Vince Lanci: Banks Are Looking At The Silver Miners Now

➡ Mining companies are expected to do well as more analytical firms start to release reports about them, which could increase interest and value in these companies. This is especially true if the price of gold remains stable. The article also discusses the current state of various markets, including commodities and stocks, and how they might be affected by factors like China’s economic health and decisions made by the Federal Reserve. The author also shares a personal story about his experience with silver mines.

All the analytical firms that have mining on their books, they’re going to start putting out reports. So that’s going to be very good for mines as institutional interest increases, unlocking their undervaluedness and hopefully getting up to a relative value. So I think mines should outperform bullion in the next leg, provided bullion remains stable. Welcome to the morning markets and metals with Vince Lancey, where each day he brings you the precious metals and financial news to get you ready for your day.

Here’s Vince. Good morning. I’m Vince Lancey and this is the morning meeting. Today we’re going to be talking about silver mines. Before we get started on that, let’s do the markets themselves. The dollar is up 1510. Yields are flat s and b 500 is down five handles. The VIX is 1484, up 16. Gold is down $24 at 23. 11. Silver is down fifty seven cents at twenty six fifty five.

Copper is down almost six cents at four hundred fifty seven. WTI is the only commodity actually pushing against all this. Up twenty six cents at eighty three point four nine. Natural gas, I’m sorry, is also up 187. Bitcoin and Ethereum both destroyed 61,000 chains, down four and 4. 3%. Ethereum is down over 6%, closing in on seven at 29 98. Platinum, palladium are both down. Palladium down 20 at 950.

Platinum down twelve at 936. Grains are also down. Wheat is the weakest, I think, down eight cents at six hundred. Okay, so before we get that, if you’re looking at the commodity markets, notice that the commodity markets are weak and the stock market is relatively stable. And the dollar really isn’t doing much to warrant these type of moves if you’re looking at correlations. So I’ll give you some framework to look at there.

Commodities have had a very nice run recently and that’s a factor, a result of a couple things. One is the world has gone from, in its recovery, it’s gone from consumption to manufacturing. So all the manufacturers are buying commodities and all the speculators are buying commodities ahead of them. And China is supposed to be coming out of its problems with some stimulus bazooka, if you want to call it that, has been part of that reason.

Copper is an example of that. Very recently it had a very big move. Now the things pushing back against that are, okay, have a healthy, possibly healthy retracement. What would be causing that? Well, maybe something is faltering in China and certainly something could be faltering in China when you consider that the yen keeps debasing. If the yen keeps getting weaker, the chinese yuan may have to weaken. If chinese yuan does weaken, and that’s less buying commodities out of China.

So you’ve got to wrap all that together. The thing that’s easiest to grasp, I think, for Americans is, well, the Fed is going to be doing their rate decision tomorrow. Now, I don’t think there’s a chance that there’s going to be a reasonable chance that they’re going to raise rates. I think that people are a little bit nervous in trying to book some profits. So there’s the markets themselves.

Let’s get to the story. There’s two things today. Well, there’s one thing today, plus a little story by me. There’s the front page again. This report is really something. You want to look at the silver pages. Before we get started on the silver page, I want to tell you a little Echo Bay mind story. When I was a market maker on the floor trading silver options, that’s where I got my start.

Having mastered silver options and being the best there ever was at it, I decided to go back to my fundamental roots and I started looking up silver mines. And Echo Bay Mines was the first mine that I bought. And, well, years go by, and in 2008, I started a business. Well, having booked a big profit, I started a business consulting, and I wanted to go back to mines.

I started visiting mines and I started consulting with them on their production. And I said, you know what? I want to buy something that reminds me of when I started. So I looked for echobay. com and it was owned by one of the mines. I’m not sure if it was Kinross or Coeur d’Alene. I forget who owned it, but it had rolled up into some bigger mine and I bought the name Echobay.

com. And so there you have it. Echo Bay Partners is an homage to Echo Bay silver mines. And that’s my initial silver pedigree. That’s really og stuff. Incidentally, Echo Bay mines, Echo Bay was going to be the name of eBay initially, but because it was owned by someone else, he went with eBay as opposed to Echo Bay. Anyway, moving on to the main event. That’s my story. Bank of Montreal, big Natural Resources bank, they have a report called the Silver Pages.

And the silver pages, as you would think, is about silver mines. It is a comprehensive review of operating evaluation metrics for a broad universe of north american and global silver companies. The data set can be used to evaluate the relative investment merits of global silver stocks based on consistent and rigorous analysis over range of valuation and commodity price scenarios. That’s their self description. This is a very dry report, very balance sheet oriented, very Excel spreadsheet oriented with some very helpful charts, but not very user friendly looking.

