What to consider when you see insider buying of stocks
Erik Wetterling, Founder of The Hedgeless Horseman joins me today to outline the discrepancy between silver stocks and gold stocks. A lot comes down to the type of investors entering the market. Erik also mentions insider buying in one of the stocks he is watching which gets us into a brief discussion on what to watch for when it comes to this type of buying. Finally we end with his thoughts on TriStar Gold.
In full discloser Erik owns shares in TriStar Gold and the Company is a sponsor on his site.
Click here to visit Erik site and follow along with what he is writing about.
Regarding the Silver Jrs, it should be pointed out that in bullish moves they normally outperform by a landslide the Gold Jrs. We saw that in 2009-2011 and in 2016’s epic surge, and on most of the smaller rallies in 2017 & 2018 & yes, this year in 2019.
The margins are impacted so much more when Silver goes up a few bucks, where you don’t see as big of moves in Gold to warrant the gold Jrs going as high up.
If investors are bullish on Gold miners, it always amazes me that they aren’t even more bullish on the Silver miners. If Silver is going to outperform gold once it starts playing catch-up, and if Silver miners always end up outpeforming Gold miners and there are so few of them, why in the heck wouldn’t most PM investors want to speculate in the Silver miners???
Then each time there is a rally so many pundits are confused that Silver miners have some of the best returns. Does the entire PM sector have amnesia of what has happened every single time on meaningful rallies?
Danzig – Come To Silver (Acoustic)
The Best Performing Gold And Silver Miners YTD – September 2019
Sep. 18, 2019 – BOOX Research
“It’s been an exciting last couple of months for gold and silver investors as precious metal prices have surged off the lows of the year back in early May. Against a backdrop of the first Fed rate cut since the financial crisis, along with volatile macro conditions, gold at $1,500/oz is trading at the highest level since 2013. Silver has also perked up and nearly tested the all-important $20/oz level earlier this month. Regardless of what time frame you favor, gold and silver are in a bull market, which has brought back a sense of optimism for the miners. This article looks at the best performing gold and silver mining stocks year to date, along with the current themes in the sector.”
https://seekingalpha.com/article/4292232-best-performing-gold-silver-miners-ytd-september-2019
For those that just want to skip the article and go right to the chart on the mining stock performance here it is.
(just know there are many producers that are not included on here like Santacruz Mining or Impact Silver but it makes the case that the miners once again have greatly outperformed most other sectors in 2019).
https://static.seekingalpha.com/uploads/2019/9/17/49782598-15687328467902582.png
Actually there are developers and explorers on that list, so there are many names missing from it – where is Great Bear (the largest win of the mining sector this year up nearly 300%), Silvercrest, Orezone, Minera Alamos, Alexco, Levon, West Kirkland, Silvercrest, Bear Creek, Silver One, etc….
There are still more producers coming to mind like GoGold Resources or Silver Bear.
It is an odd Top 50 list of performers when the top 2 positions of Great Bear and SantaCruz silver aren’t even on it.
Here is a year-to-date chart on some of the names mentioned above that I don’t even see on that Top 50 list. It kind of changes up the batting order, and also which companies should even be on the list as just these additions clear out most of the bottom 12, and they are just some of the companies that came to mind that were up bigly. There are likely dozens more….
Silver faces this big misconception and why triple digits makes sense – Keith Neumeyer
Kitco News – Sep 17, 2019 #VIDEO Interview
“Silver faces serious supply constraints, and although most people may not realize, it is a very rare metal that should be trading in the triple digits in price, this according to Keith Neumeyer, CEO of First Majestic Silver.”
“This $3 move in the silver price, it translates into about $98 to $99 million dollars in extra cash flow for $FR bottom line and that’s pretty substantial, and it just happens in the last few months.”
“Shareholders and investors have not even seen the financial statements because there is this lag and it won’t be till later this year that people actually see the benefit to us as a result of this move.”
“Now we are in a position that we can considerably think about a dividend.” ~ Keith Neumeyer, CEO of $AG
EX, JUST AMAZING. THANKS FOR YOUR DILIGENCE.
