Erik Wetterling – Lightning Strikes Twice In His Junior Resource Portfolio Recently
Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins us to review that he has seen lighting strike twice recently is his portfolio, and he further outlines his approach to value investing in junior gold and base metals mining stocks. We follow up on the last few discussions we’ve had on the 2 discoveries that Snowline Gold (SGD.V) (SNWGF) has made, and the recent surge higher it’s seen in valuation in an otherwise tough market. Next we pivot over to another big mover the last few trading sessions based on the news released from Western Alaska Minerals (WAM.V) (WAMFF), and why Erik likes this story. We wrap up with his reflections on a nickel company that hasn’t moved as much yet, Magna Mining (NICU), but that he feels have the project, permits, a key partnership, and macro drivers to move it higher in the medium to longer term.*
This is not investment advice, and people should seek the advice of an investment professional when making important financial decisions and take full responsibility for their own actions. Our guests may hold positions in any equities mentioned or be compensated by the company for promotion.
Don’t jinx us now, Ex.
Today’s reversal was soo needed.
Haha! Battaglia – the miners turned up last week and already reversed, and today was simply more follow through. Many of the stocks I was buying 2-3 weeks ago are now up 10-15% from where they were trading when everyone was running to cash in fear.
As for ole’ Joe, he’s come on begging people to sell 4 different times in the last 2 weeks, where the resource stocks then rallied the very next day each time. That is a trend not a one-off event, and speaks to the quality of his proclamations. 😉
Rest assured though, if we see the PMs correct further next week, heading into the FOMC July rate hike, then I’m sure Joe will be back on claiming he was “right.” Of course, that will be totally subjective since he hasn’t provided any price targets, any time horizons, or laid out any logical or substantive thesis to even be right about.
Saying to sell and go to cash is about a nebulous as it gets, it doesn’t help anyone to figure out where to look for a bottom, and doesn’t even specify exactly what stage of mining stock or what metal or general equity he is specifically suggesting should be sold. Conversely, he never specifies at what data point / price level / macro backdrop where he would be back in as a buyer. All he says is you are going to want Cash or need Cash… well, whoopty doo…. isn’t that always the case… everyone wants more cash as an investor.
Thanks, but no thanks…. it just noise… and a generic bearish blowhard.
Think about it, saying “Sell everything and go all to Cash” is the inverse of someone saying “back up the truck and deploy all one’s cash”.
First of all, it is very open to interpretation, and not specific in the slightest, and as a result could be seen as right or wrong by different people depending on in which precise context it was in (what sector? what stock? what price? what time horizon?)
If we eventually see lower prices, some dimwitted people may say “Look, Joe was right.” But about what really? Saying to sell everything is just the same thing as saying, “go to the sidelines and watch.” That is a spectator position, not someone on the field playing offense (going long) or defense (going short).
If someone had conviction that markets or a sector or stock was going down, then they’d short it for gains, not cower in cash on the sidelines. That is really an undecided or unsure neutral position.
It would be like the stock markets are a craps table as an analogy. One can be long and bet on the point number, or one can be short and bet on the don’t pass bar, but being in all cash, is not even being on the table at all, so simply a spectator. There is nothing wrong with being a spectator, but it’s not a position. Long or short are positions. So being in Cash is not a position that can be congratulated or described as a good call. It’s just an “anti-position.”
All markets go both up and down, intraday, daily, weekly, monthly, annually….. So without a time horizon, saying to “go all-in” or saying “sell everything” is completely meaningless. So is saying have no position.
Look, 95% of people are not out speculating in the markets, so in theory they are “all in cash” (blowing their fiat on other creature comforts). They are about as much of genius as anyone saying to go to all cash right now, so I guess 95% of people are genius traders by not participating to the long or short side. Haha!
Again, if investors reading and taking him serious were to have sold their precious metals mining stocks last 4 times Joe suggested to sell everything, they’d have sold at lower prices than were seen the very next day each time. Is that a good signal for a day trader or swing trader, or even value buyer? No, it isn’t. The PM stocks have gradually trended higher for the last 2 weeks now, so it wasn’t even a good swing-trading call.
