Sunday Jones Edition
When the Tape Breaks but the Math Doesn’t
-Miners: Media crash hype doesn’t line up with the math
On Friday, the miner's tape was downright ugly as gold and silver corrected on a perceived shift tied to a potential May change in Fed leadership — one that may ultimately prove less hawkish than initially assumed. The tape damage was real. But before jumping to conclusions, it’s worth stepping back and asking a simpler question: what does a relatively modest ~8% correction in gold actually mean for the bottom line?
Let’s look at some simple back-of-the-envelope estimates going forward. Assume — even if it proves unlikely — that gold fades back toward the $3,800 per ounce range. With share buybacks already completed, Kinross Gold now has roughly 1.22 billion shares outstanding, down materially from prior levels near 1.8 billion.
Using all-in sustaining costs (AISC) — the industry measure of the average cost to produce and sustain an ounce, including operating costs and ongoing mine maintenance (and net of by-product credits like silver) — running around $1,500 per ounce, even pricing gold conservatively at $3,800 (which it is not today), the math still points to quarterly EPS above $0.50 and annual EPS of $2 or more. On normalized multiples, that level of earnings continues to support share prices well into the $30s.
One nuance the tape often ignores is silver. For Kinross, silver flows through as a cost credit, not headline revenue. When silver prices are elevated, AISC comes down, quietly widening margins and cushioning earnings even if gold backs off late in the quarter.
The selloff itself appeared driven by systematic risk reduction, forced selling, and aggressive shorting into a gold correction — not a sudden change in fundamentals. Large players often respond to the same signals at the same time, producing moves that feel coordinated even when they are structural. That’s how crowded trades get reset.
Stepping back, this exercise is not about defending the tape. It’s about separating emotional fear trading from the projected earnings impact of a gold baseline that remains historically elevated and arguably supported by global demand, geopolitical uncertainty, and ongoing questions around fiat currencies.
The fear-driven unwind belied an underlying bull case that remains intact on the numbers. Value can be analyzed; timing in a volatile market is dicey. How each reader acts on that framework will depend on individual resources and risk-reward considerations.
If interested - scroll back and view notes on other stocks, we watch here at the Jones report. Why not? With the caveat that things change and we try to stay aware - It's all FREE to read and make your own calls and decisions. Finally - maintain some dry powder and trade or invest according to your own due diligence.
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More later so ....Stay tuned, if you dare!
For now, we close by noting that any view on the market and stocks on any particular day may change in the days to come. That is why we watch and see how our views match up with reality. Looking ahead a few months may be a way to do things - but thinking too deeply about world events and the recent alliances forming, can make projecting ahead a dicey endeavor.
All in all - we use the word maybe "some", not "too much" and play it accordingly. Never get arrogant in our notions because things do change - and individual stocks are subject to many factors outside our control. So, we try to -stay aware.
With all the above caveats and attempted prognostications, I will close this post. Stay tuned for more opining on the market and stocks to watch.
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ALL in my humble opinion, scroll down and read more.This site does NOT make Buy / Sell recommendations.
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