John Rubino, publisher of the John Rubino newsletter on Substack, joins us to review some of the various risks and also opportunities in the gold and silver stocks, and highlights a ray of light within the precious metals companies. We discuss the muted response so far from the PM miners even as gold has broken out to new high and has been holding in the mid to high $2100’s. We go on to review a number of potential macroeconomic and geopolitical risks to the mining stocks that may have some generalist shying away from the sector at present. However, John points out that when the PM stocks finally start to run higher, that it will finally bring in the momentum chasing traders that don’t want to do deep analysis in the stocks, but just want to see an overall sector that is trending higher.
With regards to the gold producers, we discuss the improving margins as metals prices move back up, but that these companies have been sitting on their cash flows or paying down debt; but not actively putting that money to work with acquisitions or growth investment into the juniors. One ray of light John sees for the PM sector is with the royalty companies, as they can offer funds to cash-starved mining companies at a better cost of capital than traditional financial institutions and create a royalty in the process. This royalty creation option is preferred by some junior companies to avoid further diluting down existing shareholders at the equity level; and this presents a good environment for royalty and streaming companies to do accretive transactions.
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