An argument for driving down to micro cap metals stocks and how to trade them
Erik Wetterling, Founder of The Hedgeless Horseman joins me to outline why he is going the whole way down the food chain to micro cap stocks that with limited news flow. We outline the risk and reward offered by this level of stocks and how on top of trading you need to be when investing at this level.
What I have found in my non-core positions is to sell 1/3 to 1/2 of position after a 4-5X emotional momentum run in a junior. Some juniors run to 8-10X before correcting, but there is almost always a correct and these things can drop 50%+ in 2-3 months.
Hi aghead – There isn’t a “one-size fits all” rule of thumb for when an investor should trim as it is personal determination based on risk/reward, time frame of the gain, what percentage goals you had, or whether you are using Technical Analysis.
Some traders are looking for a certain percentage gain, while others use TA to trade just momentum using the KAMA or another key moving average like the 18 day or 21 day MA, or use TA to look for longer term trendline resistance, prior peaks troughs, overbought conditions on chart indicators/overlays like the Slow Stochastics, RSI, CCI, TSI, TRIX, MACD, etc… Some traders use Elliot Wave projects (incorporating Fibonacci extensions), some watch Japanese Candlestick patterns to look for turns, some use volume at overbought levels to determine where trim etc…
It is a good idea to set a plan for what strategy you will be utilizing when a trade is put on, and what you are looking to make on a trade, over what time frame (several days? weeks? months? years?), and what percentage you want to trim 10% 25% 33%,50% etc…
Personally, I’ll trade around a core position in a more solid miner dozens of times adding on weakness and selling into strength, but on a firecracker drill play if it jumps up and doubles, triples, or goes 4-10 bagger in a short time-frame, then I’ll cull the win in a more aggressive way and reinvest in other stories with drill results pending in a measurable time frame.
Good luck to you in your investing and may it be quite prosperous as we move into 2021.
For me it mostly depends on position size. Some opportunities are so good I will bet very heavily on which also means I will be taking profits earlier because the position can quickly become obscene… Note that I don’t think very heavy concentration is good unless you really know what you are doing and what to look for.
In other news… Interesting chart on the subject of picking up sleepers:
https://twitter.com/TheGoldAdvisor/status/1336761739556368387
Hey there you rascal of a Hedgeless Horseman.
Good point on the position sizing and how that affects how one may trim a more heavily weighted or lightly weighted position.
Hey there Powerman2000!
I have started to join you in silver by adding a few silver focus names. I guess I have gotten bit by the silver bug a bit hehe… Silver is just so fun!
Your profit taking strategies outlined above and how you handle core positions sounds solid. I try to do somewhat along those lines.
Cheers mate!
Haha! I need to shift over into Powerman 2020 mode, as we are sailing in uncharted waters ya pirate scallywag. 🙂
It’s about time you joined in the fun on the Silver stocks man. It’s a smaller universe of stocks, more volatile, and yet, if one is bullish on Gold and gold stocks, then one needs to seriously consider the outperformance of Silver and the silver stocks.
Keep up the great work!
Gold: https://postimg.cc/BLM56fRJ
Down after 50% rise. More possible.
(Kitco News) JPMorgan weighed in on the debate whether or not bitcoin is stealing attention away from gold, stating that gold could “suffer” in the long-term as bitcoin is adopted more widely.
The problem for gold is that institutional investors are turning toward bitcoin. It is a new phenomenon that is likely to continue in the years to come, said JPMorgan strategists in a note to clients this week
are we going to get an increase in the gold price or is it late now?
b:
JPMorgan has been convicted of I believe five felonies so far due to price fixing schemes. Last time I checked Gold was a tier one asset, I don’t think you can say the same for Bitcoin.
At the end of the day , Bitcoin is a piss poor way and mind you, expensive way to conduct commerce.
The major banks and funds, have run out of options to keep the ponzi running.This still ends badly.
ditto……John……
That reminds me of the “economists” 50 years ago who thought that gold would collapse to $8 or less when it lost its “USD backing.” You can’t make this stuff up.
Gold investors need not think about BC at all, much less worry about it. The two occupy opposite ends of the risk/reward spectrum and only gold accurately measures the health/buying power of fiat currencies and will continue to just as well as ever.
