Last week I was in a quandary whether to sell my silver stocks or top slice at or near the highs, especially when they started to fall a bit. I did neither and now look at the sharp falls and wonder whether that was the right choice?
The long term demand for silver as a resource for manufacturing (which is different to gold) points to holding, at least in the medium term, as share prices should rise again. But whether to sell, top slice or hold tight is always tough. Especially as the falls are sudden and steep! Maybe I should have sold some? Maybe that would be a hedging of my bets? But time will tell as to where it goes from here. The one reassuring point is that physical silver prices are only down a very small amount, and that is what the silver miners sell. Also the demand for silver is a physical demand for manufacturing and not for just hoarding! Nervous times ahead.
Gold 200 day moving average points to a floor of $4400 with the major price damage probably has been done. Gold and silver were massively over extended short term. No getting away from physical demand in China at the moment though so paper and physical prices have massively diverged.
As OB says miners are printing cash like THX with a cash AISC of $1000.
BRWM (holding the majors) sold off and i topped up yesterday but thought would wait for weekend to review properly.
If you sell you need to ask where am i putting this cash and if no where better then keeping it where it is maybe the best course of action.
Seems to me that dedollarisation, Trump hedging and fiat debasement have altered the economics of gold for good. Having looked at loads of sellside research on gold miners, most are predicated on a NPV model in which the gold price starts at spot and fades away to $3,000 or $3,500 down the track. If you do the NPVs at spot, you get massively higher target prices than current share prices. Does my one really believe that long term gold will settle back to as low as $3k? Obviously permanently higher prices will generate some incremental supply, but it seems to me that if the long term gold price in the sellside calculations adjusts to eg $4k or more, the whole gold mining sector will rerate upwards significantly (potentially risking windfall taxes though from cash strapped govts). Anyhow being quite long of gold miners just now looks to be an excellent long term trade (when eg many other trades - tech - are tricky) notwithstanding volatility.
Longer term this may work out. I would note however though that in steep market declines everything goes down: gold and stocks together. This was true in 2008, in 2020, even in April. When lots of people are leveraged, losses in one place spread to others.
We have a lot of bubbly behaviour going on simultaneously. I'd be cautious about allocations.
OB...I concur with your sentiment and, whilst selectively taking some profits, I still remain well exposed to the miners. Also, I wanted to thank you for pointing out THX , which I had not noticed until you wrote on it out in January. I bought on 19th Jan at 78.6p and was amazed to find it at 101p only 7 days later, and locked in 28% gain. After a week of turmoil in the commodities markets, patience was rewarded again on Friday when I bought 28% more THX stock at 77.2p, which was already in profit by the end of the day. I will be making a further contribution to your charity. Thank you.
Excellent read OB, and I don't say that because our thoughts are aligned! Extraordinary yesterday was the degree of bed-wetting and panic on the BB of one of my major gold-mining holdings. These people really should stick to a Post Office savings account if a little market turbulence causes them so much anxiety.
One minor side observation is that I'm not convinced the appointment of Kevin Warsh is a done-deal. There is some considerable discussion that there are legal hurdles which could be sticky enough for the Donald to be forced to re-think. That said, I'm of the view that gold is 'ploughing its own furrow' now, due in large part to sovereign debt. I think our attraction to gold-diggers is vindicated, despite the odd spate of wallet-lightening, that many of us have experienced from time to time. Cheers!
Always another train! After FRES production update i think look at other producers as production isn't growing and grades are reducing. It will react more to metal prices imo.
SCZ had a nice update this week, production is growing with good grades and new mines.
Hmm Santacruz SCZM I think you meant. "Recent highlights include becoming debt-free, building a ~$80 million treasury, and a January 2026 NASDAQ listing to access U.S. institutional capital." And price down @20%/month atm.... 🤔
Great article, like others I've done well with miners SRB, ALTN, MTL and speculatively AMRQ and always makes you nervous when the pull backs come. Still hanging in there in the same belief we've not finished going up yet.
So, The Oak Bloke has been making some new buys, which he hasn't yet revealed. After some top slicing from the gold/silver related sectors, I wonder if any of those new buys might include lse:orch which was one of the big risers that produced great portfolio performance for a competitor to The Oak Bloke in the portfolio performance competition for 2025.
