The Subterranean Relocation Program
Written by: Jerry from The Smartin Team
What’s the Deal with Agnico Eagle Mines?
Have you ever really looked at the gold mining business? I’m looking at AEM, and I’m confused. We spend billions of dollars to take a yellow rock out of the ground in Northern Ontario, just so we can fly it across the ocean and put it back under the ground in a vault in Zurich. It’s not an industry; it’s a subterranean relocation program!
The Treasure Map Business
Investing in AEM is like paying for a treasure map where the “X” marks a spot three miles deep in the permafrost. They tell you they found a “high-grade vein.” A vein? Is the mountain sick? Do we need to get the mountain a physical? “I’m sorry, Mr. Andes, your cholesterol is high, but your gold levels are looking great!”
And who are these people doing the digging? They’ve got the hats, they’ve got the lights on their heads. If you need a flashlight attached to your forehead just to go to work, maybe that’s a sign from the universe that humans aren’t supposed to be there.
The Shiny Rock Obsession
The whole thing is based on the idea that this metal is “precious.” Why? You can’t eat it. You can’t wear it to stay warm—unless you’re a very specific kind of rapper. It just sits there. It’s the only investment that looks back at you. You check your portfolio, and the gold is just shimmering, saying, “I’m not doing anything today. Maybe tomorrow I’ll be slightly more yellow.”
AEM is one of the biggest players in the game. They’ve got mines all over the place. They’re merging, they’re acquiring… they’re basically just collecting holes. Most businesses try to build things up. The mining business is the only one where you’re successful based on how much of the earth you can make disappear.
The Hedge That Isn’t a Fence
Everyone says gold is a “hedge.” A hedge? If I want a hedge, I go to the garden center and buy some privet. I don’t buy a stake in a company that’s fighting a war against gravity in the Arctic Circle.
You look at the balance sheet, you see the “all-in sustaining costs,” and you realize you’re basically subsidizing the world’s most expensive sandbox. They dig it up, they melt it down, they shape it into a brick. A brick! We’ve been using bricks to build houses for centuries, but you make one out of gold and suddenly you can’t leave it on the front lawn.
At the end of the day, AEM is a bet on the fact that the world will always be obsessed with shiny things. It’s a solid company, sure, but it’s a company whose entire inventory is literally “rock bottom.”
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