Above ground gold has 30 to 40 times the value of BC and can’t be inflated away. The S&P 500 is worth about 100 times as much as BC but is roughly equal to the dollar value daily trading volume of gold.
Leading major financial assets worldwide as of December 2019, by average daily trading volume
https://www.statista.com/statistics/625422/daily-trading-volumes-of-major-financial-assets-worldwide/#:~:text=Gold%20had%20the%20third%20highest,at%20145.5%20billion%20U.S.%20dollars.
ditto Matthew……
I agree with a few of the comments here that Bitcoin and Gold and really different asset classes with different dynamics. Gold is “real money” and a true measure of wealth, where Bitcoin is more of a volatile speculative asset class, using the greater fool valuations to trade back and forth.
Gold is for longer term storage of wealth, where Bitcoin is fluctuating in value all the time, so it is like storing wealth in biotech, energy, or the mining stocks…. so, a real roller-coaster.
My comments are generally around trading the more volatile resource stocks, and while tethered to the metals prices, the stocks can move much more dramatically up/down than the metals, and each company has it’s own fundamental drivers that may see it move independently of the metals prices. The ETFs generally move more in tandem with metals prices, but even they march to the beat of their own drummers.
I took out a position in the Grayscale Bitcoin Trust (GBTC) a few months back that has done well, and it fairly well correlated to the movement of the Bitcoin price, but my rationale was that it was getting bullish as a speculative asset, but not considering it as a stable form of wealth. It is easier for me to trade it like a typical security, versus fooling with the digital wallet and buying the crypto, etc…
Bitcon………is a real leap of faith(tongue in check)……….
talk about thin air…..out of the imagination……comes a bitcon, and tulip bulbs….lol
Yeah, Bitcoin is still a very speculative “greater fool” type of trade, but I mentioned about a month back that it looked to be setting up for a bullish move higher back when it was in the $10K-$12k range, and so I bought the GBTC as a proxy just a for a punt. One day I logged in after not looking for a while and saw Bitcoin had popped up to $19K again at the old 2017 high.
I don’t believe it has the longer term staying power or store of value that Gold does, and don’t think it is Gold 2.0 by any stretch, but I was happy to make a little cheddar on the good trade set up.
It seems to be getting more bubbly again, and I figure it can just keep bubbling higher and I’ll keep a fishing pole in that pond as well, just in case the HODL’ers have their day and it goes to $100K. 🙂
Ex…..good summary……stay safe……
Last I heard, JP Morgan is still massively short gold & silver. & that they’re coming out with their own crypto currency. Hint- hint……..
Good point Buzz. There is about to be more cryptocurrency competition, and more digital currency options competing for fiat conversion. If there is a con-job and way to milk money out something, then JP Morgan will dive into capitalize on it.
This launching of new digital currencies and a variety of alternatives, may eventually pop the Bitcoin bubble, but for now BTC is global and still garnering a bid. It is at least a trend in motion, and something to watch develop.
Where are the boys tonight? The hall of famers?
Jerry yes the gold would be coming to candad can we keep it shhhh lmao.
You know them Evil people watching and listening…
Matt looks good to me! Consolidation back and forth could be couple of weeks but we will go much higher :)!!!!🥃🍾😆
Careful boys and family!! There are many con artist out there jumping on my predictions coming into this site to see what Matt myself and others say then they say there’s with intention of getting paid!!
Let me make this clear! There is virtually no one out there that has made calls before the facts and in “ real terms” like I have and Matt has with technicals. I have seen every god dam site.. including our guest at this site Cory and al no one comes close to me and Matt lately I’m technicals. Jerry the man long term the deciple. I don’t mean to offend Kerr family but it is what it is no one is making calls virtually. Omg I sound like the task force Biden with covid restrictions lol..
Careful everyone coming out and riding my tail and Matt’s! The originals are the originals!
Hey there Glenfidish. Glad to see you are out there doing the good work with the price projections. I’ve been out of the loop, and literally out of cell and wi-fi range for many days in the deserts/mountain areas of Colorado, Utah, Arizona, and New Mexico, and then meandering through Idaho and Oregon, and at the West coast playing/moving across the country for the last few weeks. I’ve driven across the country twice in the last 4 weeks, and took a break in the middle for Thanksgiving in the US.
