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Credit deflation and the reflation cycle to come (part 2)


spunko

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15 minutes ago, Castlevania said:

Plus a 1% annual charge and a 1% exit charge. It’s a joke.

It really is scandalous that the Govt colludes with these people to basically deprive retirees of chunks of their savings.You exptrapolate that 5% out over 30 years on a £100,000..................there's no jsutification whatsoever for such high charges in this day and age of $10 deals(no matter the size) on Saxobank etc

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So... watching to see if Gold and Silver miners are to hit around 200 MAs and waiting to see if they will hit bottom then skyrocket.

And wondering why they might not and have come across this wee indicator BPGDM.

I am going to look back a couple of years and see if I can overlay it with what some miners did and see if it is a useful predictor. 

Anybody ever used it?

This was a 2016 pic of it.

83326D4D-504D-4986-878C-9F003BEB5502.jpeg

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Hodges calls the black stuff down....

https://www.icis.com/chemicals-and-the-economy/2019/11/oil-markets-hold-their-flag-shape-for-the-moment-as-recession-risks-mount/

image.png.33764283cf6a7a27e9f65bde2e4826ba.png

Oil markets can’t quite make up their mind as to what they want to do, as the chart confirms. The are trapped in a major ‘flag shape’.

Every time they want to move sharply lower, the bulls jump in to buy on hopes of a major US-China trade deal and a strong economy. But when they want to make new highs, the bears start selling again.

Its been a long journey  for the flag, stretching back to the pre-Crisis peaks at nearly $150/bbl in the summer of 2008. And the bottom of the flag was made back in 2016, after the last collapse from 2014 $115/bbl peak.

Recent weeks have seen the bulls jump back in, when prices again threatened to break the flag’s floor below $60/bbl. And, of course, OPEC keeps making noises about further output cuts in an effort to talk prices higher.

OPEC.png

But as the charts from the International Energy Agency’s latest monthly report confirm:

“The OPEC+ countries face a major challenge in 2020 as demand for their crude is expected to fall sharply.”

This is OPEC’s problem when it aims for higher prices than the market will bear. Other producers, inside and outside OPEC, always take advantage of the opportunity to sell more volume. And once they have spent the capital on drilling new wells, the only factor holding them back is the actual production cost.

Capital-intensive industries like oil have always had this problem. They raise capital from investors when prices are high – but high prices naturally choke off demand growth, and so the new wells come on stream just when the market is falling. Next year the IEA suggests will see 2.3mbd of new volume come on stream from the US, Canada, Brazil, Norway and Guyana as a result.

OPEC’s high prices have already impacted demand, as the IEA notes:

Sluggish refinery activity in the first three quarters has caused crude oil demand to fall in 2019 for the first time since 2009.”

DUCs.png

OPEC has had a bit of a free pass until recently, though, in respect of the new volumes from the USA. As the chart shows, the shale drilling programme led to a major volume of “drilled but uncompleted wells”. In other words, producers drilled lots of wells, but the pipelines weren’t in place to then take the new oil to potential markets.

But now the situation is changing, particularly in the prolific Permian basin region, as Argus report:

“The Permian basin has been a juggernaut for US producers, with output quadrupling from under 1mbd in 2010 to more than 4.5mbd in October.  US midstream developers have responded with a wave of new long-haul pipelines to shuttle the torrent of supply to Houston, Corpus Christi and beyond.

“The 670kbd Cactus 2 and the 400kbd Epic line went into service in August moving Permian crude to the Corpus Christi area. Phillips 66’s 900kbd Gray Oak pipeline is expected to enter service this month, moving Permian basin crude to Corpus Christi, Texas, for export.”

As a result, some of that oil trapped in drilled but uncompleted wells is starting to come to market. So if OPEC wants to keep prices high, it will either have to cut output further, or hope that the world economy starts to pick up.

GDPa.png

But the news on the economic front is not good, as everyone outside the financial world knows.  Central banks are still busy pumping out $bns to keep stock markets moving higher. But in the real world outside Wall Street, high oil prices, trade wars, Brexit uncertainty and many other factors are making recession almost a certainty.

