Member Info for Major4legs

Strangely Share prices are still indicating that the war will have a minimal effect on company profits- but although 2022 Ukraine invasion produced a bigger peak the turbulence in other indicators is bigger. Oil +DXY+yields are all rising which points to prolonged stagflation which is good for gold! But a lot of the historical correlations are breaking down. Oil is now much less important than the 1970s when things last looked like this so maybe the markets are right and everything will bounce back quickly. Non G7 central Bank gold buying has slowed down - if that picks up again in response to US dollar weaponisation gold will go up

As comforting as this report is it’s a bit of an outlier. The world bank and world gold council suggest a 5-15% growth in the gold price over the next year. The methodology used in the report is a bit dubious with many unproven assumptions- 40% gold reserves target, US loss of reserve status etc. Recent gold purchases refute the theory with decelerating central bank purchases while there remains little evidence that the USD will lose reserve status in the next few decades. The flow of money into the USD during the war and continuing use of the USD in 56% of work trade refutes that theory. The Yuan has 3%! Arguing that oil and trade is priced in USD because the US was the world’s policeman is also contentious- most economists would argue it is because of the depth of dollar capital markets, liquidity and established laws and relationships which will take decades to unwind.

While we wait for MTL news and watch the macro disaster unfold in Iran I did a bit of digging into who is buying gold- mainly Asian central banks led by China but Poland is a big outlier in Europe with a stated aim of 30% of reserves in gold ! The Polish banks head is Glaprinski - his background is economic philosophy not technical- probably a gold bug who distrusts fiat! I find the psychology of this fascinating- why do some people distrust fiat and go down the conspiracy rabbit hole - I think there is a link between this and the rise of right wing populism.

Chartists may have some use on large liquid retail shares where they may be able to mimic crowd psychology - gold is being driven by non G7 central banks not retail investors- they are reacting to complex factors - can’t see how chartists could possibly predict anything to do with that. Even Trump can’t predict his next move so how. So how can we predict how central bankers respond ! The indicators are bullish but the old correlations may be broken- who knows?

What do you mean by devalue the currency- do you mean inflation? This devalues the currency but also reduces the size of the debt! Where is your evidence for saying trust in fiat is being eroded? If it were states wouldn’t be able to roll over their debt. 10 year treasuries provide a yield of 4.3% that’s not a lot - if they couldn’t sell them the yield would be a lot higher. There is no doubt the rise in gold prices was driven by non G7 central bank purchases - where I and most people disagree with the gold bugs is why they bought gold and sold USDs. You might argue it was because they thought the USD was going to collapse. The facts show that the war caused an increase in flows into the USD - DXY rose while gold fell 20% - hardly evidence of a loss of trust in the USD and increased trust in gold. The consensus is that pre war non G7!banks feared sanctions and tariffs and wanted more independence from the dollar so bought gold. Post war it’s got a whole lot more complicated - longer term indicators are bullish for gold again but who knows?

Are you asking about deficits or national debt? It’s perfectly possible for a state (or a company for that matter) to survive indefinitely running either debt or deficits or both as long as investors believe the debt will be repaid - the debt is just perpetually rolled over. G7 states have almost infinite balance sheets so selling debt isn’t really a problem especially if they control the currency the debt is in and can therefore use a variety of measures such as QE to manage it- US debt is huge and very expensive and a problem but not one that is going to explode anytime soon. Japan has run a much bigger debt for decades and by historical standards US debt isnt proportionately bigger than at other periods Not to say the huge interest isn’t a major headache but it isn’t existential. Governments don’t just print money any more - Money is created by banks providing loans

I didn’t expect gold to get this high because I didn’t understand what was driving it - the gold bugs claimed it was fear of imminent dollar collapse- I made a mistake of reacting to that thesis which is conspiracy driven and based on ideology not facts. My view now is that the main driver was not fear of dollar debasement but fear of dollar weaponisation , the evidence for that is that G7 central banks who have reason to fear debasement but not weaponisation did not buy gold. The big buyers were China, Russia and other non G7 banks who had reason to fear weaponisation. This was evident in the post Ukraine invasion gold acceleration and further accelerated by tariffs. The current rush by many non G7 central banks to agree credit swap lines with the Fed is further support. Not sure I agree Lee and his followers got it right either- they were predicting gold would continue to rise to $8 or 10,000, that Dupax was nailed on and Abra would make MTL a tier 1 producer. Really? Far too much emotion on this board and not enough considered agreeable diversity of options.

