Well, profit on the production is not enough money to buy the production back. So buying the production back requires either options, futures, or extra cash on the books. Options and futures represent loans while cash on the books is limited. So a strategy of buying back production is really just short term trading.
Basically, I would buy platinum at $900 an ounce but sit still at $1050 an ounce.
Now if I were a precious-metal mining company selling production for break-even, what would I do ?
Well, sell the production but use the revenue to buy minted bullion. The income is booked as scheduled and the bullion is simply on the books as an asset.
Why not use futures ? Well, the short term futures contract rolled over into each new contract often is not very profitable in a rising price environment. The future date needs to be targeted with a longer term contract and not rolled-over up to it,
Definitely plunk a kilogram of platinum down on the coffee table.
In fact there is nothing wrong with ticker PPLT.
PLG is an uncomplicated platinum position because they have one high-margin mine. In fact, base metals are used as a credit against costs and so since base metals are down then costs are up. The costs were $629 an ounce so just pick a number and maybe that's $675 an ounce. Then add 50% for a desired platinum price and hope for $1012.50 . And really, as the VW scare subsides I think that $1012.50 is likely.
Oh, Glencore as a commodity trader has short term borrowings as a major part of their commodity positions. That means that they become less profitable as short term interest rates rise. That's why they go into their own commodity production but that requires long term debt.
A miner is mostly concerned with long term financing to develop the mine and then just a small amount of revolving credit for month-to-month operations.
Or a small miner with one mine might fund the mine development with equity financing and that's stock issues of course
Well, the commodity trading companies like Glencore are now having as much trouble as the major miners had. Apparently, their commodity trading involves buying at the spot price and then selling future delivery. Also, they do have some amount of commodity production and then the debt resulting from expanding into production.
I could buy the major miners at these levels. That's Barrick, Newmont, Goldcorp, and others. But I really favor a company that has a single high-margin mine and then no expansion plans. In other words if another mine to be developed is found than that becomes another company. And then I would like these companies with one high-margin mine to payout like a MLP does. That's pay near 90% of income as a dividend.
See, the consumer was already dubious about clean turbo diesels for low pollution.
Now, because of VW, no one is going to buy any turbo diesel. Not from VW, not from MB, not from BMW, not from Toyota or Honda, not from anyone. No one is going to buy a Cummings turbo diesel in a pickup truck. No one is going to buy a new school bus because they will just think that they might as well run their old buses.
Of course VW could replace their turbo diesel product lines with gasoline turbos. But their corporate fuel mileage is based on selling a percentage of turbo diesels. Finally, I'm not sure that anyone will buy any VW from here on
The only thing that can save VW at this point is carbon fiber chassis with turbocharged gasoline engine. But they can't move that fast.
Or they might buy Mazda and offer Mazda cars worldwide
Buy and hold investors in small caps might wish they could be in limited partnerships instead and not be on the stock market. A partnership holding would be difficult to sell but not valued by the stock market. Of course there are master limited partnerships on the stock market. They pay 90% of earnings as a dividend.
Gosh, anyone not familiar with underground mining go find the June article about PLG on the biv website.
GUYFF is starting up 194,000 ounces of yearly production at a cost of $527 an ounce. The market price of the company is $483 million.
PLG is starting up 250,000 ounces of yearly production at a cost of $630 an ounce. The market price of the company is $222 million. But PLG also has a larger future project.
Actually, 250000 ounces per year at $990 an ounce and at a 10% after-tax profit margin seems to support the current stock price at a P/E of 10.
So the price of precious metal is important. And the development of the second mining operation is important.
A reverse split is not needed. The stock can reach a dollar within a year. Basically, production of 250000 ounces per year is expected.
Also, China setting its currency lower is supporting precious metal prices.
I mean that I notice Newmont because it's a major precious metal miner that is in the S&P 500.
Better yet, predict that older lower margin mines will be closed and find miners that only have newer higher margin mines.
They can benefit on labor costs because of the strong dollar versus the rand. That assumes that they are not hedging labor costs by holding the rand.
They can benefit on oil costs by not hedging the upside of oil. Well, put the oil hedge position in place at $38 a barrel and not at $48 a barrel.
I've also said that they can draw 5% interest on their cash by putting it in the rand. That assumes hedging the rand deposit !
Gosh, Newmont keeps setting new 52-week lows. I look at Newmont because it's also in the S&P 500
That's a childish response.
I don't buy computers by the pound and no one sells computers by the pound.
But the weight of a mobile computer is an issue.
I went looking for a Win 7 laptop with a weight of less than three pounds:
Lenovo ThinkPad X1 Carbon
2.87 pounds weight
HP EliteBook Folio 1020G
2.68 pounds weight
I suppose there are some good examples of the Internet of Things but:
I don't need my house thermostat connected to the internet. I wouldn't mind if it took into account the outside weather to make a comfort level.
Also, I would like a thermostat mounted in the hallway for my hot water heater that is in the basement.
Continuing, I'm not interested in the wind direction and speed for my city but for outside my house. Basically, a tornado warning.
So I'm more interested in systems for the house than internet connections for the house.
The bid/ask on the gold spot market is currently 1094.50 / 1095.50 .
That's off the recent lows and so those recent lows might hold.
In fact, the dollar can't just endlessly go up but will fluctuate.
And this indication of older lower-margin mines being closed can add support to the precious metals market.
It does look like the Gold ETF is underperforming the spot market.
The third largest platinum miner cut production by about 10%.
Miners cutting production can support precious metal prices.
But when buying a miner take into account the percentage of production from older lower margin mines.
The South African rand is down on fewer jobs while the Australian dollar is up on gold showing support
And that's my total plan for MS ?
No, there's several more things. Here's an example:
A Win 12 TS desktop configuration is featured whereby the display goes to the main monitor but also to a second 8" monitor. That second monitor is a touch screen monitor and can be pulled close to a computer user that is sitting back from the main screen.
Except that MS replaced "new coke" with "new new coke".
My plan for MS:
The mobile phone becomes Intel/Android.
Win 10 becomes Win 12 TS. Win 12 TS is for PC tablets and retail point-of-sale computers.
Win 7 becomes Win 12. Win 12 makes less use of processor multi-threading and is less draw on processing power.
The Surface goes to the Intel Atom processor which it did.
The Surface Pro keeps a more advanced Intel processor which it will.
And then a high priority development, an 8" PC tablet with full Win 12 TS operating system is also a mobile phone