost only marginally on Friday, miners gave back some of the weekly gain. Our contributor driven explorer and junior miner list added 0.68% over the week. You were better off with GDX or GDXJ but we kept ahead of GOEX and SIL.

Novo Gold was taken on board at CAD 3.55. As I warned we could go lower (and we did). Yet by now the Australian explorer posts a nice little gain since entry.

Gwyde
Sat, Jan 13, 2018 - 6:44pm (Reply to #225)
Gwyde
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Mining shares rollercoaster

Precious metals have been rising for three days now, though the dollar rolling over may turn the picture bleak in euro. After sliding on a marginal gold retreat early last week miners picked up steam, rallying till the Friday close. HUI/Gold firmed to 0.151. You can find more on the gold miner pulse page. The first two trading weeks of 2018 were all but a straight line up. After a 3 day slide the HUI was flat for the year by the Tuesday close. It now is up 4.7% YTD.

Among the miners in the GMP list, advances outnumber declines 50 against 32 since Dec 29, with the beaten up tail section doing quite well. The palm for January goes to Primero Mining, up over 170%. Remember that Primero needed selling its Canadian Black Fox mine to raise cash. See Primero Mining from heaven to hell. With a burdensome streaming contract on its remaining San Dimas mine, Primero was a sitting duck. First Majestic now has made a friendly take-over bid; an arrangement with WPM on the streaming contract will make San Dimas viable again.

Mitigated results for our contributor driven explorer and junior miner list: down 0.65% for the week and lagging its peers. Ivanhoe gave back some of its gain and Novo slid into the red. Continental Gold and Osisko firming well couldn't compensate.

Gwyde
Tue, Jan 23, 2018 - 1:13pm
DOOGIE
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fyi, New Micro Cap Near Term Producer with Gold Royalties

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PS It's a buy imo under $0.30

KD
Tue, Feb 13, 2018 - 4:40am (Reply to #226)
Gwyde
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Gold miners persistently lagging the metal

Gold miners persistently lagging the metal " titles the latest blog article. A miner rally of a few days, responding to a gold recovery isn't going to revert the situation. It will merely mitigate losses incurred over the past few weeks.

Gwyde
Thu, Mar 29, 2018 - 8:40am (Reply to #228)
Gwyde
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Wat may spark the next miner rally?

'Gold Miners persistently lagging the metal' (as in previous posting) raises one question: 

Wat may spark the next miner rally?

In the latest blog article some specialists come up with an answer, while yours truly also adds his grain of salt.

Gwyde
Sun, May 13, 2018 - 2:51pm (Reply to #229)
Gwyde
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Be careful what you ask for...

The article mentioned in last post: What may spark the next miner rally? was not far off track. The perspective drawn has been fulfilled to some extent, though not in the way hoped for. With the greenback regaining strength over the past month, precious metals (quoted in USD) had a hard time. However when expressed in the currencies of most gold / silver producers, mining revenues weren't shrinking at all. As a result miners have been quite resilient, with HUI/Gold off its low and holding on to 0.138 lately. Too soon for crying out victory, yet the grinding slide of HUI/Gold with miners persistently lagging the metals now seems having halted. The gold miner pulse page still is updated weekly. You find data as of last Friday.

When investing in this sector, avoiding or cutting losses is essential. That's why I added a new article combining fundamental elements for a large number of miners to tactical considerations. As the article includes data going back before the 2012-15 gold miner bear market it deserves being titled: Long term performance of gold miners

Enjoy reading! 

Gwyde
Mon, May 28, 2018 - 3:39am (Reply to #226)
Gwyde
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Mitigating risk

If there's any recipe to avoid losing with a miner portfolio over the long run, mitigating risk is the backbone. 

With gold still in a trading range, posting higher lows in successive corrections but unable to break above the $1360 ceiling since summer 2016, now is the time to shuffle in the contributor driven explorer and junior miner portfolio.

