Jordan aka Mining Stock Monkey – Gold And Silver Volatility, Analyzing Valuations In PM Producers and Royalty Stocks

Jordan Rusche, Founder of Mining Stock Monkey, joins me for an in-depth and nuanced discussion on the recent gold and silver price volatility, his approach to valuing precious metals mining stocks and royalty companies; along with which companies he is actively trading in his portfolio.

 

We start out reviewing where we are in this precious metals cycle, with Jordan pointing out that most prior bull markets lasted 7-10 years.  He highlights that the gold price has been heading higher ever since its major bottom at $1045 back in December of 2015:

• “We are 10 years into this gold bull market already. That might suggest that we’re getting towards the end of things…. However, if the US dollar keeps heading lower, towards 0, then upside in how high the silver and gold prices can go is infinite.”
• When asked if the move to triple digit silver was the blow off top, or if we’ll see silver back over $100 in this cycle – Jordan reiterated that he still believes we’ll see higher metals prices before this bull market runs its course.

 

 

Next we shifted over to some of the valuations in the gold producers in his portfolio.

• He still will look at each company though the lens of spot gold and silver pricing, but also will present his subscribers with a more conservative case using $50 silver and $4,000 gold.
• Jordan breaks down why he likes larger producers with growth on tap, highlighting the fundamental growth factors for Equinox Gold.
• We discuss why he recently sold half his shares in B2Gold, due to the increasing risk profile and potential for disappointing market guidance in the near-term.

 

Wrapping up we dive into some of the valuations he is looking at with regards to both the smaller and larger royalty companies, and why he is generally favoring the larger royalty and streaming companies.

 

• Initially we unpack the many advantages that the royalty and streaming companies have over traditional mining companies, and why can participate in long-term value creation, and pull back less during corrective moves.
• He mentions that over a year ago he was more constructive on valuations of the smaller to mid-sized royalty companies, until they have since moved up to levels that seem more fairly valued, or even overvalued.
  • He wants to focus on royalty and streaming companies that can aggressively reinvest revenues in growth, and many of the junior companies use up large percentages of revenues and free cash flows paying general and administrative expenses, giving them less capital to invest in new acquisitions.
  • He discusses why he issued a sell alert recently to his subscribers with regards to the price-adjusted risk in Orogen Royalties, with regards to its valuation before it corrected down. 
  • In contrast larger companies like Franco Nevada, Wheaton PMs, and Royal Gold pay their G&A out of just 2%-3% of their incoming revenues, with a big portion funded by just the interest made on cash on their balance sheets.
• Jordan highlights some large recent very large transactions executed by Royal Gold, Wheaton PMs, and Triple Flag as the kinds of value accretive growth that he is attracted to in the senior companies in this sector.

 

Jordan is extending a limited-time offer to KE Report listeners for those that would like to be become new Mining Stock Monkey subscribers.  Claim Your 10% Discount! (Limited to the first 10 users)

https://miningstockmonkey.com/products/vip?promo=KE10 . . https://miningstockmonkey.substack.com/kereport10

 

Click below to follow Jordan's YouTube page, where he'll be putting up some new content soon:

https://www.youtube.com/@MiningStockMonkey/videos

 

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Investment disclaimer:

This content is for informational and educational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. Investing in equities and commodities involves risk, including the possible loss of principal. Do your own research and consult a licensed financial advisor before making any investment decisions. Guests and hosts may own shares in companies mentioned.