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There is a double whammy here of the production update shocker and general expectations of lower gold and silver prices in the next quarter or so due to rate rises around the globe. Gold in particular has held up very well, but who knows what will happen once the rate rises start hitting.
However the financials, which while backward looking, will be massive when released in March. I would guestimate that $1bn of GP and something like $550m of NP. The best figures since 2017 or maybe even 2012. Fres will be trading on the cheapest PE it has been on for the last decade. In the short term it is abundantly obvious that the management are running this for the 75% shareholder and not the 25% left overs which makes sense. The question is what does the 75% want? If they don't care about the SP being high because they have no intention of selling / borrowing against the equity then a low SP suits them if they want to buy out the 25% on the cheap. I would discount this theory as they would still have to find $2bn or so to fund this. I would imagine there will be an announced dividend increase paid from the bumper profits of last year, but not as much as possible as they will want to keep a healthy war chest to see them through the labour disputes and covid stoppages etc etc. I am sure the market will like a divi increase in the short term, but longer term i think the price of gold and silver will have to make new highs to interest the larger institutional as they have been disappointed time and time again.
Once the US 10 year hits 2.5% or so and the FED has to back out of its tightening cycle and ease gold will be well on its way to $2,000 if not more. This could take 6 months or longer, but it will happen. I cannot see how the FED can normalise and not induce a recession at which time the QE machine will go brrrrrrrr.
any guesses for tomorrows numbers? i am going to go for gold beating the top end on the year at 775k oz vs guidance of 675 to 725k. Silver will come in at the bottom of the range at 53m OZ vs guidance of 53.5-59.5. The market will probably not like it initially.
slater unfortunately in America the bottom 50% of people own virtually no property or stocks. Thats a lot of voters who couldn't give a monkeys about the price of either but know exactly what the price of gas and food is week by week and can see the rises for themselves.
50 would be nice and i still think it gets there too evetually. 50 in 1970 whatever would be about 450 today if you inflation adjust. even if it only got there for a day i think even FRES would struggle to be priced at less than £10.
I think a rally to $30 will be driven on a physical supply shortage. its no secret demand from stackers , india , and family offices looking for a real asset to save in has blown higher in the last 12-18 months and i see no reason why that will slow down this year. There are large buyers via comex non delivery months at the moment which is very unusual and signify stress / a move by large players to force things higher.
The 50 and 200 dmas are close by which once overtaken will provide momentum to the upside. The rise in yields on USTs should have blown up gold and silver but it hasn't. Therefore some buying pressure if being exerted $30 is the first big target to aim for any any move higher will find tough resistance there, but it will also become self fulfilling if a serious move gets underway.
Fed rates will under no circumstances hit 5%. SP500 would trade to 2,000 and Nasdaq 5,000 if they did that and the FED has become a market propping up machine NOT an inflation targeting machine. The US economy is too dependent upon financial markets and the US political system also judges its success on Market outcomes and is too self interested in rising markets.
I also think that silver will trade north of 30 at some point this year and also a chance of 50 before the end of 2023. With silver at 50 and this SP will be north of £20 however bad the management are and i would think closer to £30. Once the 10 year yield hits about 2.5% in the current FED tightening phase it will max out and reverse course as the market will correctly anticipate the next loosening cycle. Gold will also anticipate this and go on a tear. Silver will follow.
My analysis above would only change if the FED somehow gets a volcker type appointed and they get serious about inflation, but that will never happen. The US parties have found that they can buy votes with 'stimulus' checks and they will keep pushing those out to try and 'fix' the market imbalances, which is of course insane, but its where we are.
Of course there is nothing to say that the SP doesn't go to £6 first, but i remain convinced that the destination is all time highs well above £20. I have no idea about the path from here to there.
GLA
I would expect a dividend hike given the policy of paying between 33 and 50% of net profits as a dividend and the expected huge uptick in profits, but i would also expect that this amount would be at the smallest amount possible.
unless Q4 was a disaster then gold should smash the yearly guidance and silver should come it at the bottom of guidance. No idea what the market will make of this data. Profits released in march should show something like $600m of net which will be the best since 2012. As as forward looking machine the only thing thing that seems to get this SP rising is the higher PM prices. Profits don't seem to matter. I look forward to the time when both PM prices and silver output are rising beyond what the market currently prices, although i think i will be waiting until 2023 at this rate.