I’ve only skimmed the comments when the connection was there and when time permitted, but if I saw your comments on pricing I tried to give it a look and appreciate you sharing your feedback and pricing outlook.
Keep up the great work buddy!
I noodled around with a few trades over the last few weeks, when things dipped, and recently trimmed back a few positions, but overall I haven’t done anything dramatic in the trading account, and most of my positions that pulled back have bounced nicely and my account is back up to it’s high water mark and things have trended nicely higher recently in the PM stocks, in Uranium stocks, in Lithium stocks, in PGM stocks, and even some base metals stocks. Fun times!
Sorry for the long run on sentence. Ha!
(I’m out of practice with commenting on here or even typing.)
Ditto….Ex……..on the commenting…….and Glad to see you check in……
.Glen… https://www.youtube.com/watch?v=Ql-quCbXf1k
Hi there OOTB. Yep, it was nice to be literally “unplugged” for a while, and I was surprised at how many areas are literally out of range for phones/internet in some areas of the country. Having said that, it was nice to pull up the KER site today and do a little catching up on reading and listening to past interviews.
Ex……have you noticed the NEW FORMAT …….all political issues are now on another section…..separated from the mining ….see top right of the screen.
So, if, you want to mention anything , besides mining , you must push the button on the top right…..and another section comes up…..kind of a pain in the arce…..jmo
Glad you mentioned the … “out of range”…..large parts of the country are out in the sticks., …refreshing… lol
Thanks for the heads up on the format OOTB. I generally come here for the investing threads anyway, and that is what most of the site sponsors are geared around, so I actually like the investing threads separate from the political threads for a focused approach, and can go click on the political link for those threads to see what is going on in current events.
Yes, it is just nice to see the KER site again, and get connected to the rest of the world, but it was very refreshing to be unhooked from the daily noise for a few weeks. I skipped all the election back and forth, all news, the markets, and even communication with others, and really got out there in nature and hit about 20 national and state parks with my lady. Sometimes we were one of only 1-3 cars in these big parks and we pretty much had them to ourselves. Very nice and relaxing in the face of the stress of real estate transactions. I closed on my home several states over from where I lived with a mobile title company. Living the dream!!
Hoping all is well with you and your family heading into the holiday season.
That is amazing…….only 3 cars….in the National Parks……I would have thought, some of the boomers would have been escaping the noise ……
Hey….ditto. to you on the Holiday…..2020 has been a real eye opener…..
OOTB – Agreed on 2020 being a real “eye opener”, and yet many of the sheeple still have their “eyes wide shut.” 😮
Ex:
I haven’t hot the bounce in mine yet. They are still alternating days of up and downs in groups. Almost every open there is a slight move up, then slow erosion all day long. Been maintaining the original 20%?drop from around August. Great Bear and Pure Gold have almost recovered but my silver stocks have not. Holding about 65 at the moment.
Hi David. My overall account (about 80 stocks) is at a high water mark for the year and for the last decade, but it is due to a mix of sectors.
Most of the Gold & Silver stocks have at least put in a good bounce recently off the recent corrective move, but on closer inspection, some are still down from where they were.
It appears the Uranium, Lithium, PGM miners, and crypto stocks have been very strong and may have made up the difference in the PM miners that lagged in my portfolio. Looks like it is time to rebalance a few sector weightings as a result, but glad to be diversified in these volatile markets.
Ex,
What a pleasure and delight to have you posting! You are sorely missed by many in here. In fact the board is not the same without you. We myself are hoping that you’ll come back on a more permanent basis. I’m so glad to hear that all is going well for you in your travels. Look at it as a well needed rest and recharge of your batteries. you have put a lot of hours and work here at the ker family! From what I hear, you are sorely missed 😉
Thanks amigo! Respect back to you and remember you are a ker legend and legends are created only at the ker!!!
Cheers
Glen
Thank you very much Glenfidish. Keep up your legendary posting as well sir. Let’s rock!
https://weneedfun.com/wp-content/uploads/2016/11/Funny-Thank-You-Pictures-24.jpg
The trifecta, Matt, Glen and Ex. +Doc, Jerry, Tony, CFS etc…
Lots of great info and might I add, some clearity to help keep our eyes on the prize.