As the chart shows, there is a high correlation between the level of oil prices and global GDP growth. Once oil takes ~3% of GDP, consumers start to cut back on other purchases. They have to drive to work and keep their homes warm in winter. And with inflation weak, their incomes aren’t rising to pay the extra costs.

The US sums up the general weakness.  The impact of President Trump’s tax cuts has long disappeared. And now concerns are refocusing on the debt that it has left behind. As the function of debt is to bring forward demand from the future, growth must now reduce.  US GDP growth was just 1.9% in Q3, and the latest Q4 forecast from the Atlanta Fed is just 0.3% .

Its still too early to forecast which way prices will go, when they finally break out of the flag shape. But their failure to break upwards in the summer, when the bulls were confidently forecasting war with Iran, suggests the balance of risks is now tilting to the downside.

image.png

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14 hours ago, Castlevania said:

Plus a 1% annual charge and a 1% exit charge. It’s a joke.

That really is crazy CV, I thought I had it bad and I get a 0.7% discount on both the yearly charge of 1.653% and the fund charges which range from 1% to 1.8%. There appears to be a company SIPP offering from SL, will enquire as to whether it is possible to transfer. Expect fees would be similarly extortionate though.

I bet most people just stick with the lifestyle fund they are shoved into at the start, preferring to leave it to the advise of the "professionals", but looking at the make up of some of these funds there are going to be a lot of angry pensioners out there.

If it wasn't for this thread I would still be in one of those funds, I may not come out any better but I feel more in control and doubt I can do any worse!

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9 hours ago, Cattle Prod said:

Hello Dosbodders, I'm currently in gold country, Alaska, saw the following in the local paper and thought you folks would be interested to see a little local colour on one of our favourite miners @kibuc @sancho panza and others

There was a crew of Australian miners at the hotel bar; unfortunately I couldnt stay long enough to strike up a conversation. They were clearly off to the field tomorrow (its -18 here now and their boots are not right, so were discussing that), and they seemed pretty chipper! So nothing really concrete to report, but hopefully a little flavour of the front lines :-)

 

20191117_192934.jpg

Cheers for that, looks like we have agents all over the globe... :) 

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6 hours ago, Ma2 said:

That really is crazy CV, I thought I had it bad and I get a 0.7% discount on both the yearly charge of 1.653% and the fund charges which range from 1% to 1.8%. There appears to be a company SIPP offering from SL, will enquire as to whether it is possible to transfer. Expect fees would be similarly extortionate though.

I bet most people just stick with the lifestyle fund they are shoved into at the start, preferring to leave it to the advise of the "professionals", but looking at the make up of some of these funds there are going to be a lot of angry pensioners out there.

If it wasn't for this thread I would still be in one of those funds, I may not come out any better but I feel more in control and doubt I can do any worse!

Its a huge scandal,and i mean huge.My pension fund at work is laughable.You have about 4 choices and is the first thing i do when i leave,transfer out into my SIPP.People simply dont understand the affect of losing 1% a year extra in fees you dont need to.When i phoned to  move from a fund into cash it was like they were blowing dust off the phone when they answered.Thank the lord we have SIPPs.Those lifestyle funds are terrible.Imagine moving everything into bonds at the end of a dis-inflation cycle.People are in for a huge shock down the line.Whats really happened is companies have opted out of pensions,and dont care anymore.In that case members should be able to divert their payments to a SIPP instead of the default provider.

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55 minutes ago, Cattle Prod said:

Mine is with Aegon. It is so cumbersome and inefficient to switch funds (like needing flash player enabled when most browsers no longer support it) that I think I must be one of very few who actively manages their workplace pension. They seem surprised every time I call ... "you want to switch a fund? In what way is the website crap?!" I'm convinced 99.9% of people stuck in Aegon stay in default lifestyle funds.

L&G for me, funds available are dire,  they revamped it a few months back and i managed to get hold of a gold fund by mistake, they sold me back to a multi asset, they really are a pile of shit. They are good at quoting the faq when i dont even ask them the question they answer(with cut and paste). They hate me cos i always call them or complain via email and they just try to blow me off with shit.

