Changing the playbook on investing in gold stocks – Don’t fear a quick rally
Erik Wetterling, Founder of The Hedgeless Horseman joins me to share why he changed his strategy for investing in gold stocks. Now instead of selling a large part of an investment when the stock runs higher he is keeping more money in the Company. This is all due to the continue bull market run in gold stocks, the out performance of the strong companies, and the fact that he thinks gold stocks are still undervalued.
Click here to visit Erik’s site. He’s been very busy writing company reports.
Be careful Oliver’s call for gold to be $2300, by end of 2020…..he missed that one..
If Commie Harris takes over gold could go to 50K, but she will take all our wealth to pay reparations to BLM and for indoctrination camps.
Ditto bonzo……
Most technicians are going to miss calls but Michael Oliver is still a very solid technician, despite his miss on the $2300 gold call by the end of 2020. We’ll likely get there by later this year though.
Remember there were a number of technicians that thought Silver would be $35-$45 by the end of 2020 and that didn’t pan out so great either. Those numbers are more possible for this year in 2021 though, as we mentioned last year.
For the sake of the mining stocks, which many invest in here, regardless of the actual targets reached, that is less important than the overall average realized price that the miners sell their their metals for each quarter.
The point being that anywhere around the current prices, it is not as consequential if Gold is $1920, $1890, $1850, $1950, etc…. because a good gold producer will make money with good margins at all of those price. A blip higher or lower by $100 doesn’t radically change the game because it is already above everyone’s cost of production and just makes minor differences to revenues (but it isn’t a make it or break it moment like $1050-$1200 Gold was.
Anywhere in the $1800’s, or $1900s gold also allows the valuations on the key old development projects to get a bit about the same. Yes higher is better, but if the project made sense at $1200 or $1400 gold, the it for sure makes sense at $1800 or $1900 gold and will move forward and get funding or get bought out by major accordingly.
It’s the exact same thing for the silver price. Yes, the higher the price the better for the miners… of course, but anything above $21 is profitable for the whole sector of producers. Really most have continued to bring their cost down and Zinc & Lead prices have perked up that most are going to be fine over the $17-$18 Silver price. So does it matter if Silver got stuck in the mid-$26s resistance for so long, or trades in the low to mid $27s… Not really. Yes $27.32 is better than $26.32, but it isn’t a make it or break it moment, like when Silver was at $13, $14, $15, $16…. If Silver gets back above $29 and heads into the mid $30’s that will be significant fuel to the Silver miners, but the key is we are in a bull market in the Precious Metals, and over the medium to longer term, the prices of the metals and the prices of the miners are going to go higher and they will appreciate. Yes there will corrections, pullbacks, and maybe even a sectorwide crash with the markets at one point, but the trend is going higher and the mining companies are in a position to capitalize on higher prices.
Even if one is stacking gold or silver bullion, the day to day gyrations and price targets are just a fun game of guess the number. All that matters is the price you bought the bullion at, and the price you sell it at. If someone doesn’t plan on selling it, but willing it to their family, then the day to day gyrations are just noise and it doesn’t matter if Michael Oliver or Chris Vermeulen or any of the technicians hit their targets. If one is doing shorter term trading of futures contracts, or trading options in GLD, or even just trading GLD or other ETFs then yeah, the day to day prices are mucm more relevant. Most people are not doing that that hold gold, so the obsession with daily price does end up to be a bunch of noise, and infotainment. The trend for the last few years has been up in the precious metals sector, and that trend is still in place. $2100, $2200, and even $2300 will eventually come, so fret less, and position on the pullbacks.
To be clear, I’m not saying that for shorter-term traders that price swings, and knowing when things are overbought or oversold isn’t valuable for trimming on frothy markets, and buying up unloved markets, but even someone unplugged from all that noise, can still know that when Gold got to $2060-$2080 it was much pricier to buy that it was when gold had pulled back down to the high $1700’s last year. If Gold was at $1960 earlier this week, and goes down to $1860, and you liked it at $1960 and though it could go much higher, then you should like it more at $1860 and buy the dip. This is the same thing we see in the miners. If you liked a stock at $10 and thought it had great upside, and it goes to $7 without the fundamental backdrop really having changed much, then you should like it even more and buy the dip.
Thanks EX: Good info and a lot of work for our benefit.
Thanks David. Investors should embrace pullbacks in bull markets as the buying opportunities they are.
E.B. Tucker: Civil war is not imminent, but a bull rally in these assets is (Pt. 1/2)
Kitco News – Jan 7, 2021
America is not headed for another Civil War, but what investors can expect is an appreciation of commodity prices in the wake of major economic changes, said E.B. Tucker, director of Metalla Royalty and author of “Why Gold, Why Now.”
