Yes to ABX and WPM. If the Fed does pause in raising rates, the Dollar will weaken and likely inflation and metals will rise.
FCX is another way to diversify into gold as they get about 13% of their profits from gold but 80% is still copper and they popped 6% yesterday, back to $12 from $10.50 last week but that's still only $17.5Bn in market cap while they've already dropped $2Bn to the bottom line in Q1-Q3 this year and next year is projected down due to a planned overhaul of their Grasberg operations as well as lingering issues in Indonesia that should be resolved eventually..
| Year End 31st Dec | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | TTM | 2018E | 2019E | CAGR / Avg | |
| $m | 18,010 | 20,921 | 20,001 | 14,607 | 14,830 | 16,403 | 19,985 | 18,774 | 14,989 | -1.9% | |
| $m | 5,646 | 5,316 | -225 | -13,512 | -2,766 | 3,654 | 5,927 | -8.3% | |||
| $m | 3,041 | 2,658 | -1,308 | -12,236 | -4,154 | 1,817 | 3,158 | 2,423 | 1,152 | -9.8% | |
| $ | 3.19 | 2.64 | -1.37 | -11.3 | -2.96 | 0.93 | 1.89 | -21.8% | |||
| $ | 3.27 | 2.75 | 1.55 | -3.45 | -1.16 | 0.89 | 1.82 | 1.64 | 0.87 | -22.8% | |
| % | -32.2 | -16.0 | -43.6 | +150.8 | +83.8 | -47.0 | |||||
| x | 13.4 | 6.57 | 7.28 | 13.7 | |||||||
| x | 0.16 | 0.078 | n/a | 0.30 | |||||||
| Profitability | |||||||||||
Certainly they have had no help from copper pricing either recently:
FCX usually bottoms out around $9 and tops out at $20 so let's add the following to the OOP:
- Sell 15 FCX 2021 $12 puts for $2.80 ($4,200)
- Buy 25 FCX 2021 $10 calls for $4 ($10,000)
- Sell 20 FCX 2021 $17 calls for $1.50 ($3,000)
- Sell 10 FCX Jan $12 calls for 0.70 ($700)
So we're in the $17,500 spread for net $2,100 but we're uncovered on 5 of our longs so very hard to imagine we'll get in trouble selling 10 short calls for $700 and we have 12 periods like that to sell so $8,400 of premium sales before we even worry about whether we do well on the spread or not and the worst-case is we're assigned 1,500 shares at $12 ($18,000) so our net should be far below $10 even if assigned down the road and it's still not a full allocation block.
For the LTP, this is all too much work so let's just sell 20 of the 2021 $15 puts for $5 ($10,000) and see what happens.
