Another reason that mining is being undervalued today is because most analysts still think that it's a totally cyclical business. They function with the impression that miners can't be profitable unless there is a higher unit price for their output. And like the old saying goes, the cure for high prices is high prices. They are trapped by that assumption, and thus, they value the businesses as purely cyclical instead of businesses producing consistent results.
And my Miners have pulled back significantly too. And I have to ask... How will Diesel prices - soon to spike affect their margins? (Although I guess that goes for any industry?).
diesel is a meaningful but not dominant cost line for gold miners. I’ve read estimates that if prices doubled from here it would drive up ASIC 12-15%. So for a typical gold miner with AISC around $1,500/oz today, doubled diesel would push AISC to roughly $1,650–1,725/oz.
Another reason that mining is being undervalued today is because most analysts still think that it's a totally cyclical business. They function with the impression that miners can't be profitable unless there is a higher unit price for their output. And like the old saying goes, the cure for high prices is high prices. They are trapped by that assumption, and thus, they value the businesses as purely cyclical instead of businesses producing consistent results.
Yes, but diesel fuel is up 54% since the inauguration. And, could go higher
And my Miners have pulled back significantly too. And I have to ask... How will Diesel prices - soon to spike affect their margins? (Although I guess that goes for any industry?).
diesel is a meaningful but not dominant cost line for gold miners. I’ve read estimates that if prices doubled from here it would drive up ASIC 12-15%. So for a typical gold miner with AISC around $1,500/oz today, doubled diesel would push AISC to roughly $1,650–1,725/oz.
Thanks Matt
Matt, thank for the "facts"