The Stock Market, Investments, and Investing Thread
Precious metals are good now because they are undervalued but the problem with them is that they are highly correlated to risk assets. When the market gets spooked, and there is a sell off, the market also sells off gold. Its counterintuitive but that's what happens.

Comment about physical - the immediate loss of value on bid/ask spread, not to mention premiums, is spot on (no pun intended). Have some for emergencies, along with brass (ammo), but keep your powder liquid.

Avoid SLV, PSLV or CEF have the actual metal.

The way to think about precious metals is degrees of risk. They are all basically derivatives of the dollar.

As the dollar weakens, they go up.

Gold is the least risky, then silver, then platinum/palladium.

Then you have the miners. GDX is major miners, GDXJ is the juniors. More leverage in the miners but a lot more risk, especially the juniors.

Then you have speculative companies recommended by newsletters. These have very small floats are very risky. Odds are pretty high that someone is just touting it to offload to the unsuspecting publc.

Somewhere in between are speculative plays like NAK and NG. These companies have huge precious metal reserves but it will take billions to pull that metal out of the ground. The way to think of these is as a long term option on the metals that never expires. NAK is a little more crazy because its in Alaska about an hour from where they fish salmon and the environmentalists are up in arms about their plans. But these companies are just a couple of people with applications for a permit, they aren't actually mining anything and more importantly don't have many employees to pay or equipment to buy.

Another way to play is with royalty companies. Check out FNV and WPM. They front cash to companies that are building a mine, and then get a percentage of all mine revenues. They lend behind the banks, so they get really good rates of return. FNV is a blue chip royalty company, and it pays a dividend; the bad news is investors have already plowed a lot of money into the stock and the dividend yield has declined from about 3% to 1%. Some of the up and coming streamers can be good investments, but they have fewer revenue streams so they are more volatile. FNV might have 50 different projects from which they are getting paid, so if there is a hiccup at any one mine (workers strike, government problems, etc.) it doesn't matter too much. Also, the up and coming streamers often have lent money out and revenues might come on stream in a couple of years, and then may ramp up each year as the mines come on line, so they are like the growth stocks of streamers, but it also means you need to do a lot more due diligence.
Reply


Messages In This Thread
RE: The Stock Market, Investments, and Investing Thread - by Hypno - 03-07-2021, 12:39 PM

Forum Jump:


Users browsing this thread: 14 Guest(s)