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  • Writer's pictureIshfaaq Peerally


Last week, I said that I'm selling Polymetal International $POLY.L and many of you said that it was undervalued based on current Gold $GOLD and Silver $SILVER prices and that it was not really a Russian company and did not have the same risks.

I first invested in Polymetal International in 2019 because I was betting on higher gold prices and it was one of the gold miners with the lowers AISC. Since Polymetal is also the third-largest silver producer in the world, I also had exposure to Silver.

Even though about half of the profits of Polymetal come from Kazakhstan, it remains a Russian business doing business in Russian Roubles and selling most of its gold to the Russian Central Bank. It is, therefore, subject to country risks. It is possible that the Russian government nationalizes the Russian mines. This is a real possibility with the current situation. Besides, The Russian Central Bank buys gold at a lower price than market price.

Besides, Russia is on the brink of economic collapse with the sanctions and possible oil $OIL embargo. The Central Bank has not many options. And this is irrespective of the outcome of the war. These sanctions are not going away anytime soon.

The mines of POLY are located in the far east with a big of their employees not being ethnic Russians. With this war being very costly to Russia, political risks such as internal conflicts and separatist movements are real.

Even in the Best Case Scenario, being 80% down, one needs to wait for the stock to be a 5 bagger to break even. It is better to look for less risky investments.

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