Seriously… Thank you all.
Haha, I meant clarity, Doh!
Also thanks to fellow countrymen b and DT… always thinking!
Dan……..thanks for the mention….
Hi Dan – Yes, lots of great input and insights from the KER crew, and looking forward to getting everyone’s insights as we get ready to turn the page on this crazy year, and get a strategy together for 2021.
I’m about to go through my portfolio of stocks and catch up on news, catalysts, and their strategies for Q1, and also assess the technical setups in the sector and individual companies to see what’s popped, what’s dropped, and what is waking up from a nap.
Good trading to you sir!
Dan,
You really made my day with your kindness.. I’m not sure folks if you understand but just kindness like this goes a long way at what we do and how hard the work we do is appreciated. I don’t want a Nobel prize but sometimes folks don’t understand mike the work ex and Matt and Jerry do on a constant basis is not easy. We all do it from the heart because that’s what this ker is about. Ex, matt, Jerry myself many others would be so easy to have own site or paid subscription but we are not moved my that. Matt and ex long ago could have done for themselves yet we are blessed to have them here and this young blood glen who learned from them and today challenged Matt lol on targets etc is a living proof on how this site is special to many of us with the morning coffee or tea!! Keep it alive and going..
Dan thank you!!
Glen
Ex:
Good to hear from you. Sounds like everything going well. Looks like once you get settled you will be able to attend a bunch of Vancouver conferences. I have pretty well stopped trading other than taking some tax losses to offset (not enough) gains earlier in the year. I think the algo machine got stuck for the last 4 or 5 months. Anyway…ever upward…some time soon.
Hi there David. Yes, it will be nice to be closer to the action in Vancouver, being in the Pacific Northwest, but the US/Canada border has been closed most of the year.
Looking back on the last few months, it was a typical corrective move in the metals, and was healthy considering the move up that Gold, Silver, and the miners had coming out of the mid-March sector lows, and screaming higher into the late Summer.
This is the time of year I like to add a bit to positions, but unfortunately, if I was more plugged into the daily gyrations and watching the markets closer, then I would have added more in the recent weakness. I was checking briefly every few days, and liking the look of the pullback, went out of range, came back and most of the stocks had bounced considerably, so hoping for a bit more end of the year weakness to pounce on. Most of my positions were just in a “hold” strategy so I’m still very allocated overall.
The seasonality factor typically has a nice rally start out of late December and into Jan/Feb/early March for the Q1 Run, so we’ll see if we don’t get a nice bump to kick off 2021. Cheers!
Ex, I see you have picked up on the governments latest initiative it’s called “Drive By Jobs”, no need to work anymore just collect your government money and keep on driving. There is no guaranty against poverty equal to a drive by job for every man and woman. That is the primary purpose of the polices they advocate and the end dream of politicians, we have finally found utopia. DT
America 2020, “THE LAND OF PROSPERITY”, now featuring “DRIVE BY JOBS”, you heard it first here by me! DT
Haha! That about sums it up DT. Yes, I had a severance package that got me most of the way through 2020, but for the first time ever did pick up some unemployment funds from the nanny state, until the move. We did well on our home sale, and I had saved for a rainy day, so now I’m going to be looking for what I’ll do in the new chapter of life. I’m not particularly interested in a “drive by job” but that is what many are going for as you mentioned.
If the miners would just rally bigly, I could probably swing just being a full time investor, but I like to spend money too, so I need my account to triple or quadruple again in short order to be able to go full time swing trader. Until then, I’m back on the job market and back following the markets. Cheers!
Ever Upward
Glen…….just in case you missed it….
https://www.youtube.com/watch?v=Ql-quCbXf1k
Jerry half way through it!
Thus far
1.. Getting harder to purchase the real stuff bullion.
2. But the dips and not the rallys
3. Hold on to real wealth/ gold
Thank you pal
Glen
Hello…That was a great conversation between you boys…Mr Horseman , you should drop in more often. Ex great to hear from you again. WOW..traveling the country , man you are living the dream…FREEDOM….haha
Hey there IrishT.