For next update, I will take on board Franco Nevada (since long a stronghold of the 'benchmark' section) and Randgold (outperforming over the long haul) on board in the portfolio. Doing so we also leave aside the principle of investing only in junior miners and explorers. 

Meawhile 'Liberty Gold' (LGD.TO) (an explorer formerly known as Pilot Gold) and prospect generator Almaden Minerals (AMM.TO) will be escorted to the 'exile' sheet of poor investments. 

Since a few weeks, the HUI/Gold ratio seems put at 0.138 (marginally up since bottoming in April). With the yellow metal struggling to uphold $1300, miners start showing some resilience. You find more comments and graphs on the gold miner pulse page.

Gwyde
Tue, Jul 17, 2018 - 10:43am (Reply to #231)
Gwyde
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Is miner resilience preceding a turnaround for precious metals?

The HUI miner index hasn't risen, yet its decline doesn't match that of the yellow metal, bottoming around $1240. This equals the December 12, 2017 low. As a result the HUI/Gold ratio stays level or even is in a slight uptrend after bottoming in the second half of March. HUI/Gold shortly rose above the (declining) 200 dma early July. The gold-miner-pulse page shows the detailed graphs over a 7 months stretch (rising from the Dec 2017 low).

After the friendly take-over bid on Arizona Mining by the Australian South32, our top-performer added another whopping 50% lifting its long term gain near 1400%. You find more info on this and on the recent list changes on the miner performance page.

Meanwhile the contributor driven explorer and junior miner portfolio still is updated weekly. After introducing Randgold (NYSE) and Franco Nevada (TSX quote) the list performance slightly improved (we keep above break even), yet the weighted long term advance is diluted (we replaced 2 nanocaps by 2 large caps). Over the past week, Osisko Mining mitigated its loss and Pretium continued improving. Too bad Oceana Gold and MAG silver spoiled the broth: the weekly list performance is near zero, which still compares well to our benchmark ETFs.

Gwyde
Sat, Aug 25, 2018 - 6:41pm (Reply to #232)
Gwyde
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Recovery rally doesn't cure the disease

Mid August, the HUI miner index plunged to 139: beneath both the Dec 12, 2017 bottom (175) and the Dec 15, 2016 bottom at 163.5. After Friday's rally HUI now posts at 146.8, which still is well below said bottoms. The recovery rally merely alleviates the pain but it doesn't cure the disease. HUI/Gold plunged to 1.21 up only little as gold regains $1200. The gold-miner-pulse page shows the detailed graphs over a 6 months stretch. The miner performance page draws a grim picture on individual miner performance in 6 graphs. Only 11 explorers or miners stay out of the red over the long haul, while equally 11 explorers or miners are down over 95% since the GMP list was initiated in autumn 2010.

Meanwhile the contributor driven explorer and junior miner portfolio still is updated weekly. Since a couple of weeks the long term result is in the red, though the loss now mitigated to 2.12%. Poor comfort we did less bad than our benchmark ETF's over the past few weeks. 

Last week the list advanced 4.19%, which is almost entirely due to the Friday rally. Weekly advances (12) outnumber declines (4). We owe much of the decent advance to the 21% recovery of Ivanhoe Mines. 

Gwyde
Sat, Dec 1, 2018 - 9:39am (Reply to #233)
Gwyde
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Miner bear market continuing...

The big news on the Barrick / Randgold merger temporarily lifted enthusiasm for the (gold)mining industry.

However the effect wore out quite quickly. In the mean time later mergers & acquisitions got less attention:

  • Pan American Silver is to acquire Tahoe Resources
  • Coeur Mining completed the acquisition of Northern Empire (NM.V)

Red Eagle Mining went belly up after the restructuring failed. In the gold miner pulse list, Red Eagle was replaced by Teranga Gold Corporation, a West-African producer located in Senegal. The Miners' Performance page lists how (poorly) most miners did over the long haul. 

Gwyde

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