1/5: In 2008-11 senior Au miners traded at ~16x P/CF & ~1.7x NAV. Presently, according to broker comps, they trade at ~11x 2021 CF (at consensus Au of ~$1660/oz) & P/NAV of ~1.5x. Val'ns remain well below 2008-11 levels & that's before normalizing for today's higher Au prices…
2/5: Yes, Au equities have gapped higher, especially the producers & royalty cos. However, the upside, as presented by equity analysts - notably those using valuations of the last several years to benchmark the opportunity, appears to me to be understated.
3/5: On this, wouldn't the forceful regime change highlighted by slowing growth & deflation, both at a historic rate of changes (Quad 4 in Dalio’s investment framework), justify valuations more typical of periods when Au & Au equities are in favour (e.g. 2008-11)? Yes.
4/5: W/ Au prices strong & equity in other sectors challenged by volatility & cloudy earnings picture, there is justification for the higher val’n regime for Au miners. As Q1 reporting wraps up, look for Au analysts to publish Q1 sector pieces in which tgt prices are increased.
5/5: Though, the analysts will inch tgt multiples higher vs. the step-change I suggest. Why? They don't use regimes w/ val’n that correspond to the new regime. Their approach is more linear. I.e. they inch tgt multiples higher & thus chase the share price higher