Yes, we did over 3,000 miles the first trip with me driving the moving truck and my lady driving my sports sedan, and over 4,000 miles the second trip with me driving the RV and her driving the SUV. There were so many amazing parks with huge parking lots and nobody in them. We looked at mountains, rock monuments, natural arches and rock bridges, deserts, large lakes, rivers/waterfalls, and they were mostly empty.
Ironically, the one place everyone should be – outside getting fresh air in the parks, is the one place everyone isn’t. Instead everyone is holed up inside. It was a strange discovery, but the RV parks at least had more people in them.
One of our neighbors at one site was instructing his daughter that she had to do her homework and see her class via Zoom, while they had wifi connection, because they were going to unhook and not have one a for a few days. She protested a bit, and the father countered with, “Do you want me to turn this RV around and head back home, or do you want to continue with the family trip?”
I realized, some families had gone mobile, and as long as they could get to a wifi spot at key times, they could be anywhere, as the kids are doing their school remotely.
These are quite interesting times eh?
Glad to Ex is back, thank you Glenfidish, Matt, and others for helping out the little guys. Took a small position in XES and OIH and little while ago. Bought USAS when it 2.50 in Oct, bought some more MUX @ .95, took a little flyer out for NAK @ .41. Did not own it.
Waiting… if big leg down due to general markets next year: Silver Elephant, Silver Tiger, After Math. Also, will add more to Copper, Uranium, Oil, FPI, LAND (smh… commodities)
Hi GrowingTrees. Those are some good companies and Oil ETFs on that list.
I added some USAS back in October at $2.45 on the 6th, at 2.54 on the 7th, and at $2.47 on the 29th. I trimmed back a little though on Nov 11th at $2.98. It’s currently my 13th largest holding (but was much larger earlier in the year).
I’ve still got my punked out position near parity in MUX and am waiting on it to wake up and get moving. This is the 4th time I’ve positioned in McEwen. I did very well the first time, and trading out for a loss the second time, and for a wash the 3rd time. 4th time a charm?
I don’t own Silver Elephant or Aftermath but do follow them. I did very well in Silver Tiger though a few months back, reduced the position, and noticed it has pulled back quite a bit over the last month or so. I’m going to be adding back to that position as they very well may be Silvercrest 2.0. One of the Silver stocks that I’ve done the best on has been Defiance Silver, but I recently lightened up just a bit on it after such a large move. There are plenty of other silver Jrs that look appealing to add to though, so it’s time to get out the shopping list. Ever upward!
Appreciate your words. With MUX and its resources and McEwen, I am taking a Benjamin Graham strategy, companies that disappoint and get “rerated” in the public eye are more likely sources of opportunity. Time will tell. Cheers
+1 Yes, it will eventually get rerated upwards and the move will be quick when it does come, so it is a pent up opportunity of stored energy.
Growingtrees,
Your patience is going to be rewarded handsomely. In fact I’m not an owner of mux for the reason I’ve told ex in the pass. Don’t let that scare you at all. In fact if I had some dry powder left I would be adding specifically at these lows heavily..
From my lenses, once released and “possibly” very soon, it will run like forest fire towards 2.71-2.74 possibly 2.81 before a multiple short term correction and resume. Let’s not get ahead of ourselves. $2.71 as a short term play is when I personally would unload and re-buy at the correction low. However like I said it would be short term multip week correction before attacking $3.61-$3.75..
My overall point in from a daily, weekly and much more importantly monthly basis, this mux along with every other sound miner is going to bring value back to shareholders! You can take that to the bank 🙂
Thanks for the kind words above as well.
All the best pal
Glen
Hopefully it will. Seems like patience is a thing of the past. Let’s go monthly chart! Keep throwing out that knowledge. We are picking up what you are putting down.
Hey Ex………this is a feather for your cap…..on BITCOIN….. 🙂
https://www.zerohedge.com/markets/169-year-old-mass-mutual-buys-100-million-bitcoin
Thanks for the update on the Bit-con OOTB. 😉
That new feather in my caps looks dashing….
https://c1.staticflickr.com/9/8319/7963876320_74b0b52561.jpg
Dang , that guy stole my hat……. 🙂
I’m listening, reading, and trying to learn. I am on a 1 to 3 year buy and hold Jr explorers and also producers. At what up percentages does one consider trimming (or even closing position)? Thank you for any nice advice, guidance and opinions.
Ag