By SD Contributor SRSrocco:
I have seen a few comments stating that I don’t believe in the gold & silver miners. This is not quite the truth. I don’t believe in the OVERALL MINING INDUSTRY going forward… especially by the next 5-10 years.
However, certain miners will be great stores of wealth as the $trillions of investment dollars tries to find a home in REAL ASSETS and not the fake IOU’s that now total more than $85 trillion globally.
To invest in miners in the future… YOU HAVE TO GET SMART. There are too many misled investors throwing money at miners that are not performing well. For example, Silver Standard’s total cost of production is now running close to $29-30 an ounce. With that kind of cost structure, there is NO PROFIT whatsoever.
If we take a look at the chart below, we can see that when we compare SILVER STANDARD over the price of SILVER, we can see just how poorly it has performed since 2011:
When silver started to take off in 2011, so did all silver miners stock prices. However, we can see that Silver Standard has grossly under performed the price of silver. In late 2011, you could by one share of Silver Standard for the same price of an ounce of silver. Today, you buy nearly 3 shares of Silver Standard for an ounce of silver.
What you want to happen is for the stock price to trade MORE than the price of silver… not LESS. If Silver Standard had low costs and was making large profits, you would have seen the ratio go from 1.0 to 1.5+ or higher… NOT LOWER. Back in Nov 2011, the price of silver as about $26 an ounce… so was the stock price of Silver Standard. Today silver is trading at $29, but Silver Standard is in the $10 range.
One more thing. I miss old Bob Chapman and his International Forecaster Newsletter. However, Bob only pushed two stocks…. Agnico-Eagle & Silver Standard. I never knew why he told investors to buy Silver Standard. Here we can see that you would have been much better owning the physical metal than the stock.
These are the FUNDAMENTALS BABY.