I own shares of Agnico Eagle Mines (NYSE: AEM) and yesterday after the market close it announced a total blowout earnings quarter with a quarterly earnings increase of 400%. Yep, they didn’t double their earnings for the quarter, but quadrupled them!
The company announced record gold production for the quarter, but most of the gains in revenue and earnings came thanks to something that is now going to impact ALL mining companies as the earnings announcement reveals in this line – “The increase in net income and in cash provided by operating activities in the first nine months of 2019 compared to the prior year period was mainly due to higher realized gold prices….”
The increase in the price of gold from below $1300 an ounce in the spring and a year ago to roughly $1500 an ounce today means an explosion for the bottom line for mining companies that produce gold. It also means that the small cap junior mining and exploration stocks who aren’t big producers, but have viable ounces in gold and silver in the ground are going to see those properties simply become more valuable as time goes on.
The masses have no idea that these companies are becoming more valuable and with gold having a bit of a pullback the past we weeks since Labor Day they have ZERO interest now in the stocks.
That will change in time. Once the stocks tick up the masses will start to chase and only then will they read the reasons why the stocks are going up and start to understand that the fundamentals for the mining sector is now becoming a sweet spot.
Caterpillar announced an earnings disaster yesterday. Chipotle fell 5% on its earnings news. So did Ford shares are down 5% in pre-market trading.
But AEM increased its dividend by 40% for its shareholders!
That is real.
And so is gold as it is now over $200 dollars from where it began this year at and broke out several months ago. And that fact means every once of gold today is worth more than it was on New Years.
And Bitcoin…. well it fell below $10,000 in September and then below $8,000 earlier this week. Online brokers are actually rendering Bitcoin obsolete as an instrument of speculation by lowering trading commissions to zero. This morning it is below $7,500. It’s a total joke, but once Bitcoin players finally give up on crypto “coins” they will move some of that money into what is hot and going up. That will just be more money going into the metals market when it happens. I believe the thing to do is to be positioned AHEAD of the masses.
-Mike