So The Oak Bloke knows that lse:orch exists. (share price 60.1p to buy and TNAV on 31st Jan. 2026 is now around 106-107p, almost all cash ! (cash + the house-office the company uses (cost 400k pnds), cash is lent out (not parked at a bank, earning interest income, main lending is to people spreading out their vehicle insurance premiums). So the share price is 60.1/106 of the TNAV. p/e is only 4 !! (14.4p/60.1p):
And since The Oak Bloke has been posting his research and share picks for free (so far, one assumes he will start charging) I have also started posting today, giving my share picks for free. My normal area of speciality is small cap. stocks <100 million pounds, and generally avoiding commodities, metals, bonds. Quite happily also suggest decent looking CFD buys for shares or indees, and shorts, but I probably won't do that for the first X months (and while I'm not charging I probably wouldn't write much explanation/justification). But I'll happily have a go at anything if I see a good buy. In 2025 my portfolio did amazingly well, and during the bounceback after Covid (doubling versus pre Covid, without any gearing).
Back in the dot com days I had about 300 people receiving my share suggestions by e-mail and it seemed to move the market. The FCA then came and visited me in person and told me to stop ! How things change ! There are now shed loads of people sending out their opinions about shares and happily charging readers and the FCA is now OK with it !!
I won't be posting such detailed analysis as The Oak Bloke, with so many graphs etc. Very impressive stuff, must take some time to do.
ORCH looks interesting but whats the catalyst for a multiple re-rating? Earnings growth expected this year looks a bit sluggish (14.4 to 15p?) from here and ROE sub 20% which for a lending business seems low in the current environment. Business suffering being a little bit subscale? TIME seems a comparable and i looked at this but had the same reservations as for ORCH.
Also looks like the business wants to remove itself from AIM and go back to private although why this wasn't done a year or 2 ago when the share price was 20p seems a bit odd.
The Cockney Rebel substack i think would be a good place for you to check out. Some interesting picks and Richard goes big on conviction. SAGA is 30% for him. I've taken a 9% stake in my ISA and this is up 25% since start of the year.
I took the % ROE from their half year results. Full year it might look better. Even big banks are doing in excess of 20% - Natwest. New banks like Tide, Zopa, Revolut etc have ROEs in excess of 30%. None of these examples are leveraged so not debt flattering the number.
There's lots of shares that are trading at 50% of NAV but the trick has been seeing what the near term catalyst would be to close that gap.
Difference between SAGA and this business is their market is much more liquid so easier to get in and out and the story is easily told to investors who can see the path back to £30 and are climbing aboard. SP is getting chased higher on the back of recent update and before the full year results.
I partly see your point. And yes banks and Saga have been doing well. (Natwest, I was there at 180p, now >x 3 :-) )
but
ORCH, eps 14.4p/share at last accounts. Now running at 15.5p I hope/expect. SHare price 60.1p to buy. That is a return-profit of 25% of the share price. Way way higher that Natwest, Saga et al. Sure, high liquidity for shares in Natwest and Saga, but for that benefit you have the negative of a much lower return-profit for 1 pound of share price.
...'what might be the trigger to increase the share price ?'....
Fair point.
The trigger I am expecting is the reporting of the co. performance to the end of January 2026, which has now ended as an accounting period. The TNAV has increased in the last 6 months by about 6-7p. And another 6-7p for the period to end of July 2026. SO, the nett cash per share rises, that increases the discount between the share price and the TNAV/share; at some moment the elastic link between them will not withstand the load any more imo and finally the share price will move up, imo.
I am suggesting that you look at the return for the share price. When you buy a share you pay the share price. You need to look at the return for the share price. (But if you dont want to, no problem, life goes on).
The Federal Reserve simply does not have the luxury of being meaningfully hawkish for very long in a world of heavy Treasury issuance. The supply of government debt remains enormous, foreign demand is less dependable at the margin, and domestic investors are increasingly price-sensitive—meaning they demand a higher return when they’re asked to absorb more duration and more issuance. That dynamic matters because if policy stays too tight for too long, the risk is not theoretical—it’s dislocations in funding markets and dysfunction in Treasury market liquidity. In that environment, the Fed’s bias over time is toward keeping markets functioning, even if that means leaning back toward easier conditions when stress shows up.
