Gold Equity Dividends Must Rise Further and Faster
ST. LOUIS (MineFund.com) -- Gold equity investors have been cheered by recent company promises to improve dividends. The pledges have been underwritten by thickening margins, especially over the last eighteen months as gold prices outpaced input costs for the first time in several years.
Being in the business of literally pulling cash out of the ground means that precious metal miners must pay higher and high dividends to maintain their claim as an option on bullion prices that is more attractive than merely physical gold.
New Resources on MineFund
ST. LOUIS (MineFund.com) -- We’ve launched a number of new resources in recent weeks so tuck in and enjoy. Any feedback is appreciated to help us make MineFund more useful to you.
What’s new:
The Con Promoting Coyote Resources
ST. LOUIS (MineFund.com) -- It is an unfortunate reality of up-cycles that vultures come out to feed on unsuspecting investors who are paying more attention to the excitement than the facts. The latest such case is a likely illlegal paid mailer promoting Coyote Resources (COYR.OB). Carpenter Global Stock Advisory put together the advertorial on behalf of GLJ Media which reports having $1.2 million at its disposal for the promotion effort.
Most paid mailers at least attempt to camouflage their bull dust with rabbit trails of meaningless facts, figures and hyperbolic claims. Andrew Carpenter doesn’t even bother - he just amps up the hyperbole to render a $30 billion valuation by association.
The Relationship Between Gold Reserves per Share & Stock Performance
ST. LOUIS (MineFund.com) -- It is notable that a number of gold miners have lately mentioned their bullion reserves per share. It is not a new valuation metric, but it has suddenly taken on a new level of popularity with several mentions in recent financial reports.
Goldcorp (GG) was the most recent convert stating in its fourth quarter report released on Friday: “Gold reserves increased 23% and 13% on a per share basis, the Company’s seventh consecutive annual increase.” Fellow Canadian miner Agnico-Eagle (AEM) was similarly bullish about its gold reserves per share, and included a graph to reinforce the message. London listed Randgold (RRL) has also been promoting the metric which is not surprising since it has enjoyed industry-leading growth in that area.
Reserves per share are no gimmick. They are strongly correlated with stock returns (see chart at left). They are also increasingly a benchmark for fund managers who have grown disillusioned with the industry’s headlong dilution of investors.
It was a core component in our story late last year calling on the gold miners to stop making dilutive acquisitions.
That trend may be changing as more attention is focused on bullion per share, and the willingness of companies to internalize it as a performance metric.
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