Precious Metal Mining Stocks are Nearing Two Decade Lows

PM mining stocks are at 20 year lows, time to catch the falling knife?

Gold and silver mining stocks are making the news again for delving to depths not seen since 2008 as pointed out by Crescat Capital on Twitter.

P/E ratio for metals and mining stocks in the S&P 500 are now retesting the lows of the 2008 bottom.

Max Fischer

Originally tweeted by Max Fischer (@CrescatMax) on 2 Aug 2022.

This in an environment where dividend yields for mining stocks are rising to 2.6% (0.4% less than the fed bond rate for non-ibonds).

As we know, yields can increase with risk such as operations in shale oil production can have the highest yields in the bond market but the least likelihood to make it to maturity due to the risk of the operation. Are gold miners saying they are in higher risk environment or are they merely raising dividends to be more attractive vs the fed rate? $FNV saw sales growth of 3% in Q1, while $GOLD had a sales contraction of 13% in Q1. $NEM saw a similar 11% contraction in Q1, but sales grew back nearly 7% in Q2. All I see is noise in the individual stocks, but the overall trend seems to show the bottom and start of a new cycle for precious metal stocks.

Bears seem confident

Maybe the humongous gold deposit discovered in Uganda is adding fear, uncertainty, and doubt to the global precious metals mix?

Me personally I think mining stocks are pretty bad at giving dividends, but great for adding balance to a portfolio overweight in other sectors. Due to the rather large amount tin foil on my head I’d rather have the base metal in a safety deposit box though.

If you have a prediction for mining stocks and ETFs please leave a comment down below.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

You May Also Like