Ed Yardeni is a pretty reputable name and he thinks the silver fall is because of margin hikes:
"Then, at 2:00 pm EST, the CME group raised maintenance margin requirements again, the second increase in three days, effective after the close on Monday, February 2. Gold maintenance goes from 6% to 8%, silver from 11% to 15%, platinum from 12% to 15%, and palladium from 14% to 16%. The margin on copper was raised too.
By announcing the hike before Friday’s close, the CME effectively warned traders that any positions held over the weekend would be subject to significantly higher collateral requirements by Monday. This forced many participants to liquidate their positions during the final hours of trading on Friday, which contributed to the late-session acceleration of the price drop."
Thanks for sharing your analysis, as always first class. The propensity to hold personal gold in these uncertain times is still high. I am betting on the upside
Hi OB,
Last week I was in a quandary whether to sell my silver stocks or top slice at or near the highs, especially when they started to fall a bit. I did neither and now look at the sharp falls and wonder whether that was the right choice?
The long term demand for silver as a resource for manufacturing (which is different to gold) points to holding, at least in the medium term, as share prices should rise again. But whether to sell, top slice or hold tight is always tough. Especially as the falls are sudden and steep! Maybe I should have sold some? Maybe that would be a hedging of my bets? But time will tell as to where it goes from here. The one reassuring point is that physical silver prices are only down a very small amount, and that is what the silver miners sell. Also the demand for silver is a physical demand for manufacturing and not for just hoarding! Nervous times ahead.
Great article and thanks for all your work!
Graham.
For anyone feeling nervous Jordan and Clive are good to listen to
https://www.youtube.com/watch?v=_iLPhCiChgA
https://www.youtube.com/watch?v=uLL1nNF4lnc
Gold 200 day moving average points to a floor of $4400 with the major price damage probably has been done. Gold and silver were massively over extended short term. No getting away from physical demand in China at the moment though so paper and physical prices have massively diverged.
As OB says miners are printing cash like THX with a cash AISC of $1000.
BRWM (holding the majors) sold off and i topped up yesterday but thought would wait for weekend to review properly.
If you sell you need to ask where am i putting this cash and if no where better then keeping it where it is maybe the best course of action.
Seems to me that dedollarisation, Trump hedging and fiat debasement have altered the economics of gold for good. Having looked at loads of sellside research on gold miners, most are predicated on a NPV model in which the gold price starts at spot and fades away to $3,000 or $3,500 down the track. If you do the NPVs at spot, you get massively higher target prices than current share prices. Does my one really believe that long term gold will settle back to as low as $3k? Obviously permanently higher prices will generate some incremental supply, but it seems to me that if the long term gold price in the sellside calculations adjusts to eg $4k or more, the whole gold mining sector will rerate upwards significantly (potentially risking windfall taxes though from cash strapped govts). Anyhow being quite long of gold miners just now looks to be an excellent long term trade (when eg many other trades - tech - are tricky) notwithstanding volatility.
Longer term this may work out. I would note however though that in steep market declines everything goes down: gold and stocks together. This was true in 2008, in 2020, even in April. When lots of people are leveraged, losses in one place spread to others.
We have a lot of bubbly behaviour going on simultaneously. I'd be cautious about allocations.
OB...I concur with your sentiment and, whilst selectively taking some profits, I still remain well exposed to the miners. Also, I wanted to thank you for pointing out THX , which I had not noticed until you wrote on it out in January. I bought on 19th Jan at 78.6p and was amazed to find it at 101p only 7 days later, and locked in 28% gain. After a week of turmoil in the commodities markets, patience was rewarded again on Friday when I bought 28% more THX stock at 77.2p, which was already in profit by the end of the day. I will be making a further contribution to your charity. Thank you.
Barrick q4 figures > https://www.barrick.com/English/news/news-details/2026/q4-2025-results/default.aspx
Mulitply eps by full year ($5.72) over sp of ($47.36)
PE of just over 8.
Just a read across for anyone :D
They have guided roughly flat production for 2026 but any further increase in gold price will be reflected in cashflows.
