Icbccss&p500usd Discussion Threads

[mattjos] 06/2/2022 11:03

That is pretty scary Chip.The commonly held belief is that, over the longer term, inflation will negate the debt.If we use the rate of Gold price increase over the last 50 years as a proxy for the real rate of inflation (rate at which the spending power of fiat currency is being destroyed), that suggests even at 8% CAGR of inflation, the rate at which debt is growing is much higher.Debt acts as a negative drag on growth as ever increasing sums of money have to channelled into servicing the debt & more recently we've all seen how it takes bigger and bigger successive rounds of stimulus to try and keep growth positive.It is clearly unsustainable but, there are no politically/socially acceptable ways out of the debt trap other than to keep deferring the day of reckoning by doing whatever it takes to keep interest rates near zero.Given the scale of the last round of stimulus across the world & the increase in debt that has resulted in, i cannot see how Central Banks will be able to raise rates to anything like as high as last time (2.5%) before the next financial crisis occurs. Maybe the FED will get to 1.75 - 2% but, that will likely be the peak.I wonder what Volker would do right now?

[chipperfrd] 06/2/2022 10:54

Hi LLB,

I have only mapped out house prices to gold in terms of GBP rather than numbers of oz, but it should be broadly similar. So I would be interested to see if your numbers concur with mine.

I would have a go now but I am in the middle of setting up a new laptop (groan!).

Have a good weekend.

[laurence llewelyn binliner] 06/2/2022 09:18

Thanks Chip, very interesting ..

I started to map how many ounces of Gold bought an average house through the years since 1971, to look at the continuity of the buying power of Gold, and if it had indeed remained relatively static compared to the multiples of our FIAT needed to buy an ounce..

Work in progress unless you have already been there.. :o)

[chipperfrd] 06/2/2022 09:07

Hi Matt,

Yes, exactly.

Further, my CAGR calculation for gold in sterling terms since 1971 = 8.8% pa.

And in US$ terms it is 8% pa.

Silver in US$ is 5.4% pa and in GBP = 6.2% pa.

I have been doing these calcs for many years and even did a cross-check against house prices (including ones I bought and sold along the way) and their CAGRs are broadly in line with gold(£).

I have never believed the official cpi figures.

[mattjos] 05/2/2022 15:37

Thanks Chip.Suggesting fiat currency, by virtue of it's incessant creation, is losing purchasing power by circa 9% per annum?If so, the official reported rate of inflation in the 0 - 2% range over much of that timeframe, is grossly underreporting the reality of the situation, by some 7-8%.With even this 'manipulated' rate of inflation now turning sharply upwards towards the 6-8% range, might we now see Gold put in a corresponding 13-16% gain this year ?

[chipperfrd] 05/2/2022 14:06

Performance of gold since 2000 in multiple currencies.