If you’re a retail investor like I am, I’m gonna go through a couple of the slides there. One thing I’ll say is that there’s not a lot of writing in this, but it’s what comes out of this. This is put out on the 29 April. Look at the date there. Two days after Newmont, right after UBS. All the analytical firms that have mining on their books, they’re going to start putting out reports.

So that’s going to be very good for mines as institutional interest increases, unlocking their undervaluedness and hopefully getting up to a relative value. So I think mine should outperform bullion in the next leg, provided bullion remains stable. Now, dollar 24 in gold, that is stable. Let’s not get crazy down $0. 60 in silver that is stable within a range. All right, so let’s look at a couple of slides, give you an idea, some color for this.

There’s the table of contents. Table of contents is pretty thorough. I put a red rectangle around stuff that I’m looking at as a trader. Silver price sensitivity makes it more of a beta play. Next chart. There’s a silver price sensitivity showing by mine. Some of the mines are core mining. First, majestic Fortuna, Hekla, Pan American, Gatos, Gogold, Magsilver and silver Crest. They go through all those based on different price scenarios for silver.

Here’s a chart implied the red in the middle, that’s the price of silver. Okay. To the left is net present value sensitivity. So it’s kind of like, if silver moves, are they less or overly or more sensitive to silver? So if you want a pure play on silver, if you want a play that’s more leveraged to the price of silver, you’re going to go with Fr, Mag, SL and Gato.

Right. Okay, so your companies that are leveraged to the price of silver will be companies that have a lot of probably financial leverage. Well, no, actually, I’m not necessarily sure about. Depends on the company. Right. It’s been a while since I looked at these. And on the left you have ggo, Cde, Fortune, Fortuna and pass and Hecla. Okay, so you have all these mines and what are these stripes here? Okay.

The large are with the stripes and the medium size are without the stripes. So you could see that in general the larger mines are less sensitive to the price of silver. That could be because they have other metals in their portfolio. It could also be because they have different type of hedging books. They’re more mature, so they’re going to be more stable. And you’re buying a business that is in silver on the right hand side.

A lot of the miners will be more sensitive because they have an under hedged book. They might be more junior, although I’m not sure. All right, so that’s my rambling comment on that. Here is the BMO commodity forecast assumptions. Nothing spectacular there. They haven’t really raised them. They’re looking for dollar 28 by the end of the year in silver key valuation metrics. This is probably the most interesting thing, I think, for, for people looking at these producers core is a market behavior, market performance, I should say first majestic market performance.

Fortuna over perform, outperform. Hecla outperform. Pan american outperform. Gatos market go gold outperform with an s. I don’t know what that s means. Magsilver outperform. Silvercrest outperform. You could see that. It would seem to me that the bigger the mine, the less theyre expected to outperform, which makes sense because those are the mines that are the only people only put their money into the bigger mines, mining companies, if at all.

This is consistent. You want to see this. That means these smaller mines or majors that havent been discovered yet are the ones that are undervalued. And this is consistent with things thats their pick of what they like. Also, we have a BMO metals brief. This is actually very good. I haven’t seen this in a long time, but silver’s on everyone’s radar. Getting to the news, Elon Musk wrapped up his visit to China.

Again, what did I say yesterday? Don’t short Elon Musk. Well, there you have it. He got what he wanted out of them. I don’t know what that means, what he gave to get it, but he may end up buying tick tock for all I know. Currency traders warned Japan’s government that it will need to repeatedly act to buoy the beleaguered, yen driven economic force. Everyone talking about the yen yesterday? Well, that’s because the bank of Japan seemed to be coming to knock it back in place, which means they’re getting a little bit nervous.

Federal regulators find wireless carriers, Verizon, at and T Mobile and Sprint. Nearly 200 million for sharing customers location data without consent. Again, bigger incumbent technological companies are getting attacked by the federal government. Not that they don’t deserve geopolitics. It’s more the same and it’s just not good. The IDF, on a good note, they’re talking. It says the invasion possible. They’re talking. But everything else here, the Houthis are just attacking our ships at will.

Now China is pushing back against the Philippines. Shanghai Maritime Safety administration said military activities will be carried out in part of the East China Sea. Everyone’s pushing back, pushing against american presence, right? All right, data today is the S and P. K. Shiller Home price index. 20 cities Wednesday is the federal interest and there’s reports promised for premium subscribers. Have a great day. I’m Vince. Catch you later.

Echo Bay mines and by the way, I own Echo Bay. I had to pull it down when I closed my CTA down years ago, but echobay. com, it’s not for sale. Thanks for watching this morning’s markets and metals update with Vince Lancey, brought to you each day by Miles Franklin precious metals, where this week’s special is junk silver for only $2. 75 over spot. Junk silver is the pre 1965 dimes and quarters, and one of the products where we did see premium spike in the past couple of years.

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