Where are we in the precious metals cycle?

There is no shortage of questions on why gold has significantly underperformed during such an ideal macro setting.

Here is thread 👇👇👇

Let’s start by looking at the usual fundamental trends of this industry as part of prior historical cycles.

Gold and silver stocks have never peaked at historically undervalued levels.

Miners are now trading at the cheapest fundamental multiples we have ever seen.

Assuming the current 2022 free-cash-flow estimate relative to the current enterprise value, the median company among the 50 largest miners in the US and Canada exchange now trades at an unprecedented 7% yield.

Note that in aggregate terms, the same basket of companies also trades at its highest free-cash-flow yield in history.

Additionally, as shown in the second panel of the chart below, gold and silver miners continue to expand their margins in a significant way.

The median free-cash-flow margin is now above 25%.