The precious metals mining sector will enjoy another boom, says Ed Bugos, Senior Investment Analyst and Financial Editor at The Dollar Vigilante
“An unsound one as well, as the incentives will be to over mine, and that will lead to a good cycle followed by a bad one when the resources needed to continue the boom in mining get tight, and you start to see inflating operating and capital costs,” he said. “Mining is a business, it is a different asset class than gold or silver or the commodities mined. It is subject to the boom-bust cycle like any other sector. But it is due for a boom.”
For now, confidence is still high in the US dollar relative to other fiat currencies. “But this is a cyclical phenomenon,” said Bugos. “Sentiment is always bullish at the top and bearish at the bottom. Most dollar bulls are not old enough to realize that the US dollar can fall against other fiat currencies even if they are less sound.” In any case, the situation is ripe for the mining sector.
“The precious metals miners bottomed in 2016 and have come out of the trough but I expect the cycle to continue for most of the decade,” said Bugos.
Many governments dependent on the mining sector declared mining to be essential, so there were no work stoppages. “The news initially whacked the miners hard but they recovered so very quickly and went off to new highs as they should because really their NAV’s are not really going to be impacted that much by a stoppage in mining,” he said. “The metal will still be there. The life of mine will be the same. If anything, the collapse in the price of oil has been an additional boon to those who continued to mine throughout it.”