Merk Webinar: Black Swans?


I attended the Merk Webinar today and here is a summary of what I picked up.







- Japan's government bonds are being crowded out by central banks.

- VIX has been coming down, which signals overcomplacency.

- Terrorism has increased bets on Brexit.

- Elections can have effect: e.g. trade wars which will be negative for deficit countries like U.S.

- U.S. dollar will weaken on trade wars.

- Margin debt is peaking.

- Chinese yuan is leading indicator for S&P.

- Bearish Japanese yen.



Comments

Post a Comment

Popular posts from this blog

Sibanye-Stillwater

Image
Platinum, palladium and rhodium have all been moving higher and I expect them to go higher as China is loading more palladium and rhodium in their vehicles. China vehicle sales have rebounded as well. Both palladium and rhodium are in deficit. Platinum is going to be used in 3-way catalysts , which will boost platinum prices. Sibanye-Stillwater expects platinum to reach $2000 per ounce in 2025. Sibanye-Stillwater has exposure to all of these metals. SBSW's production numbers were very good. SBSW's EBITDA was $922 million in Q3 2020. This translates to $3.7 billion EBITDA per year. With a 5 multiple, SBSW should be valued at $18 billion market cap. So there is 50% upside. The company has no net debt. Net earnings were $1 billion per year in 2020, but is expected to rise 66% on higher rhodium/platinum prices and higher production numbers. Earnings per share are expected to be at $3.52 per share, which gives Sibanye-Stillwater a P/E of 4.8 which is very cheap. On top of thi...
Read more

The Consequences of Brexit

On June 24th, 2016, Britain voted to leave the EU. The immediate reaction was an 8% plunge in the Nikkei, financials dropped between 10-30%, negative bond yields went even more negative and gold surged 8%. George Soros predicted that we would have a 20% drop in pound and he was right. These are large moves and this is my take on what investors should be doing next. Read further here .
Read more

Gold/silver price Vs. Oil price

Image
When we chart the Silver/Gold price minus Oil price, we can have a good idea on the margins of the precious metal miners although oil costs are just a small part of the overall costs (only 10% of AISC). As you can see here, the trend has been higher since 2014. => Producer Price Index by Industry: Gold Ore and Silver Ore Mining - Crude Oil Prices: West Texas Intermediate (WTI) - Cushing, Oklahoma The HUI index though (miners), has not been following the correlation since 2014. This is because the gold and silver price has been breaking down lately and sentiment is not positive. Other costs like development costs due to lower grade ore could also have a negative impact. Nevertheless, the chart above is a good indicator for the health of mining companies (comparing the gold/silver price against the oil price).   Energy costs are just 10% of the total AISC costs of a miner. So it doesn't have a significant effect on the overall costs in mining. Miners with a high strip ratio and op...
Read more