Gold and silver prices are down

HappyHarry said:
Are you saying the gold mining stocks are lower than they should be, or higher? I deal in physical metals regularly, but don't hold them for any long term, other than a small amount that I've had for years. I have never really looked at mining stocks until I recently bought Newmont in January, because they mine some copper, as well as silver. It seems that a lot of mining companies I looked at back in January were pretty small market caps, and I try to stick with bit larger companies, in general, when investing in stocks.
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Look at 10 year charts of gold vs gold miners. Gold is up 70% and miners up 0%.

It’s a massive buying opportunity if you think gold’s breakout is real.

I’m biased cause I’m all in on junior gold and silver miners.

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meh said:
I am not sure what exactly he his referring to if it is a new thing. The correlation between GDX and GLD is rather high in recent months. In early April we saw GLD march upwards and GDX lag behind, though GLD gave up those gains by the end of the month. Where I would argue that miners are under-valued is that the demand for gold is increasing yet the long term trend line for GDX is flat or declining, despite inflation. If we entertain the notion that these major miners are about where they should be, they were over-valued in the past. If, conversely, we suppose their valuations were anything close to correct in the past, they are under-valued today. I think the latter is the case, as equities, not to mention bitcoin, have been on fire, drawing investors away from these stocks for reasons having nothing to do with fundamentals and everything to do with speculative appreciation, not to mention the effects of passive investing in ETFs like SPY.
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Gold miners in the past were extremely badly managed, pissing away massive rallies in gold, so a lot of investors swore off the sector. At the height of the last gold bull market (2011), gold miners were paying $1100 an ounce for garbage deposits owned by junior miners that never had a chance at becoming mines.

Today undeveloped gold in the ground is going for $15-25/oz. That’s how overvalued junior miners were in 2011, and how undervalued they are today.
 
richc said:
Value is the price an arms length buyer and seller agree to transact at.

People invest/buy when they think there's a good chance of future price appreciation. But remember everytime someone buys, that means someone else is selling.
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Care to explain the extreme popularity of same day dated options?
 
Win said:
If I was buying market moving amounts of gold like China is, I’d say the same thing that China is saying.
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Good question, why has China been so vocal about its gold buying the last year or two? You’d want to keep that on the down low normally.

It could be they’re trying to encourage other BRICs nations to dump dollars and buy gold, or maybe there’s truth to the rumor they want to establish a gold based BRICS currency.

And why now announce you’re not buying? To bring prices down so you can buy more?
 
meh said:
I don't see a lot of respect for the 200dma on the GDX chart. If it blasts through on the downward trend into the high 20's, I know what I'm going to do.
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Sorry I meant to state the 200 ema (exponential moving average) which is a very reliable predictor of price action.
 
DJBrad said:
Should be about $31.25?
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Yeah, that's what I'm seeing. On downtrends, we went through it in early January, but we bounced off of it in March. We'll have to wait and read the tea leaves when we get there. I'll probably just sit tight at $31.25, versus piling in, but last time when we bounced off, it was followed by a nice run-up.
 
meh said:
Yeah, that's what I'm seeing. On downtrends, we went through it in early January, but we bounced off of it in March. We'll have to wait and read the tea leaves when we get there. I'll probably just sit tight at $31.25, versus piling in, but last time when we bounced off, it was followed by a nice run-up.
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I don’t pay attention to GDX. With gold at $2300, producers are making as much as $1000/oz. Investors won’t be able to dismiss those kind of profits for long.
 
Varmint said:
I don’t pay attention to GDX. With gold at $2300, producers are making as much as $1000/oz. Investors won’t be able to dismiss those kind of profits for long.
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That's my theory, too. It's why I didn't think about taking profits a week or two ago, even though I have to remind myself why I didn't on days like today. :)
 
meh said:
That's my theory, too. It's why I didn't think about taking profits a week or two ago, even though I have to remind myself why I didn't on days like today. :)
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It’s difficult in a strong gold bull market to get in and out of stocks. They can move fast so I prefer to just be patient and hold.

But I’m selling juniors that have bloated their share structure or accepted bad financing deals (Lion One Metals, Cerrado, Orezone, Caliber Mining, Troilus Gold). The brutal bear market has wrecked some very good companies.
 

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