YEAR
USD
EUR
GBP
AUD
CAD
CNY
JPY
CHF
INR
AVERAGE




2000
-5.3%
1.2%
2.4%
11.2%
-1.9%
-5.4%
5.8%
-4.2%
1.4%
0.6%


2001
2.4%
8.4%
5.3%
12.0%
8.8%
2.4%
18.0%
5.5%
5.8%
7.6%


2002
24.4%
5.5%
12.3%
13.2%
22.9%
24.4%
12.2%
3.5%
23.7%
15.8%


2003
19.6%
-0.2%
8.0%
-10.7%
-1.3%
19.6%
8.1%
7.4%
13.9%
7.2%


2004
5.6%
-2.0%
-1.7%
1.5%
-2.0%
5.6%
0.8%
-3.1%
0.1%
0.5%


2005
18.1%
35.2%
31.6%
25.9%
14.1%
15.1%
35.9%
36.3%
22.8%
26.1%


2006
23.0%
10.4%
8.1%
14.3%
23.3%
19.0%
24.2%
14.1%
20.7%
17.5%


2007
30.9%
18.4%
29.2%
18.0%
12.0%
22.5%
22.5%
21.8%
16.9%
21.4%


2008
5.4%
10.0%
43.0%
30.5%
28.7%
-1.5%
-14.2%
-0.8%
30.0%
14.6%


2009
24.8%
21.8%
13.0%
-1.6%
7.9%
24.8%
27.9%
21.1%
19.2%
17.7%


2010
29.5%
38.6%
34.2%
13.9%
22.8%
25.1%
13.2%
16.8%
24.8%
24.3%


2011
10.2%
13.8%
10.6%
9.9%
12.7%
5.2%
4.5%
10.7%
30.7%
12.0%


2012
7.1%
5.0%
2.4%
5.3%
4.2%
6.0%
20.7%
4.5%
11.1%
7.4%


2013
-28.0%
-30.9%
-29.4%
-16.1%
-23.0%
-30.1%
-12.6%
-29.8%
-19.1%
-24.3%


2014
-1.8%
11.6%
4.4%
7.2%
7.5%
0.7%
11.6%
9.4%
0.2%
5.6%


2015
-10.4%
-0.2%
-5.3%
0.6%
6.8%
-6.2%
-9.9%
-9.7%
-5.9%
-4.5%


2016
8.5%
12.1%
29.7%
9.4%
5.3%
16.1%
5.4%
10.3%
11.4%
12.0%


2017
13.1%
-0.9%
3.3%
4.6%
5.9%
6.0%
9.0%
8.3%
6.3%
6.2%


2018
-1.8%
3.0%
4.3%
9.0%
6.8%
4.1%
-4.2%
-0.8%
7.3%
3.1%


2019
18.3%
21.0%
13.8%
18.7%
12.6%
19.7%
17.2%
16.6%
21.3%
17.7%


2020
25.0%
14.7%
21.2%
14.1%
22.6%
17.2%
18.8%
14.3%
28.0%
19.5%


2021
-3.6%
3.6%
-2.6%
2.2%
-4.3%
-6.1%
7.5%
-0.6%
-1.7%
-0.6%


2022 YTD
0.5%
1.1%
0.1%
1.0%
-0.5%
0.4%
-0.3%
1.0%
0.5%
0.4%


AVERAGE
9.4%
8.7%
10.3%
8.4%
8.3%
8.0%
9.7%
6.6%
11.7%
9.0%

[chipperfrd] 05/2/2022 14:03

Tables 1 & 2 in the header updated.

[the skipper] 31/1/2022 08:54

Thanks Chip. With the company up for sale I hope to see LND at or near the top of the table when you do the February update. There’s been a persistent seller there but the 450k trade this morning might, just might, be the last of his stock going out. That’s the largest trade I’ve seen to date.

[nevgroom] 31/1/2022 07:15

I see ALTN have reinforced their position at the top of the table this morning - What is it with undervaluing these goldies!!?!??!?

[chipperfrd] 30/1/2022 09:58

Hi 'The Skipper',

LND is updated weekly in Table 1 (in the header).

I have added LND to the YTD performance table ready for it's next monthly update at the end of February.
Chip

[the skipper] 29/1/2022 19:40

Thanks Chip, but can you please add Landore to the table? It's performed poorly so far this year, but with a revised MRE due to be issued in early February it is well worth looking at imho.

[chipperfrd] 29/1/2022 18:54

Performance table for PM stocks YTD



Stock Name
Code
31/12/2021
Latest
Change(%)
Yield(%)




