If it's Tuesday...

If it's Tuesday, another mining company must be doing another stock offering. Off the top of my head, I can think of Agnico-Eagle, Kinross, Newmont, Pan American Silver, Silver Wheaton, First Majestic, ECU Silver, and Anatolia Minerals, that have all raised equity lately. I'll give Anatolia a pass since they needed to complete funding the Copler mine. Today add to that list Silver Standard, which just issued 5.45 million shares at $17/share. A week ago the shares were trading at 20, but now thanks to that offering they are below 17.

I attribute this to a lack of confidence by mining executives across the entire industry. It is as though they were so traumatized by what happened to their share prices last year that they're all locking in the chance to raise equity even thought their share prices are still well below last year's highs, often more than 50% off last year's levels. I can understand if they plan to use the cash for acquistions, and they intend to buy up junior mining companies whose share prices have been beaten up even worse (see Kinross) but dilution in order to use the money for "general corporate purposes" makes no sense to me.

Although gold has retreated from $1000, I think this is only a temporary pullback, and we could see another march upward, this time to $1200, and possibly as early as this spring before the inevitable summer sell off. I expect silver will outperform gold, as it still has a lot of catching up to do, at least according to the silver/gold ratio.