For the last ten years the largest gold producers in the XAU have destroyed shareholder value! They have:
- Increased aggregate net debt from $1B to $41B
- Increased common shares outstanding by over 100% by carpet bombing investors with paper (2.07x)
- Yet estimated gold production only rose from 38M oz to 43M oz for these very companies (+13%)
- While gold production per share declined from 0.38 oz to 0.21 oz (45%)
To clarify this Revolutionists, the largest companies in the XAU index turned gold production into ever increasing, ever diluted paper claims on ever declining reserves!
Complete Wealth Destruction
Buying and holding these kinds of companies in the rotten mining sector through a tracking index will only make you madder than hell over time! It is no wonder very few mining executives put their own money into the companies they run!
Yet the sector is historically cheap, and has a terrific medium term window in front of it over the next couple years like we identified back in September 2015!
Unlike the biggest losers in the XAU (who turn declining gold reserves into evermore diluted cash claims), our number-one gold-miner turns cash into even more gold claims!
In a nutshell, for every share of dilution, our number-one gold miner has produced two reserves of resources in the ground for only one share of dilution (reverse of the pathetic industry on whole!).
By owning our number-one gold miner, we are increasing the amount of our claims on gold because our gold miner increases their reserves with less paper needed to create these reserves! So we get unbelievable leverage to gold, especially when it rises!
Since 2001, our number-one mining company has produced a 2,100% return—unlike the entire industry, which has lost investors money in aggregate over the last entire decade!
Of Course, It Is No Wonder
Our number-one gold miner is run by a Superinvestor who understands and increases per-share intrinsic value – unlike most miners who destroy intrinsic value over time as shown – and has his money where his mouth is with shareholders like us.
Almost 90% of our mining CEO’s net worth is in his own company’s stock! We’ve got full alignment of interests!
To summarize, the mining shares were demolished over the last few years. To play the rebound, FMT Advisory owns one of the very best of breed in the entire sector, plus it is much cheaper today than many of the highly touted junior miners with zero proven gold resources in the ground!
One last note, the mining industry is unquestionably a boom-bust industry, and there isn’t an observer of economic or market history that will argue this.
You have to sell the booms and buy the busts, which is completely against human nature. If an investor ignores this, they are nearly guaranteed a lifetime of misery in the sector.
However, our number-one gold miner has produced sustainable gains from start to finish! This is for sure the kind of company FMT Advisory wants to hold for a potential boom in a rotten sector, which is still undervalued today!
Meanwhile, over time, the top-ten components (most widely held) in the XAU index will all too likely continue to destroy shareholder value over the coming decades.
Buy Right and Hold Tight
You can get on board with our New Economy Revolution, where we connect our money and our member-clients’ monies to the best assets – with the most exemplary teams compounding them, by simply starting your journey with our Fiduciary status and low-cost approach by contacting us right here.
Please tell your friends, family, and colleagues to join FMT Advisory’s New Economy Revolution.
CEO & Chief Investment Strategist