Im ready and as soon as it starts falling im going all to cash then ill buy it all back again - no body is even aware that you can switch as far as i can see. Useless bastards.

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27 minutes ago, leonardratso said:

L&G for me, funds available are dire,  they revamped it a few months back and i managed to get hold of a gold fund by mistake, they sold me back to a multi asset, they really are a pile of shit. They are good at quoting the faq when i dont even ask them the question they answer(with cut and paste). They hate me cos i always call them or complain via email and they just try to blow me off with shit.

Im ready and as soon as it starts falling im going all to cash then ill buy it all back again - no body is even aware that you can switch as far as i can see. Useless bastards.

Why dont you just transfer it to Hargreaves or Interactive Investors and start your SIPP

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32 minutes ago, Cattle Prod said:

People got wiped out in Ireland in 2009 by inertia. "I saw it going down but I thought it would go back up so I didnt do anything. I really wish I'd transferred to cash"

I fear most for people going into drawdown with a lifestyle type fund.If you take say 4% drawdown,1% fees and 4% inflation with equities falling and bonds going down hard as money flows to inflation assets then you have a big problem.I really do think its crucial people understand the affects this can have,and that they need some cash and to try to only draw the natural yield and reduce that if needed to.

UK pensions might avoid the worst though due to the FTSE 100 having a big weighting towards sectors that should do well.Its those bond funds where the real pain will be once they have one last period in the sun.

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Bobthebuilder

I read some live report on the so called bbc today about how industrial output is down, they were blaming brexit of course but last sentance as a sub note mentioned the unavailability of extended credit from banks etc wasnt helping. Classic, reminded me of this thread. I thinks whats beeen said on here will be mainstream soonish.

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2 hours ago, Agent ZigZag said:

Why dont you just transfer it to Hargreaves or Interactive Investors and start your SIPP

its a work pension, i did enquire but they wont pay to anything except 'approved' pension schemes, to be honest its not a massive amount and i really dont expect to make it to drawdown, plus it gives me 3.5x death in service and ive topped up elsewhere via work to add another 7x, so the contributions+10x salary + anything else should leave a nice wedge for the brats when i kick the bucket.

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34 minutes ago, leonardratso said:

its a work pension, i did enquire but they wont pay to anything except 'approved' pension schemes, to be honest its not a massive amount and i really dont expect to make it to drawdown, plus it gives me 3.5x death in service and ive topped up elsewhere via work to add another 7x, so the contributions+10x salary + anything else should leave a nice wedge for the brats when i kick the bucket.

Thats what I thought. I Set up a Hargreaves Sipp account, supplied Hargreaves with the Pension Reference and they did the rest. One of my pensions was also with Legal and general and Standard Life. Give it a go

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7 minutes ago, Agent ZigZag said:

Thats what I thought. I Set up a Hargreaves Sipp account, supplied Hargreaves with the Pension Reference and they did the rest. One of my pensions was also with Legal and general and Standard Life. Give it a go

might well do, ill dig around and see what i can do with it.

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I highly recommend this 40 minute presentation by Luke Gromen - 'The Return of QE & the Future of the Dollar' . Well worth watching if you have a bit of free time.

 

 

 

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On 17/11/2019 at 20:04, Castlevania said:

Plus a 1% annual charge and a 1% exit charge. It’s a joke.

Most folk have no idea how their pensions operate. It's a real shame.

I caught one large funds provider charging me when my funds were temporarily lodged in their 0% charge Deposit fund.

Actually, most pension provider staff have no idea how their pensions operate!

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On 17/11/2019 at 19:52, sancho panza said:

how much?

that's daylight robbery.

Must say I like the look of Fres over 5 years from here.could go down but huge upside too.

decl long

Hey SP, I'm thinking the same, but what spooked me was FRES's failure to respond to rises in silver prices in the same way that the likes of First Majestic and Endeavour spiked....do you have any thoughts on this? Mexico related?

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18 hours ago, Cattle Prod said:

By natural yield, do you mean dividend?

