Silver Dip-Buying Comment, and Goldman’s Mining Preview

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Today we have excerpts from a brutal Tesla report, Gold mining analysis, and Silver.

7:45 a.m.- Good Morning. As we write this the dollar is up 56 bps. Bonds are mixed with longer dated yields higher. Stocks are down between 30 and 85 bps. Gold is down $6 and Silver is down 28 cents. Oil is up 43 cents. Nat Gas is down 17 cents and both grains and crypto are marked lower.

Update 12:35pm- from down 28c to up 43c

The Silver EFP is currently 5 cents negative implying the physical buying is even stronger as the paper price drops. If it isn’t obvious by now that someone is pulling all the above ground silver off the market at these prices then we don’t know what to say. This is the most criminally under-reported Supply-chain/ Russian War/ Sanction story of the year. And there are many stories to chose from.

Why Does India Need So Much Silver All of a Sudden?…

Stay the course, ignore the price right now. This is the biggest weak hands to strong hands trade we’ve ever seen in 30 years. Trust your intuition. But do not underestimate the power of financial repression. We’re not telling you to buy. but to not sell if you can afford not to. We will also personally tell prem-subs when we add to our own physical if that is of any help. But we are not trying to pick bottoms either. Now is the time to ignore printed price but  think about at what price you will commit more. But only if you can stomach more drawdowns, as more are coming. More this weekend on why Silver and Gold are buys.

Goldman runs through the US mining industry as Q3 earnings are released. They update their estimates and mark to market commodity prices for 3Q22 for covered North American gold mining and streaming companies. Among the group, they continue to prefer Buy-rated NEM, WPM.TO and AEM.TO, and we are Neutral-rated on FNV.TO and ABX.TO/GOLD. From that report:

We expect focus for the miners will center around:

1. the ability to mitigate opex inflation and capital inflationary pressures,
2. capital allocation strategies, and
3. production expectations into 4Q22and 2023, particularly given weaker 1H22 volumes.

For the streamers, we see focus on the production ramp profiles of core assets and delivery of new projects. While the weakening gold price environment will diminish margins across the group, the streamers will continue to exhibit elevated margins given low the operating strategy’s predictable cost structure. Please see within for our expectations and updated estimates ahead of 3Q22 earnings season.

They are friendly to Newmont as opposed to Barrick; and like Wheaton over Franco Nevada currently. Interestingly enough, despite their preference for streamers we note they rate FNV as neutral. This may be an indirect comment on the royalty aspect of its business.

Continue reading here (including the Tesla report)