“We have an opportunity with gold because what we’re going to see is that companies are going to run into some trouble when costs are rising, labor costs are rising…commodities are all going up,” Tucker said.
I have to point out that Michael Oliver’s so-called targets are really not targets at all but guesses. His subscribers don’t pay him for targets as Vermeulen’s seem to. As far as I know, Chris is one of the countless price-focused guys whereas Michael cares more about (only about?) momentum (as I do, but I look at both). Getting a handle on momentum provides you with entries and exits but not targets to focus on in advance like Rick Ackerman does or the various Fibonacci or Elliott Wave approaches.
Stackers would do very well to know who’s in charge (bulls or bears) and which sectors are favored, especially long term. At least smart stackers should care since accurately matching your strategy to the prevailing conditions can save you money when you buy and make you money when you sell. Maximizing performance consistently is worthwhile.
I have never explained my heavy use of strength and momentum oscillators here (among a couple other key things) but they have allowed me to maximize opportunities in a way that most price-only approaches can’t. They also provide me with a confidence that most price guys never get to experience. Remember when Spanky asked how I could be so sure of myself 2 or 3 years ago? I wonder if he is very worried yet again. He shouldn’t be. Of course I would be better off if I worked harder and broke my discipline less but I’ve learned that it’s maximizing opportunities that’s important, not being right about every little squiggle. Because of that fact, I stress a lot more and work a lot harder when things are going great and don’t lose any sleep when things are bad.
That’s interesting Matthew. I’d love to dip more into that with you and talk through momentum, divergence, ADX, etc, but I’d be wasting your time…. I’d be playing checkers while you’d be dealing in 5D chess on the stock market board. I’m just glad you’re here sharing.
Canuckski, based on your credentials/history, I bet you’d play 5D stock market chess just fine.
Speaking of valuation, Jeremy Grantham points out that Tesla’s market cap amounts to $1.25 million per car sold each year and GM’s market cap amounts to just $9,000 per car. With insanity like that even among people with assets, it’s no wonder the West is circling the drain.
Dear Matthew, what is your opinion of the cryptocraziness going on? I know we spoke about crypto before but hearing your take on current development should be interesting.
Norrareal1968, the technical picture was turning bullish many months ago so I thought BC was going to go up but I did not know it was going to go up so much so fast. I guess I shouldn’t be surprised considering its history.
It is technically extremely dangerous for both buyers and sellers because such parabolic moves are impossible to predict. It could crash at any time but it could also go far higher very quickly. It is more overbought on the weekly chart now than it was when it topped a few years ago based on the RSI(14) indicator (currently at 95!). On the monthly chart, it is less overbought this time and on the quarterly chart, it is far more overbought this time with an RSI of 85 which is also an extreme reading. When it does top, it will come down hard and probably for a long time. The question is, at what price will it top? I would be surprised if it makes it past $55,000 to $60,000 and not surprised if it tops out at a lower level.
Thank you for your timely reply Matthew
Forgive my grammar guys!
I have been nice to this pundint but he shows his true clouds. I come from the streets and I’m a good guy and wish everyone much success. This pundint is an a-hole always trying to stir shit up and trying to cause confusion. He is exactly the person you don’t want to listen to because you will lose a fortunes lol. Facts
Matt you are bang on don’t need to explain! The pundint is an a-hole! Always throwing jabs and insecure. His life must be miserable
A person who always takes the time to write up an essay to attack someone who gives there heart and has been more accurate then his thoughts is an a hole.. I speak the truth..
My ker family you know who has spoken and has right. Matt and me are on the same team! I believe Jerry is as well
Thanks Glen.
I’ve learned that it’s maximizing opportunities that’s important………Matthew says….
SPOT ON………
And ditto on the “stacker” statement….
Looks like Gold is going to be down today because it is going to be down today. I think I will shred paper today.
Wipe out of Monday complete on pro-miner news. Back to holding in same channel for months.
I guess the gap at 1890 got filled.
Nice not to have to wonder about it anymore.
bitcoin over 41k.
Took some profits and added to Santacruz, Southern Silver and Baru. Santacruz down about 19% at one time; Baru -17% or so; and SSVFF -10-15%. Sounds like a sale.
Looks like I will close “flatlined for 5 months”.
Michael Oliver says gold is going to 8000 and silver to 200 in 2 years, so I would be afraid to take profits till then. I bought more NFGFF this morning.