More Fun With HYMC

But first . . .

THE TIDE IS TURNING

Gavin Newsom and Tim Miller (60 seconds).

WHY I VOTED FOR TRUMP

“Because I Was an Idiot” (60 seconds).

(To learn who “Donna” is, click here.  It’s blood-boiling.)

And now . . .

FUN WITH HYMC

HYMC jumped 50% yesterday to $24.50, up nearly 8-fold since suggested in June.  Rather than sell shares, I sold more calls, as described Sunday — this time for $14.50 each.  They give the buyer the right to buy my shares for $25 anytime until January 21, 2028.

The buyer is betting the stock may be above $39.50 by then, after which his having paid $14.50 for the right to buy it at $25 ($39.50 in total) won’t look so dumb.  Indeed, if the stock were $60 or $80 by then, it would look downright brilliant.

And I’m not sure the buyer won’t be right.  Which is why I’m keeping a good bit of my position without writing calls against it.

After all, look at it this way:

When AMC paid $27.9 million for 2.34 million shares at $10.70 each, it wasn’t doing it out of the kindness of its heart; it was taking a considerable risk in hope of considerable return.  (It also got warrants to buy an additional 2.34 million shares for an additional $27.9 million, which sweetened the deal.)

Now, nearly three years later, HYMC stock is more than double what AMC paid — and the warrants to buy more at $10.70 mean that, all told, AMC has pretty close to a quadruple.*

But wait!

When AMC took this gamble, perhaps hoping to make 10 or 15 times its money, gold was around $1,900 an ounce.  Today, it’s $4,400 . . .

. . . which is more than “more than double” $1,900 when you take into consideration the cost of mining each ounce.

If that cost is $900, then the net profit per ounce AMC might have been shooting for would have been $1,000 ($1,900 less $900).  Now, it would be $3,500 ($4,400 less $900) — three and a half times as much.

Plus, as noted Sunday, there’s the recently reported silver.

So — while none of this is really “analysis,” it’s just fun — if you figure AMC hoped to make $200 million on its $27.9 million gamble back when gold was $1,000 net of costs . . . might it now fairly hope for three and a half times that kind of profit? $700 million?  Even more?

For its $27.9 million investment to be worth $700 million, the 4.68 million HYMC shares it bought (and would own if it exercised all its warrants) would have to be $150 apiece — not yesterday’s $24.50.

I’m not for a moment suggesting or predicting that.  I know virtually nothing about mining gold, let alone where the prices of gold and silver will be a year or two from now.  Indeed, it’s just when I start to giddy about something that the top may be at hand.

But I like to think whoever bet $14.50 a share yesterday that HYMC will be meaningfully higher than $39.50 by 2028 will prove to have been spectacularly right.

BONUS: REMEMBER CIVILITY?

A former president and first lady.

*Sharp-eyed readers will note that AMC sold some of its holdings this month before much of the run-up.  To keep the math simple, I’ve ignored that.