The DXY is just the dollar against a basket of 6 currencies, EUR, JPY, CAD, GBP, SEK, and CHF. Most heavily weighted is the Euro at 57.6%. Since most of those currencies are being printed at more or less the same rates to on a relative basis it is unchanged. They are all being diluted at the same rate. In effect The DXY is just the USD/EUR pair.
For the DXY to be in the70s the dollar would have to lose c20% of its value from here against those 6. The dollar could lose its reserve currency status and still be in the 90s if those other 6 also lose their own percentage of reserve currency holdings. I cannot say if the next reserve currency will be RMB or BTC or some other CBDC but i am willing to bet it wont be any of the 6 on the other side of the DXY basket. If anything the EUR is more perilous than the USD. Given the Italian banking system and the political nonsense that goes on there the USD actually looks pretty good to me compared to EUR. The DXY should only be used as a measure of USD strength of the Dollar versus Western Europe + Japan.
everyone has to follow their own gameplan and stick to it. i wouldn't recommend taking advice from a notice board. I do recall the FRES got wacked down 20% down to about £4.50 when silver was hammered on March 13 ( give or take) 2020. BUT it bounced hard from that bottom. That was then of course and this is now. For sure if the markets get tanked everything goes down at first. Again my thoughts are that the sell off will be tech and related names that make no profits. If we are lucky this will be accompanied with a rotation into 'value' names which to me means companies that make money, pay dividends and have decent future prospects.
Hi all,
I would add to the downside risk category a full market puke. The long end of the UST market had a huge move last week signalling pain to come for equity markets, it just hasnt got the memo yet. This would be in response to rate rises.
To balance this you have the upside of increasing output in silver once junicipao online ( at some point ) and rising prices as demand for silver is on a tear. I dont know when this will happen of course. Also in my opinion once the equity market pukes the powel put with come out and rocket things higher again.
For my 2 cents worth this one is as convex a play as there is in the FTSE100. It has traded above £20 in the past and the conditions are right for that to happen again in the future. Its making a tonne of profit right here. Long term financing it fixed. If the silver squeeze movement goes mainstream then this share should fly. Its even paying a dividend again with the prospect of higher payouts with the existing profits. Sure it could trade down to £7 something, but my upside target has not changed. As is see things downside is 25%(?) but upside is 100% +.
GLA
I would hope the manipulation will be greatly reduced / ended next year. If they are resorting to shipping silver from london to deliver in new York there is something going on. New york should be awash with silver eligible for delivery. Real physical demand has been booming, check our Indian imports for instance. Lets see what 2022 brings. Silver output should be a huge increase from junicipao. Lets hope prices run north too and break the magical 30 number.
https://www.reddit.com/r/Wallstreetsilver/comments/rlrda9/yep_yep_more_of_the_same_jp_morgan_moving_metal/
JPM been shipping metal across the pond for a while now. Looks like they are dipping into SLV holdings to make good on Comex deliveries. Its very interesting reading.
Hi Kando, Comex is showing signs of large stress. They are shipping silver from london to make deliveries in NY. Think about that for a moment. I have no idea when the 'market' notices and applies a massive squeeze, but its one day closer today and will be again tomorrow. I sold out of this name just before the move from 760 to 1350 and still get annoyed about it. I wont make that mistake twice. GLA.
Heallywood, Drahi is positioning himself to make a massive fortune from here to at some point in the future. He will also try to force this move and not just wait for the market to re rate the stock. Copying him is in no way a bad strategy imo.
IMO this story is in no way done. Drahi wouldn't just buy 18% to have it sit there as a market investment. He will make a play to increase the value. Its what he does. The most obvious thing would be to force a spin out of openreach / team up with DT for a full bid. Even if it were to fail he would bring other bidders to the game increasing the SP by 50%(?) from todays price. only paper hands are selling here.