Don Durrett thinks a proper bull market phase in miners would mean at least PE of x15 in the majors. Agnico probably 20 for its quality.
GPM is way off today!
Excellent read OB, and I don't say that because our thoughts are aligned! Extraordinary yesterday was the degree of bed-wetting and panic on the BB of one of my major gold-mining holdings. These people really should stick to a Post Office savings account if a little market turbulence causes them so much anxiety.
One minor side observation is that I'm not convinced the appointment of Kevin Warsh is a done-deal. There is some considerable discussion that there are legal hurdles which could be sticky enough for the Donald to be forced to re-think. That said, I'm of the view that gold is 'ploughing its own furrow' now, due in large part to sovereign debt. I think our attraction to gold-diggers is vindicated, despite the odd spate of wallet-lightening, that many of us have experienced from time to time. Cheers!
Bang on, thank you OB. I sold half my Fresnillo last time there was a dip like this and have regretted it ever since!
Always another train! After FRES production update i think look at other producers as production isn't growing and grades are reducing. It will react more to metal prices imo.
SCZ had a nice update this week, production is growing with good grades and new mines.
Hmm Santacruz SCZM I think you meant. "Recent highlights include becoming debt-free, building a ~$80 million treasury, and a January 2026 NASDAQ listing to access U.S. institutional capital." And price down @20%/month atm.... 🤔
https://grok.com/share/c2hhcmQtMw_b2e415c6-64e7-46f9-8bf7-7f5033864eb2
https://www.youtube.com/watch?v=RXIelex0pcI
Thank you OB for a very timely article.
Great article, like others I've done well with miners SRB, ALTN, MTL and speculatively AMRQ and always makes you nervous when the pull backs come. Still hanging in there in the same belief we've not finished going up yet.
So, The Oak Bloke has been making some new buys, which he hasn't yet revealed. After some top slicing from the gold/silver related sectors, I wonder if any of those new buys might include lse:orch which was one of the big risers that produced great portfolio performance for a competitor to The Oak Bloke in the portfolio performance competition for 2025.
So The Oak Bloke knows that lse:orch exists. (share price 60.1p to buy and TNAV on 31st Jan. 2026 is now around 106-107p, almost all cash ! (cash + the house-office the company uses (cost 400k pnds), cash is lent out (not parked at a bank, earning interest income, main lending is to people spreading out their vehicle insurance premiums). So the share price is 60.1/106 of the TNAV. p/e is only 4 !! (14.4p/60.1p):
And since The Oak Bloke has been posting his research and share picks for free (so far, one assumes he will start charging) I have also started posting today, giving my share picks for free. My normal area of speciality is small cap. stocks <100 million pounds, and generally avoiding commodities, metals, bonds. Quite happily also suggest decent looking CFD buys for shares or indees, and shorts, but I probably won't do that for the first X months (and while I'm not charging I probably wouldn't write much explanation/justification). But I'll happily have a go at anything if I see a good buy. In 2025 my portfolio did amazingly well, and during the bounceback after Covid (doubling versus pre Covid, without any gearing).
Back in the dot com days I had about 300 people receiving my share suggestions by e-mail and it seemed to move the market. The FCA then came and visited me in person and told me to stop ! How things change ! There are now shed loads of people sending out their opinions about shares and happily charging readers and the FCA is now OK with it !!
I won't be posting such detailed analysis as The Oak Bloke, with so many graphs etc. Very impressive stuff, must take some time to do.
ORCH looks interesting but whats the catalyst for a multiple re-rating? Earnings growth expected this year looks a bit sluggish (14.4 to 15p?) from here and ROE sub 20% which for a lending business seems low in the current environment. Business suffering being a little bit subscale? TIME seems a comparable and i looked at this but had the same reservations as for ORCH.
Also looks like the business wants to remove itself from AIM and go back to private although why this wasn't done a year or 2 ago when the share price was 20p seems a bit odd.
The Cockney Rebel substack i think would be a good place for you to check out. Some interesting picks and Richard goes big on conviction. SAGA is 30% for him. I've taken a 9% stake in my ISA and this is up 25% since start of the year.
Thanks for your reply.
"and ROE sub 20% which for a lending business seems low in the current environment. "
The share are priced at almost 1/2 of the equity. So, RO cap. value is double 20%, ie. ~40%.