Keep believing and for gods sake don’t let facts get in the way of a good cult. The dollar is collapsing before our eyes… MTL won’t be heavily discounted because we only have 1 mine in a sanctioned jurisdiction- Bowden will wave his magic wand and another Condor will appear - risk what risk? Anyone would think the enlightenment never happened! For those more interested in facts than reading chickens entrails this site may help https://www.atlanticcouncil.org/programs/geoeconomics-center/dollar-dominance-monitor/

MTL isn’t alone in being hit hard by macro fundamentals. GDXJ is the closest we have to a sector metric and that is down since the war started. The gold evangelists are pinning their prayers on a never ending gold bull run driven by US debt - but the evidence refutes that. Gold went up post 2022 because non G7 central banks bought gold fearing the weaponisation of the USD following sanctions, accelerated by tariffs. The war forced some of these banks to sell gold to pay for higher oil. Now with real yields on 10 year treasuries rising gold is losing its lustre. No one knows where this will go so pinning your hopes and prayers on it is foolish. The same evangelists will tell you the MTL board is about to do something magical- again based on nothing but hope and prayers. They will tell you there is no risk. I don’t doubt their belief- that is all they have - but the risks involved in all gold mining are real and the risks in MTL in a single sanctioned jurisdiction make it riskier than most. Until these macro and micro risks change MTL will remain heavily discounted. The fundamentals are strong but in the current climate fair value won’t be realised. That can change but it will take more than hopes and prayers from a few believers.

Our liquidity is the problem not the number of exchanges we are listed on - we only have a relatively small number of shares being traded. Upgrading to the FTSE or main TSX (not the TSXV) would help. Inclusion in the GDXJ would probably follow if we increased liquidity by listing on FTSE or main TSX

Sorry punctuation error! In Nicaragua we dont have production risk yet only build risk!

Lee - even a stopped clocked is right twice a day so eventually (I hope) your endless predictions come true! But there is real risk here. Runruno decline could be steeper than expected while political opposition, Biox contamination, diesel supply etc could all delay or stop production in Nicaragua on top of the usual risks involved in building a new mine (it’s not LEGO” we have US sanctions, Trumps threats and Ortegas corruption to deal with. The opportunity is huge but the risk is not negligible- you undermine your credibility by claiming it is.

All true. If the “believers” had not over hyped this share and tried to cancel and drown out anyone pointing out that ALL gold mining is risky we would all be satisfied with where we are. As Mark Twain said “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

Of course la India should start producing this year but if we see a repeat of problems at Runruno or run into construction delays in Nicaragua or some unknown political event between Trump and Ortega or any number of risks associated with mining in high risk jurisdictions - we might not. That’s why MTL is now a high risk opportunity and returns will be heavily discounted and why I cut my exposure here and invested in lower risk opportunities with higher potential rewards. I genuinely admire your balls if you hold more than a minority of your investments here, it’s a great gamble.

The RNS increases potential reward and the actual risk. Funding for La India is now much tighter - $103m capex cost remains funded by appprox $66m FCF and $36m cash with 30m loan contingency. Not a crisis but a long way from the risk free fully funded project many here promised. Gold mining is an uncertain risky business which is why p/FCF multiples are low and NPV discounts high. MTL is no different. I admire the courage of LTHs with a high concentration of MTL in their portfolios but question their rationale. GLA.

Gold is down over 8% since the war started but MTL is more or less unchanged. Some expectations are wildly exuberant- probably because of overexposure and emotional attachment. It’s a binary risk now but the odds are increasingly in our favour as La India nears production

Not sure 6% discount is defensible under current circumstances. Realistically I would double it. Also this is pre tax. Post tax =( 4,800-1,176) x 145k oz x 12. 4 =6.5 billion gross and 2.1 billion after 12% discount and 30% tax - not sure on the tax position I think the published 30% CIT may be alleviated in early years- anyone know or disagree with my calculations?

Not sure 1.5% rise is flying! More significant rise was GDXJ up almost 4%. Juniors rising faster than gold is a good sign. DXY down to 97 showing money flowing out of USD - all bodes well for us. Looks like MTL was over sold today - like others I took advantage and added a few.

Hate to say it but having our own Trump whispering right wing populist on the board may be helpful

Good to see sanguine debate on this - not so good to see the immediate impact on the share price. US isn’t an honest broker and there could well be a political element like their attack on Anthropic. We can’t exclude macro risks