TSXV:MAE - Post Discussion
Post by
nozzpack on Mar 13, 2024 5:59am
The Macro View …Greatest wealth opps are upon us
Two of the Greatest Wealth Creating Opportunities are Upon us… but can your stomach handle it ?
Meme Source:
Let’s start with Gold and Silver - in our last newsletter, we mentioned the importance of having some exposure. These two assets are negatively correlated to the market - meaning they are risk-off.
And over the last month, much of the price action continues to be hated by most market participants, except for the smart money.
The major producers are seeing record inflows from the world’s smartest investors - they know what’s coming and it’s been very hard to ignore. The chart below, in our view, is setting up to be the largest wealth creating opportunity in our lifetime.
Remember - charts have memory. Everything above is related to commodities. Gold and silver have never been cheaper to own than now.
Many producers are able to produce gold anywhere between $850/oz - $1400/oz USD - if you do simple arithmetic with gold even being at $1900/oz USD - they are still able to squeeze about a 30% margin on their production alone.
When gold reaches above $2,200/oz USD - and companies are trading at around 0.6-1.1x Cash - it makes sense, many value investors are piling into the sector.
If rates do get cut - we expect the price of gold to reach new highs, further making the valuations of the sector at current prices even more attractive.
For the first time in a decade - apart from the Energy sector, the deep value trade is in the precious metals producers, who can even pay you solid dividends to start. Newmont Corporation ($NEM) pays about 3.20%, and is likely going to ride up to the high 60’s, when this rally commences.
Perhaps the bottom is in?
As Nic mentioned - Stanley Drunkenmiller has sold $AAPL and $AMZN and bought positions into $GOLD and $NEM. When a portfolio manager who manages billions of dollars, and has a track record of beating the market for the past 30+ years, is rotating into gold and silver producers - something important is happening.
For Silver - you’ll probably need a lot more patience because historically, this commodity always lags gold by several months, before ripping to the upside when investors least expect it. You do not want to chase this trade - but rather start accumulating when nobody is talking about it.
Take a listen to our recent episode with Peter Krauth - Click Here to Watch Full Episode - to get a better understanding of this asset.
We are bullish on it - physicals first, producers second then sprinkle some juniors explorers for leverage upside.
The Juniors continue to provide some interesting investment opportunities - if you pick the right ones, have an insane amount of leverage and potential return.
We’re talking shitcoin style returns of 10x, 100x, maybe even 1000x potential.
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