That is one heck of a high % in my opinion.
(note, I have not checked your numbers for %, I have some other things to do. Your calcs are ....yours !)
Does that make it more appealling in your eyes ?
------
With a p/e of ~ 4 that is an integral 'return' of 25% (but not all paid out to shareholders). While banks are perhaps paying only 4%.
I took the % ROE from their half year results. Full year it might look better. Even big banks are doing in excess of 20% - Natwest. New banks like Tide, Zopa, Revolut etc have ROEs in excess of 30%. None of these examples are leveraged so not debt flattering the number.
There's lots of shares that are trading at 50% of NAV but the trick has been seeing what the near term catalyst would be to close that gap.
Difference between SAGA and this business is their market is much more liquid so easier to get in and out and the story is easily told to investors who can see the path back to £30 and are climbing aboard. SP is getting chased higher on the back of recent update and before the full year results.
Natwest has a return_profit wrt the share price of 10%. (= p/e of 10)
At ORCH it is 25%. (p/e of 4)
Pays ya money, takes ya choice.
I partly see your point. And yes banks and Saga have been doing well. (Natwest, I was there at 180p, now >x 3 :-) )
but
ORCH, eps 14.4p/share at last accounts. Now running at 15.5p I hope/expect. SHare price 60.1p to buy. That is a return-profit of 25% of the share price. Way way higher that Natwest, Saga et al. Sure, high liquidity for shares in Natwest and Saga, but for that benefit you have the negative of a much lower return-profit for 1 pound of share price.
Natwest entry very good! Probably still some mileage in that one.
Saga has done 40% in 3 weeks and i'm happy to keep hold for the moment. Probably more.
Any thoughts on Funding Circle. 50% increase in PBT for 2026 which makes PEG around 0.32
+40% in 3 weeks at SAGA. Nice one.
...'what might be the trigger to increase the share price ?'....
Fair point.
The trigger I am expecting is the reporting of the co. performance to the end of January 2026, which has now ended as an accounting period. The TNAV has increased in the last 6 months by about 6-7p. And another 6-7p for the period to end of July 2026. SO, the nett cash per share rises, that increases the discount between the share price and the TNAV/share; at some moment the elastic link between them will not withstand the load any more imo and finally the share price will move up, imo.
DYOR etc etc
You have not seen the point that I have made.
I am suggesting that you look at the return for the share price. When you buy a share you pay the share price. You need to look at the return for the share price. (But if you dont want to, no problem, life goes on).
The Federal Reserve simply does not have the luxury of being meaningfully hawkish for very long in a world of heavy Treasury issuance. The supply of government debt remains enormous, foreign demand is less dependable at the margin, and domestic investors are increasingly price-sensitive—meaning they demand a higher return when they’re asked to absorb more duration and more issuance. That dynamic matters because if policy stays too tight for too long, the risk is not theoretical—it’s dislocations in funding markets and dysfunction in Treasury market liquidity. In that environment, the Fed’s bias over time is toward keeping markets functioning, even if that means leaning back toward easier conditions when stress shows up.
Whos buying the dip? Gold bounced around $4400 so looks a good floor. Back up to near $4800.
Miners going cheap.
Ed Yardeni is a pretty reputable name and he thinks the silver fall is because of margin hikes:
"Then, at 2:00 pm EST, the CME group raised maintenance margin requirements again, the second increase in three days, effective after the close on Monday, February 2. Gold maintenance goes from 6% to 8%, silver from 11% to 15%, platinum from 12% to 15%, and palladium from 14% to 16%. The margin on copper was raised too.
By announcing the hike before Friday’s close, the CME effectively warned traders that any positions held over the weekend would be subject to significantly higher collateral requirements by Monday. This forced many participants to liquidate their positions during the final hours of trading on Friday, which contributed to the late-session acceleration of the price drop."
"Silver: CME Margin Hikes Explain the Price Rout"
http://uk.investing.com/analysis/silver-cme-margin-hikes-explain-the-price-rout-200621959
Superb,informed and objective article. Thanks.
Thanks for sharing your analysis, as always first class. The propensity to hold personal gold in these uncertain times is still high. I am betting on the upside