China Nonferrous
CNG
7.0
9.3
33%
 


Galantas Gold
GAL
25.5
31.0
22%
 


Katoro Gold
KAT
0.6
0.6
18%
 


Jangada Mines
JAN
5.6
6.0
8%
 


Pan African
PAF
16.7
18.0
8%
5.2%


Oriole Resources
ORR
0.3
0.4
7%
 


Silver (LBM) £
S£
16.9
17.3
3%
 


Caledonia
CMCL
8.9
9.1
2%
3.1%


Altyn
ALTN
114.5
116.0
1%
 


Gold (LBM) £
G£
1336.5
1348.6
1%
 


Wishbone Gold
WSBN
8.5
8.4
0%
 


Gold (LBM) $
G$
1815.7
1792.1
-1%
 


Anglo Asian
AAZ
112.5
111.0
-1%
5.3%


Chaarat
CGH
19.5
19.2
-1%
 


Centamin
CEY
88.8
87.6
-1%
12.3%


Condor
CNR
31.0
30.5
-2%
 


Serabi Gold
SRB
56.5
55.5
-2%
 


Gold Resource
GORO
156.5
153.5
-2%
2.6%


Goldplat
GDP
7.0
6.8
-2%
 


Barrick
GOLD
19.0
18.6
-2%
1.7%


Xtract Resources
XTR
5.5
5.3
-2%
 


Silver (LBM) $
S$
23.1
22.5
-3%
 


Scotgold Resources
SGZ
72.0
70.0
-3%
 


Newmont
NEM
62.0
59.9
-3%
1.7%


Kirkland Lake Gold
KL
52.4
50.4
-4%
1.5%


Eurasia Mining
EUA
24.5
23.5
-4%
 


Griffin Mining
GFM
90.5
86.8
-4%
 


Yamana Gold
AUY
421.5
402.0
-5%
1.7%


Pretium Resources
PVG
14.1
13.4
-5%
 


Vista Gold
VGZ
70.0
66.3
-5%
 


Royal Gold
RGLD
105.2
99.3
-6%
1.1%


Vast Resources
VAST
1.7
1.6
-6%
 


Sandstorm Gold
SAND
620.5
582.5
-6%
 


McEwen Mining
MUX
88.6
82.3
-7%
 


Franco-Nevada
FNV
138.3
128.3
-7%
0.6%


Jubilee Metals
JLP
16.3
15.0
-8%
 


Panthera Resources
PAT
12.5
11.5
-8%
 


Phoenix Copper
PXC
53.0
48.6
-8%
 


Wheaton
WPM
42.8
39.0
-9%
1.0%


Eldorado Gold
EGO
9.4
8.5
-9%
 


Hecla Mining
HL
521.0
473.0
-9%
0.4%


Ariana
AAU
4.2
3.8
-10%
8.0%


Cora Gold
CORA
9.4
8.5
-10%
 


SSR Mining
SSRM
17.7
16.0
-10%
 


Kinross Gold
KGC
581.0
524.0
-10%
1.5%


Metals Exploration
MTL
1.5
1.3
-10%
 


Coeur Mining
CDE
5.0
4.5
-11%
 


SolGold
SOLG
29.0
25.4
-12%
 


Shanta Gold
SHG
8.1
7.1
-13%
1.2%


Agnico Eagle
AEM
53.1
46.3
-13%
2.4%


Kefi Gold
KEFI
0.8
0.7
-13%
 


Great Panther
GPL
21.9
19.0
-13%
 


Orosur Mining
OMI
14.6
12.5
-14%
 


First Majestic
AG
11.1
9.5
-14%
 


AngloGold
AU
21.0
18.0
-15%
2.2%


MAG Silver
MAG
15.7
13.3
-15%
 


Pan American Silver
PAAS
25.0
21.1
-15%
1.0%


Silvercorp
SVM
376.0
315.5
-16%
0.7%


Avino
ASM
86.0
72.0
-16%
 


Fortuna Silver
FSM
3.9
3.2
-17%
 


Harmony Gold
HMY
410.0
340.0
-17%
2.1%


Endeavor Silver
EXK
421.5
345.5
-18%
 


Greatland Gold
GGP
16.0
13.1
-18%
 


Pure Gold
PUR
41.5
33.5
-19%
 


Alexco
AXU
175.5
141.0
-20%
 


Polymetal
POLY
13.1
10.5
-20%
7.3%


GoldStone Resources
GRL
11.5
9.1
-21%
 


IAMGold
IAG
313.0
246.5
-21%
 


Hummingbird Resources
HUM
14.5
11.3
-22%
 


Hochschild
HOC
130.1
100.0
-23%
3.6%


Conroy Gold
CGNR
34.8
26.5
-24%
 


Petropavlovsk
POG
19.2
14.4
-25%
 


Resolute Mining
RSG
20.4
15.3
-25%
 


Fresnillo
FRES
8.9
6.3
-29%
2.1%


 
 
 
 
 
 


Average =
 
 
 
-8%

[goatherd] 23/1/2022 13:12

Chip,

In relation to your 9129.

I should have explained why I was asking about NPV.

It relates to my favourite PM/Cu share - KEFI. In as very recent presentation the Chairman/CEO ("Harry") said that the NPV is currently 12 p/share (current price about 0.78). He does use a (declared) factor of 8%.

He went on to say that, once in production he expected the market price to be roughly equal to NPV. Now almost all of the variables you discussed will no longer be variable s once production starts.

