Quantitatively, gold stocks are almost a choose your own adventure narrative-wise, in interpretation.
Positive loadings to breakevens (meaning it trades as an inflation hedge), negative to real rate changes (doesn’t like rising rates) and very low beta’s (e.g. trades as defensive).
And yet, performance over the past year?
In other words, terrible, under all conditions. Doesn’t matter what’s happening, whether inflation is rising or falling, real yields rising or falling, or the market going up or going down.
NCM even has a good balance sheet, and (somewhat) hedges the risk of copper-to-the-moon, which, even though we are bearish commodities (due to China wobbles, COVID-zero stance) we can still imagine possibly happening, due to the EV/green-energy-electrification story meeting the no-big-new-mines-discovered and it-takes-about-8-10yr-to-bring-a-new-mine-online narrative.
Anyway, we’ve recently established a position at ~$18, on a PE of 10x-11x, for a highly cash generative stock with minimal debt that produces towards the bottom of the cost curve that has good growth prospects (newly acquired mines, soon to be developed reserves etc).
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