The central banks already are holding the bonds. They receive hugh capital gains when they unload into the public retirement funds. The funds will eventually go bankrupt but the central bankers will have long been gone. It is total corruption by the central bankers around the world. Go read what our founding fathers thought abut central bankers. You will be amazing at how accurate they were.
It is insane, but insanity can continue for quite a while as we all know. Being right and early is still painful. But I am LT and try not to sweat the ST as much as possible. And when things keep crazy, I try to add like I did with Paas.
Insanity! Investors Now Paying for the “Privilege” of Lending to Broke Governments
This could go down as one of the oddest, most irrational asset bubbles in history. Trillions of dollars are now tied up in debt instruments that promise to return less than the invested principal. According to a report issued by J.P. Morgan, $3.6 trillion in government bonds around the world now carry negative yields.
It raises the obvious question; why would so many people be willing to accept a negative rate of return?
You’d think that institutional investors would start getting wise to holding gold as a hard-currency alternative to cash instruments that yield less than zero. The fact that gold has no interest rate is actually an advantage in an environment where competing rates are negative! Plus, unlike most of the bonds issued in this upside-down interest rate market, gold has significant appreciation potential.
If inflation rises even modestly to the 2% target of European and U.S. central bankers, then bonds issued at rates of below 2% will all be losers. The two-year Treasury note yields only 0.63%. Even the recent 10-year yield of 1.98% fails to match the Federal Reserve’s inflation ambitions.
In this environment of ultra-low nominal yields or even negative real yields, precious metals as a reserve asset look very attractive. Many central bankers around the world agree and are busily accumulating gold. According to a report issued by the World Gold Council in February, governments around the world added 477.2 metric tons of gold to their reserves in 2014. That haul was the second biggest in 50 years.
When inflation fears return to the market, as they eventually will, precious metals will become one of the premier asset classes to hold. Even now, they are performing better than virtually all other world currencies.
The end game of these ongoing currency wars is that all fiat currencies will be debased. And a true flight to quality will accelerate focused 4 asset liquidity
Sentiment: Strong Buy
Good strategy and I use it sometimes too. Let's see if we can get a bounce. It held 9 nicely for 1 day, but still risk. If it holds for a week or so, then we may get the triple bottom confirmation.
Bought PAAS initially at 12.67 If it goes any lower I will dollar cost average. Silver prices at a multi year low, I expect it to recover.
Actually, PAAS management is not the worst in the sector; though one should remember that average level of management in PM miners is just awful. This company has better than average operating performance; i.e. these guys can move stuff around mines. The problem is that beyond mining they behave like the most stubborn goldbugs.
Regarding possible improvements, firstly, they should cancel dividend. The whole idea of paying money out of treasury is not healthy and with worsening operating numbers it would be the most logical thing to do for any financially literate managers. Regarding operations, mothballing unprofitable mines etc, it was mentioned correctly that it is impossible to do it overnight. However, it is something that could be done in two years, for sure, and, in this respect, management wasted last two years keeping heads in sand, dreaming about sudden return of silver bull market.
Will they do something now? Firstly, it would involve admitting mistakes and, again, they are stubborn. Also, any operational changes will take time with count starting only when it really starts. Dividend can be still cancelled at once. Most likely, it would cause another drop in share price; it makes unreasonable to buy right now; that's investor perspective.
Continuing on investor perspective, bear market persists and financials worsen. It dictates continuing reduction in investor interest in this sector. It is always possible to try a quick TA trade here or there, but risks continue increasing. The whole sector is not worth of anything serious now.
Final notes: PM miners have zero control over metal price and it comes by very serious reasons. There is no chance for improvements on this issue. Also, I agree with you that "cash cost" is a ridiculous measure; it is a very old issue with this industry. By the way, "all-in" yardstick, started few years ago, quickly loses credibility too.
Trying to double down on what looks like and I hope is a triple bottom.
I don't have enough BP for outright buy, so I am going for the leaps (2017 8's @ 2.4). I've gotten filled on just over half and hopefully get the rest by close.
I reviewed the con call from earnings, looked at the chart (triple bottom at 9!) and read the blog from 2/27 on sliver / gold potential.
I am basically a LT investor who will trade a bit or trade around a core position.
I still think this is one of the best run PM miners with a strong balance sheet. I don't know when we get a pop, but they are managing cost, protecting the balance sheet for the most part, giving a dividend (this is starting to hit the balance sheet) and doing what they can (short of closing mines which I like in theory).
An upside is other distressed miners may have to slow/close mines. Lastly, I like today's employment number, which should lead the fed to raise in Jun or Sep (see pop in 10-year), which should finally start us toward normalized rates and thus inflation and thus increase demand for PM.
Agreed with you and similarly to much of Silverc's post. If you look at their mines (aka our mines) they would do us all a service by moth balling 1/2 the mines for 1-3 years. Work the lowest cost ones, produce 1/2 the sliver and if many did the same, then supply going down would help prices up. Then re-start mines in order of lowest cost..............I know it is NOT that easy as this is just a theory, but we are "wasting" gold and silver at break even pricing.
Good message, Silvercomments. I do not agree with all points but I support many of them. By and large, miners play silly games by promising and delivering record production at silver prices guaranteeing capital losses. What other industry could afford it?
This bear market continues for 2 years already (by the most optimistic count) and companies show no real signs of adjustment. It confirms chronic problems in corporate development; these companies are made for bull markets only.
The Chinese (inventors of paper currency) called paper money, "flying money".
Throw it up in the air and watch it fly away.
Humorist Will Rogers was smarter than most Americans then.. and today. About Investment he said, INVESTORS DON'T UNDERSTAND that the key to successful investing is understanding the difference between RETURN OF YOUR MONEY and the RETURN ON YOUR MONEY. Tell me that you understand.
Thanks for all the info, but I never said I was "in" PAAS and got burned. I just saw that it was up, and everything else was down and wondered why.