Yes.I think its prudent to have cash resources to cover a drop as well.I usually look at mine as if i need £12k a year (i actually need around £10k) and dividends cover that i want ten years worth of 20% of that in cash.So if £100k in divis over ten years i want £20k sat in cash.That way if the divis drop 20% across the board i can withdraw  £2k a year from the cash to replace.Iv always done similar to that all my life and so far its always meant i was never a forced seller.

Most people would argue its crazy to keep money in cash,but that system has always worked for me very well,and its seen me through some testing periods,like loss of job due to serious illness,relationship breakdowns etc.

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2 hours ago, Solzhenitsyn said:

Hey SP, I'm thinking the same, but what spooked me was FRES's failure to respond to rises in silver prices in the same way that the likes of First Majestic and Endeavour spiked....do you have any thoughts on this? Mexico related?

The worst companies in the sector do the best in the first stages.$1 on silver to FRES is nice,to a smaller player its the difference between bust or not.Its why i always keep a rubber band stock list in the sector when im working on timing it.They bounce hard and fast because of the amount of energy in them from all the downside/risk in a bear.

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Yellow_Reduced_Sticker
On 30/10/2019 at 17:15, MrXxxx said:

That's what I love about this site..I go to the Brexit thread with low blood pressure and when I leave it's high, I go to the pension thread thinking I have it sussed and when i leave i realising I don't, and then I come to this one feeling chipper and then leave depressed!..where's YRS, he always makes me laugh, especially when he shares his latest `investment` and how the price ha suddenly dropped (shares not reductions) :-) :-) :-)

 
Well ...I'm BACK ! :Old:
 
The house purchase went through, so been enjoying this new-found delightful part of the UK...MUST say its unreal here, (well for me anyway) as I'm not used to people/neighbours talking to you & being friendly and ALL speaking ENGLISH!
Folks here even wave at ya when they pass you by...
 
Anyhoo...GREETINGS from the Cotswolds!
 
As I've JUST bought no doubt that the bottom will DROP out of the housing market VERY SOON lol!:oxD
 
Now on the the IMPORTANT part, the YRS bargains!:Beer:
 
Done Aldi early and BLANKED, did Tesco at 7:00pm and there wasn't much there, then they reduced the cake section as i walked passed, ie: 70p cakes reduced to 18p ...i had the LOT!
 
However, when i got to the till, a girl behind me arrived with some YRS in her trolley, but what caught my attention was the reduced beer, as i was looking in her trolley, this girl started chatting and told me to get over to the far left of the store as there was still some beer reduced, even the kind lady on the till held my shopping while i RACED over to get 18 large tins of carlsberg reduced to 6 quid! (only thing wrong with 'em was a spliage and wet cardboard) PLUS i got a full bag of chicken thighs for 30p!xD
 
The kind lady on the till informed me that they do final reductions at 8pm and also throw more final reductions at 9.00pm, when i told her where i'd come from (WAR-ZONE) she could not believe it, a young cashier guy on the other till over heard us talking and he said he'd heard about this (fighting EE / Asians over YRS )  and watched it going on in Essex on YouTube...when i asked what this store was like, THANK GOODNESS his answer was you've arrived at normality!
 

HOWEVER, the BEST place so far is waitrose, I've been getting fish etc that costs £4 / 5 ...reduced to 99p, sometimes its only half-price, BUT the quality is FAR superior than Tescos!

The other day at waitrose i even got pheasant, well i would as I'm country boy now! 99p from £4.25 !
image.jpeg.6aa44cfcd58ce78bda2d1224fabbf9be.jpeg
 
On 26/10/2019 at 16:41, DurhamBorn said:

@Yellow_Reduced_Sticker

youl like this one.Iv just bought a side unit and set of draws,side unit for tv to stand on,133cmx90cmx42cm .Barker and Stonehouse in solid walnut.Got them from a real posh house near Durham,,they were downsizing moving south to be near family,paid £60 for both,and they are in superb condition.I reckon for the two new in B+S they would of been over £1500.Iv had some bargains on there,but i reckon this is the best iv had.Love my old Peugeot estate for picking things up;)

 

NICE 0NE, ya done very well for yourself!
YES I do like what ya picked up, bloody BARGAIN!:Jumping:
I'm on the look out here, there are 2 good CHEAP 2nd-hand furniture shops, also looking on Facebook, but not seen much on there...
 
