Digging for Opportunity in Precious Metals, Part 2
This is the "greed" dynamic: accepting a higher level of risk in return for (significantly) greater profit potential. Arithmetic can tell us precisely how much these mining companies should be able to leverage gains in the price of bullion. How much they actually leverage metals prices is the net product of the fear/greed dynamic.
This is where things get interesting. Gold and silver miners must (over time) leverage gains in the prices of the commodities they produce. However, the media have told us again and again that for most of the 12-year bull market in bullion prices the miners have
But it's much more than that. For most of the time they have "underperformed" bullion. This doesn't mean partial leverage, or "only a little" leverage. We're talking about less-than-zero leverage. This can only mean one of two things.
Perhaps we have "the market" telling us that we're witnessing the most intense fear dynamic in market history. Low tide in the precious metals mining sector...for 12 years. Investors fleeing in panic because these companies are reporting
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