When I bought Polymetal International (LSE: POLY) stock sometime ago, it was as a hedge. The gold and silver miner appeared like a good proxy for the yellow metal that could hold me in good stead if and when things went awry. Its dividend yield, which was just below 10% at the time, was also attractive.
The Polymetal share price crash
So I am at a loss of words when I see a complete meltdown in the stock because the situation looks bad. Compared to a year ago, the Polymetal share price is down by almost 90%! It even touched all-time lows recently. But this is as much a part of the investing journey in stock markets as is always looking ahead. The only question for me is, what can I do about the stock now?
Well, I am definitely not selling. Most of my invested capital in it has dwindled to nothing in any case, so there is little left to lose if I just stay invested in it. In fact, I might just end up gaining a fair bit over time as and when the situation gets better.
Dividends due for now
Also, it still intends to pay the dividends proposed on 2 March 2022. So I should at least stick with the investment until my dividends come in. Looking ahead though, the company appears to be hinting at a dividend cut. In a recent update, it said that future dividends will be at the discretion of the board and could be re-evaluated.
I would not be surprised if its dividends were paused altogether. Earlier this week, Evraz did the same, something I had anticipated earlier for the obvious reason of its unpredictable future. That said, the Polymetal share price might just manage to inch up further in the coming days, which gives the smallest room for hope. As I write this Friday afternoon, it is already up by 8% today from its all-time lows earlier this week.
Diversified operations
The fact is, that almost half of its earnings are generated through its Kazakhstan operations and the country accounts for 40% of its gold reserves. Moreover, because of its ongoing revenues from there, it is better able to deal with the situation in Russia. For instance, its new borrowings in the country could be at elevated interest rates considering that the Central Bank of Russia has increased its key interest rate to 20%.
Encouraging as this is, I simply cannot overlook the fact that a big part of its production and earnings still comes from Russia. And this could impact its numbers down the line in various ways. So far production in the country is unaffected. But Russian refiners were recently suspended by the London Bullion Market Association, barring them from selling precious metals in international markets.
What I’d do
As such, I would not go anywhere near the stock now. This is despite the fact that the Polymetal share price could rise significantly in the days to come. But then it could decline equally fast.
Manika Premsingh owns Evraz and Polymetal International. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
