Wednesday 16 August 2017 The one stop source for free breaking news, expert analysis, and videos on AIM and LSE listed shares


A Tsunami of Selling in Gold Miners Is About to End

By Tom Winnifrith | Friday 16 June 2017


 


In this week's podcast from Palisade Capital Frank Holmes discusses how the GDXJ became just a buying index with no separation of value and little understanding of who was doing well fundamentally. The re-balancing has created a large uncertainty with five billion dollars initially moving into the space and now three billion dollars leaving it. This will affect many of the small and mid cap producers. The investment money is being reallocated to the big names like the Barricks, the Newmonts, and the Goldcorps of the world. Holmes argues that you should use this as an opportunity, as some of these stocks have been sold down indiscriminately even though they are reporting phenomenal fundamentals.

June 16th is the last drop date for names that will be sold, look for opportunities to buy in afterwards and towards the end of the month. You want to be selective and look for those stocks with higher profit margins and high returns on invested capital. His analysis shows that a lot of shareholder value has been destroyed by companies increasing their shares. Only a few companies protected their shareholders wealth, and the large capital flows into GDXJ has tended to cover for those that did not. 

Frank discusses the valuations and pricing methodologies for gold royalty and streaming companies and why these companies have high efficiency ratios. Silver Wheaton for example has one of the highest profit margins per employee. Holnes thinks streaming companies know how to properly ebb and flow within the capital markets.


Filed under:



This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.


Comments

Comments are turned off for this article.




Site by Everywhen