Folks, If ya want a GOOD LAUGH watch these 2 short videos on Britain's Tightest Person!
FFS, She even asks for visitors to bring their OWN TEA BAGs ...! xD
 
 

 

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16 minutes ago, Yellow_Reduced_Sticker said:
 
Well ...I'm BACK ! :Old:
 
The house purchase went through, so been enjoying this new-found delightful part of the UK...MUST say its unreal here, (well for me anyway) as I'm not used to people/neighbours talking to you & being friendly and ALL speaking ENGLISH!
Folks here even wave at ya when they pass you by...
 
Anyhoo...GREETINGS from the Cotswolds!
 
As I've JUST bought no doubt that the bottom will DROP out of the housing market VERY SOON lol!:oxD
 
Now on the the IMPORTANT part, the YRS bargains!:Beer:
 
Done Aldi early and BLANKED, did Tesco at 7:00pm and there wasn't much there, then they reduced the cake section as i walked passed, ie: 70p cakes reduced to 18p ...i had the LOT!
 
However, when i got to the till, a girl behind me arrived with some YRS in her trolley, but what caught my attention was the reduced beer, as i was looking in her trolley, this girl started chatting and told me to get over to the far left of the store as there was still some beer reduced, even the kind lady on the till held my shopping while i RACED over to get 18 large tins of carlsberg reduced to 6 quid! (only thing wrong with 'em was a spliage and wet cardboard) PLUS i got a full bag of chicken thighs for 30p!xD
 
The kind lady on the till informed me that they do final reductions at 8pm and also throw more final reductions at 9.00pm, when i told her where i'd come from (WAR-ZONE) she could not believe it, a young cashier guy on the other till over heard us talking and he said he'd heard about this (fighting EE / Asians over YRS )  and watched it going on in Essex on YouTube...when i asked what this store was like, THANK GOODNESS his answer was you've arrived at normality!
 

HOWEVER, the BEST place so far is waitrose, I've been getting fish etc that costs £4 / 5 ...reduced to 99p, sometimes its only half-price, BUT the quality is FAR superior than Tescos!

The other day at waitrose i even got pheasant, well i would as I'm country boy now! 99p from £4.25 !
image.jpeg.6aa44cfcd58ce78bda2d1224fabbf9be.jpeg
 
 
NICE 0NE, ya done very well for yourself!
YES I do like what ya picked up, bloody BARGAIN!:Jumping:
I'm on the look out here, there are 2 good CHEAP 2nd-hand furniture shops, also looking on Facebook, but not seen much on there...
 
Folks, If ya want a GOOD LAUGH watch these 2 short videos on Britain's Tightest Person!
FFS, She even asks for visitors to bring their OWN TEA BAGs ...! xD
 
 

 

:-) :-) :-) at last, I have found a female version of myself... although I don't think I would like to `flick her switch`!...

...and as for the undies, I do the same too, but not to save money! :-) :-) :-)

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Yellow_Reduced_Sticker
On 31/10/2019 at 18:33, DurhamBorn said:

Exactly,i love living frugal but as healthy as possible.Being frugal though iv bought a tin of the Pizza Express passata and have bought similar crushed tomato cira brand from BandM,looks very good quality and x2 as much.Iv bought some Basil to add as per the Pizza Express one and salt and pepper.Il compare the two and if very close il use the half price one in future.Im going to push the boat out and get some of that flour though.I use Sainsbury 00 pasta flour and thats very good,the Italian pizza one put up is 80% more,but might be worth it so il compare them both.Iv noticed my partner putting a chicken carcass in the bin with lots of chicken still on it underneath,thighs etc.From now on that will be getting stripped for pizzas toppings the next night.Im also going to try out some healthy cheap toppings,mushroom and leek being one xD

Just started catching up on this GREAT thread...

