13 Comments
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Pietro's avatar

Hey Russel, at the cost looking like a gold bug, gold total cash cost per ounce are ~1300$/oz. Fuel and energy is around 20% of that. So assuming energy prices have double permanently it’s a 260 $/oz hit to miners’ margins. For sure material and worth a repricing but is it the end of the world for them? Gold has rallied more than 1500$ last year and AISC were ~ 1900 $/oz on average

Russell Clark's avatar

The one way gold miners could be really good is if they take the cash they generate when times are good to buyback shares.... Normally they greenlight big expansions at the top. So if gold miners became like Japanese trading houses - then they would look good to me.

As for cost curves - I always think miners are really at risk of tax raids when they are making really good money.

Patrick Barber's avatar

I still like gold here. Tend to agree with your take on Silver. What are some other physical assets you like from here?

Russell Clark's avatar

Japanese land - but no direct play - other than via banks....

Patrick Barber's avatar

I always assumed the direct plays, eg 8801, 8801, 8830, were a decent way to invest in Japanese property. Is the only realistic catalyst through actual land sales?

Russell Clark's avatar

close - but not quite the same as owning the land.

Kristjan's avatar

What about european banks? Given the already great performance in the last two years?

Michael's avatar

I really don't get the tightening of monetary policy part. Oil shock is something you don't treat with higher interest rates - in fact, it takes care of itself, as cure for higher prices are higher prices. Imho the CB's had their Trichet moment last week. Higher energy costs are recessionary, if they are anything at all.

Russell Clark's avatar

Depends if governments spend to offset the recsessionary effects - as they did in 2022

Michael's avatar

True. Although I doubt there is that much space for that anywhere, not even in Germany anymore

Russell Clark's avatar

There is always room if you dont care about the currency

Andy Fately's avatar

My take is that if/when economic data starts to turn lower, the central banks will arrive in size. it is the only thing they know.