I should say Harry is intensely unpopular with many advfn posters! And perhaps others as well, but, of course, that I do not know.

[chipperfrd] 23/1/2022 11:15

I have updated Tables 1 & 2 in the header.

Also updated Table 3 (12 months since I last tackled it!!). Note that Au & Ag have outperformed most miners (ex divis) over 20 years. Who would have predicted that in 2002!

I will probably post up my PM share performance (current year) sheet on a monthly basis. So will try to do that next weekend if I am not required elsewhere!

Hope you have a good week.
Chip

[goatherd] 10/1/2022 12:38

Thanks Chip, yes, indeed, that really helped.

[chipperfrd] 10/1/2022 12:08

Hi Goatherd.

No quick and easy answer to that, at least, in my view.

The NPV does provide an initial project target price but there are numerous factors that can impact as the project gets underway.

How much share dilution is probable? What will the debt/equity situation be in order to initially fund the project?
Will management award themselves significant options/warrants? ie GGP!
Will private equity get involved and create unmanageable debt ie MTL.

During the LoM what is the country/political risk? ie HUM (coup x 2), CEY (litigation and changed fuel pricing), HOC due to electoral changes in Peru, SHG (VAT repayments owed), etc, etc.

Failure by management to meet mine plan. ie PUR, GRL, HUM, SHG, et al. Not always down to management, can be unknown poor ground (SHG), adverse weather (HUM), CNG (avalanche), et al.

Covid is another example of unplannable impact that has affected most projects as supply chains and manpower have been disrupted.

On the brighter side, independent experts who assess new project cashflows tend to be conservative with metal pricing and much can happen over a project LoM that can improve sales through increased PM pricing. Even if western gold market price discovery is via paper market (futures and forwards) driven by highly geared, largely short term speculators - and worst by manipulative bank trading desks!

My own approach is to attempt to model cashflows over the predicted LoM and to arrive at my own NPVs/IRRs at differing PM pricing. If possible I use the project technical reports to gain as much data as is made available and thus derive possible annual share price targets as well as the overall share valuation for the set of NPVs.

These models then provide a base which can be edited in line with changed to project delivery, costs, debt levels/interest, share dilution, royalties, et al.

Also, fairly inevitably, there are likely to be increases in LoM as further investment in exploration (both wider and deeper) is made on an ongoing basis.

On top of all this will be the vagaries of the market and the resulting market valuations compared with the ongoing investment propositions predicted by my own models - hence the formulation of the tables here in the header.

No guarantees of course (MML is a good example of 'hero to zero') in that respect!

I could probably go on ad infinitum regarding all this and there is much else that could be added, but I will leave it for now.

Hope it helps.
Chip

[goatherd] 10/1/2022 10:14

Chip, is there any relationship between NPV and share price, perhaps varying by stage?

[goatherd] 10/1/2022 10:14

Chip, is there any relationship between NPV and share price, perhaps varying by stage?

[mattjos] 08/1/2022 21:08

Thanks Chip. fwiw, I am expecting CNG to have a better year in 2022 as they have now started repaying the debt ($29.3m repaid in H1 2021).
Unless you can think of a reason why the EV should fall then, Mkt Cap should rise as Debt falls.

[chipperfrd] 08/1/2022 15:34

Tables 1 & 2 updated.

Let's see if we can have better performance from our PM stocks over 2022.

[swanvesta] 05/1/2022 11:28

Can't see Thor Explorations (THX) here? Looks good on paper as a new producer, but seems to be suffering teething problems and poor comms. Don't have any yet, waiting for better omens. Meanwhile losing bigly on all my gold producers.

[roguetreader] 01/1/2022 10:53

Cheers Chip thanks for sharing your hard work here. Happy New Year to all.

[chipperfrd] 31/12/2021 18:42

So very, very true :(

[mattjos] 31/12/2021 18:36

Thanks Chip,

Immediate observation:

Run a sound business, pay a dividend & watch your share price fall throughout the year v poke around in the ground and say you've found some stuff without actually mining anything & see your share price rise.

Seems to reinforce the Mining Life Cycle pretty well

[chipperfrd] 31/12/2021 18:33

Healthy and prosperous New Year to all.
Chip