Mining
It’s Time to Pile Back Into Gold Stocks [Charts]
The blessing and curse of being a contrarian is this: an inevitable outcome is recognized well before it comes to fruition. Even though profitable opportunities may be identified well in advance, it can take so long for hallmark events such as capitulation to happen, that it gives ample time to second guess one’s convictions.
We’ve believed, even before the correction that has recently hit U.S. markets, that the bear market for gold was long in the tooth. With asset bubbles all over the place, it has seemed for awhile that gold and silver were the only assets that were reasonably priced. Then yesterday, our friends at Palisade Capital sent us over five charts on why they believe that gold stocks are the most undervalued that they have been in decades.
We tend to agree with that sentiment, which is why in last week’s chart of the week we predicted that gold had already bottomed and that it had nowhere to go but up. (We further predicted that other commodities such as base metals would continue to get routed for the time being, and that U.S. equities would not return to the same levels for awhile.)
In any case, here are the charts:
1. The divergence between the S&P 500 and Bloomberg Commodity Index is at an all-time high.
2. The bear market in the TSX Venture now stands at 1,090+ days.
The TSX Venture, the Canadian home to the majority of the world’s junior mining stocks, is still plagued with plenty of zombie stocks that amount to billions of dollars of negative working capital. The exchange and regulators have also been readily criticized for recent changes that limit access to capital from retail investors. However, in spite of all of this, there are truly some great projects and assets lying in some of the companies that have survived the onslaught. As you’ll see in the next chart, these companies have never been more undervalued.
3. Gold stocks have never been this cheap relative to the price of gold.
The Gold BUGS Index (HUI), which tracks the world’s largest gold miners, was last this low when gold was only $250/oz.
4. The gold bear market is closing in on being the longest in BGMI history.
Using the Barron’s Gold Mining Index (BGMI), this is already the worst bear market for gold miners. However, in just a couple of months, it will also surpass the 1996-2000 bear market as the longest.
5. The ratio between the gold/silver sector to the S&P 500 is unprecedented.
When pricing the S&P 500 in terms of the Gold/Silver Sector Index (XAU), it has never been this expensive. Put another way: gold and silver has never been this cheap.
Chart credit to: Palisade Research and The Daily Gold
Mining
Visualizing Mining’s Footprint in British Columbia
Mining represents 7% of British Columbia’s GDP despite only accounting for 0.04% of the land use.
Visualizing Mining’s Footprint in British Columbia
British Columbia is considered a global leader in the development of socially and environmentally responsible resources.
An estimated 54% of the province’s total land is protected, making it one of the world’s greenest mining hubs.
This graphic by the B.C. Regional Mining Alliance (BCRMA) details mining’s footprint in the province.
A Tier 1 Jurisdiction for Mining
British Columbia covers almost 95 million hectares (234 million acres), more than any European country except Russia, and more than any U.S. state except Alaska.
As the largest mining province in Canada, BC registered $18 billion in revenue from the industry in 2022.
British Columbia stands as Canada’s sole producer of molybdenum, which finds applications in metallurgy and chemistry. Additionally, B.C. is the country’s leader producer of copper and steelmaking coal, besides gold and silver.
At the heart of British Columbia’s mining industry lies the Golden Triangle, one of the hottest mineral exploration districts in the world.
More than 150 mines have operated in the area since prospectors first arrived at the end of the 19th century. The region alone is endowed with minerals worth more than $800 billion.
How Green is B.C. Mining
Mining represents 7% of the province’s Gross Domestic Product (GDP), despite only accounting for 0.04% of the land use. In comparison, farmland demands 3% of the land, bringing $2.1 billion (0.8%) per year.
| Land Use in B.C. | Revenue (2022, CAD $) | |
|---|---|---|
| Mining | 0.04% | $18.0 billion |
| Oil & Gas | 0.4% | $9.5 billion |
| Infrastructure | 1% | $25.0 billion |
| Farmland | 3% | $2.1 billion |
| Forest | 62% | $13.3 billion |
Mining operations are also supported by a stable, transparent, and effective policy environment. The province ranked as the world’s least risky for mining in 2017 and 2018.
In addition, mineral exploration has received ample support from local Indigenous communities. Today, mining accounts for over two-thirds of all indigenous people employed in the extractives sector.
According to the International Energy Agency, up to six times more minerals and metals will be needed by 2040 to accelerate the energy transition.
In this scenario, British Columbia is well positioned to support the transition to a low-carbon future and make a significant contribution to climate action.
The BCRMA is a strategic partnership between indigenous groups, industry, and government representatives that aims to promote B.C.’s mining opportunities internationally.
-
Mining2 months agoCharted: America’s Import Reliance of Key Minerals
The U.S. is heavily reliant on imports for many critical minerals. How import-dependent is the U.S. for each one, and on which country?
-
Batteries2 months agoRanked: The World’s Top Cobalt Producing Countries
Cobalt, an essential component for certain types of EV batteries, has seen a significant shift in its global production landscape.
-
Energy3 months agoHow Big is the Market for Crude Oil?
The oil market is bigger than the 10 largest metal markets combined, with production value exceeding $2 trillion annually.
-
Urbanization4 months agoRanked: The World’s Biggest Steel Producers, by Country
China has dominated global steel production the past few decades, but how did the country get here, and is its production growth over?
-
Mining6 months agoCharted: 30 Years of Central Bank Gold Demand
Globally, central banks bought a record 1,136 tonnes of gold in 2022. How has central bank gold demand changed over the last three decades?
-
Mining8 months agoVisualizing U.S. Consumption of Fuel and Materials per Capita
Wealthy countries consume large amounts of natural resources per capita, and the U.S. is no exception. See how much is used per person.
-
Technology4 weeks agoAI vs. Humans: Which Performs Certain Skills Better?
-
Maps2 weeks agoMapped: The Deadliest Earthquakes of the 21st Century
-
Countries9 hours agoCharted: The World’s Biggest Oil Producers in 2022
-
Demographics3 weeks agoVisualizing the World’s Growing Millionaire Population (2012-2022)
-
Energy2 weeks agoWhat Electricity Sources Power the World?
-
United States3 weeks agoMapped: The Richest Billionaires in U.S. States
-
Markets2 weeks agoThe 25 Worst Stocks by Shareholder Wealth Losses (1926-2022)
-
China3 weeks agoCharted: Youth Unemployment in the OECD and China