Only on page 75 AND just pissing myself laughing with some of these posts... just BRILLIANT!xD

There is just NO-WHERE ... where you get this caliber of underground investment information, intertwined with frugality on the entire web! 

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On 18/11/2019 at 04:37, Cattle Prod said:

Hello Dosbodders, I'm currently in gold country, Alaska, saw the following in the local paper and thought you folks would be interested to see a little local colour on one of our favourite miners @kibuc @sancho panza and others

There was a crew of Australian miners at the hotel bar; unfortunately I couldnt stay long enough to strike up a conversation. They were clearly off to the field tomorrow (its -18 here now and their boots are not right, so were discussing that), and they seemed pretty chipper! So nothing really concrete to report, but hopefully a little flavour of the front lines :-)

 

20191117_192934.jpg

Good to see you still flaoting around CP.I posted previously that we've used this recent move downn to $4.20 toup our holding in KGC to roughly 1.4%.Didn't think the Q3 figures were that bad but markets often do this.

We're still loading up on big oilies and to a lesser degree some oil services firms and nat gas/mid size oilies.Nowhere near full allotment yet.

USD still looking strong.June 08 looks like being 2021 now with recent price action in S&P.Gonna be interesting to see what happens to the likes of KGC if the $ does weaken.

 

On 18/11/2019 at 14:57, Harley said:

Not sure he knows his chart patterns!

xD Yeah,it's the fundamental analysis I'm more interested in.I thought that when I read it.

 

7 hours ago, Solzhenitsyn said:

Hey SP, I'm thinking the same, but what spooked me was FRES's failure to respond to rises in silver prices in the same way that the likes of First Majestic and Endeavour spiked....do you have any thoughts on this? Mexico related?

Could be.

I think this Motley piece from 5/8/19 sums up my view whoich is very much that bad news often gets oversold.Good news overbought

Also include the bit about Hochschild

https://www.fool.co.uk/investing/2019/08/05/would-i-be-mad-to-buy-the-ftse-100s-worst-performing-stock/

Misfiring

Historically, Fresnillo has been a popular pick with long-term investors seeking exposure to precious metals, along with a dividend (current-year forecast yield 2.3%). It’s the world’s leading primary silver producer and Mexico’s largest gold producer, with seven operating mines and a high-quality pipeline of projects and prospects. As a FTSE 100 stock, the liquidity of its shares has also made it a favourite with shorter-term traders.

However, over the last 18 months or so, it’s got into an unwelcome habit of downgrading production guidance, due to such things as operational delays, and working through lower ore grades than expected in one or two areas of its operations. The persistence of these challenges has led many long-term investors to throw in the towel. Meanwhile, the last thing traders want in a leveraged play on strengthening gold and silver prices is a company that keeps falling short on its production guidance.

Looking to the long term

I don’t think the fundamental attractions of Fresnillo as a long-term investment have changed. I expect management’s cost reduction and productivity initiatives to come through in time, and with improved performance and reliability to see a return of long-term investors, as well as renewed interest from traders.

Fresnillo’s challenges could persist in the near term, and the share price could remain volatile for a while yet. However, I’d be happy to buy a stake today on the view that long-term returns could be very strong from the current level.

Firing on all cylinders

Mid-cap miner Hochschild operates three mines — two in southern Peru and one in southern Argentina — and has a good pipeline of long-term projects throughout the Americas. The company, which is my colleague Ambrose O’Callaghan’s top stock for August, is firing on all cylinders.

Last month’s production report told us: “Hochschild has continued its strong operational performance in the second quarter of 2019, with year-on-year increases at all three of our mines … Consequently we remain firmly on track to meet our annual production and cost targets.”

City analysts expect earnings to soar 80% this year, followed by 40% in 2020. There are dividends too (current-year forecast yield 1.6%). While the shares have risen 30% in just a couple of months, the strong operational performance and forecast rates of earnings growth suggest to me the stock is still undervalued. I’ve long admired the company, and continue to rate the shares a ‘buy’ at their current level.

 

Decl long both Fres and Hoc

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