Argonautica

Professional investors can review published thought leadership and market updates from the Argonaut Investment Team.

2 posts found for June 2013

‘$1200/oz and falling: the gold industry in crisis’

A few weeks ago with the gold price trading at $1,400/oz we wrote that fair value for gold on a purchasing power basis was just $240/oz and that in view of the debate on quantitative easing in the US shifting to the timing of exit we believe there was no reason for gold to trade at such a significant premium to its fundamental value.  We also pointed out that optically cheap P/E ratios of gold mining companies were based on assumptions of $1500/oz gold and that profit margins were likely to be quickly…

‘The $240/oz question: who needs gold now?’

Gold and silver prices are now 26% and 55% off their 2011 highs of $1,897/oz and $48/oz respectively. It strikes us that the most remarkable aspect of this new bear market is the bewildering absence of an accepted narrative that might serve as an explanation, particularly as central banks generally have become more rather than less bold in their policy actions since 2011. We would however caution against the consensual view that the precious metals have experienced nothing more than a “technical…