This is going to be the same kind of scenario for many of the producers when the markets are going to get surprised at what a difference these higher metals prices have made to their 3rd Quarter economics margins.
People that think the Silver and Gold producers already moved too far too fast, are simply not grasping how much more rerating higher these companies still have to go.
Look at where some of these miners went in 2016 when Gold only went to $1377.
Where do people think these things are going at $1450 to $1550 Gold?
In 2016 the Silver miners were much higher at $21 Silver, but even at $18 Silver they are way better off than they were at $14-$15 and their Q3 production and operation reports should reflect that.
Most of these Gold & Silver Q3 reports will be hitting in late October to mid-November and there are many opportunities to surprise to the upside.
What is interesting is how many precious metals bulls are already pulling the plug and claiming the valuations in the miners are way to high. When generalist analysts start looking at the economics on the producers, their revenues, free cash flows, and PE ratios it is likely they’ll see a much different opportunity that those metals focused bulls still suffering from bear market PTSD.
If metals prices stay up like they are now, then Q4 should also send the market a similar message.
Boys!
All the big cities on the left coast today are run by Demorats.
And now we are seeing these cities over-run by rats and other vermin, feces, urine and needles all over the streets and sidewalks and the comeback of medieval diseases.
People defecating in the streets is now common. It has become tolerated and what is tolerated becomes accepted and what is accepted becomes the norm.
How do you boys feel about that? In the USSA soon defecating in the streets will be the norm!
Boys, a new word has entered the lexicon. I made it up months ago and I predict it will be widely used in the months and years ahead.
This new word is the new name of the Democrat Party.
Boys, I give you the Fececrat!
Maybe I should copyright it. After all, Lebron James is trying to copyright Taco Tuesday? How about Fececrat Friday? 🙂
OFF TOPIC:
There has been an anonymous whistle blower accusation that that Trump called a foreign President and made quid pro quo promises that upset the whistle blower.
The rumor in the UK is that the phone call was to Ukraine:
https://www.independent.co.uk/news/world/americas/us-politics/trump-ukraine-joe-biden-military-aid-zelensky-kiev-a9111106.html
and that the quid pro quo was military aid, with the strong suggestion that Ukraine re-open its investigation of the Bidens
HUI:GLD is up over 5% since hitting a fork support this week and has probably bottomed…
https://stockcharts.com/h-sc/ui?s=%24HUI%3AGLD&p=W&yr=3&mn=9&dy=0&id=p68258478215&a=675549285
The yen likely at or very near a bottom so it will soon add wind to gold’s sails…
https://stockcharts.com/h-sc/ui?s=%24XJY&p=D&yr=1&mn=1&dy=0&id=p51568917293&a=631600439
Gold seems to be having a hard time dropping below 1500.
Yes, it’s been impressive considering how overbought it had become. Maybe it smells an imminent move lower for the dollar. I’m pretty sure I can smell it…
https://stockcharts.com/h-sc/ui?s=%24USD&p=D&yr=1&mn=3&dy=0&id=p76285335584&a=639428811
This one is for you Ex, First Quantum (syl-FM) minerals is being viewed as a takeover after losing half it’s value in the last year however; it is up this morning. DT
https://business.financialpost.com/commodities/mining/first-quantum-minerals-draws-takeover-interest-from-global-miners-after-losing-half-its-value
Thanks DT. First Quantum has lost half it’s value because they’ve had less than stellar performance and the Base Metals have been in a slump for over a year due to all the trade wars.
There are a number of Copper, Zinc, Lead, Iron, companies that have been pummeled, but it is always possible the low valuations may have larger players jump in and snag some of these in a takeover. The problem is that even the big boys have had their valuations sliced down.
China Gold is looking for producing mines does it want Iamgold. The Chinese are taking over too much these days, Canada and The US are starting to wake up, Canada will get knocked off it’s perch because we are too complacent. DT
https://business.financialpost.com/commodities/mining/china-gold-sees-canadas-iamgold-as-good-fit-executive-2
Always good to get The Hedgeless Horseman’s thoughts on the miners and the metals macros.
Good interview Erik & Cory. Thanks guys!