Now if we see gold sell off next week and the PM mining stocks get hit further, does that make a blanket sell everything call correct? I guess, but is it helpful? Does that make someone “prophetic?”
What if we see the PMs surprise everyone with a short covering rally? Would the “sell everything” call be correct then? Obviously not, but will people consider that “anti-prophetic” then?
It’s just a binary bet like betting on even or odd, or betting on black or red… nothing prophetic about it… and nothing notable about it.
If some one bets on “black” and it comes up black, are they a genius? An amazing trader? A good market reader? Nope.
If someone bets on “odd” and it comes up even, are they a bad speculator? Nope.
There is no there….there. It’s a broken clock call that will be right twice a day, and wrong the other times.
Now if Joe was to get specific about which sector and stocks to sell, at what levels he’s looking for a bottom, what data has him placing this bet, or better, if he’s so convinced things are going down that he had put on a short position and what his targets are, then that would be something.
In contrast to Joe’s vague neutral position, Jordan at least laid out a thesis for and target for gold to pull back down to right above $1600 and provided 20 minutes of thoughts, technical analysis, and macro fundamental reasons for his call. Doc Postma mentioned the need for the PMs to pull back down the lower Bollinger Bands on the monthly charts and mentioned similar price levels in Gold and lower prices in the mining stocks. Dave Erfle mentioned the next level of support below $1673-$1675 being at the 200 week MA around $1650. They all discussed the rate hiking cycle potential paths, prior historical periods of performance as analogs to this period, and support levels to watch in GDX and GDXY. There is a rationale behind those bearish calls, and something an investor can mull over.
Can people not see the difference?
That’s it!
I’m gonna invite you and Joe the Prophet for a drinking contest! This thing between you guys has to be settled asap!
🙂
Haha! I used to be able to surprise folks in drinking contests, but now I value my liver and health much more and stick to water, tea, coffee, and fresh pressed juice most of the time, but do still enjoy getting a few craft beers, or a glass of good red wine, or the occasional mixed drink if out at a bar or restaurant.
There’s really nothing to settle, just asking for higher quality posts from him. I just wish he’d quit trolling PM investors that may have lost money or be in financial pain as if it were amusing.
It would be far more insightful if he’d put the specific data he is using as to why he believes we should all sell and go to cash. How about him sharing a logical thesis with either technical or fundamental context to his posts, further explaining why he has his bearish thesis? How does coming on dozens of times to keep suggesting to everyone that they sell their stocks near their lows after a 2 year corrective period help anyone?
Again, calling for everyone to go to Cash is simply neutral spectator position, and it shows uncertainty and that someone is too unsure to take a short or long position.
If one truly believed the markets were going down, then they’d short them to gain from this prophetic wisdom.
It’s the same thing as if one believed now was good value in the PM miners, then they’d be buying it. It’s as simple as that.
Cash isn’t even a position on the field, it’s simply watching from the sidelines.
Why should anyone listen to someone that comes everyday yelling in all caps to go to Cash in a neutral unsure position? Give us a well reasoned bearish position and explain when and at what price you started shorting the markets. Give us a target or data to watch for when you’ll get long again. Going to cash is as vague and unengaged as it gets.
If the markets pull back from here, it doesn’t really make it a savvy investing thesis… it’s just a 50/50 call from any point at any time, and markets go both up and down. If the markets go down, then great you’ve got cash. I’d be far more interested in precisely when the person with cash will finally be a buyer, and why. If the markets go up then, then oh crap, you missed the big surge higher sitting on the sidelines. I’d be curious when you thought it was going to be a good time to put the cash to work into an actual position. A cash position is essentially non-involvement, which is fine, but isn’t really saying that person has anything to offer as far as insights. If the cash is for investing, then when will the person invest it (to either the long or the short side)? If one is perpetually in cash, then they aren’t really investing. At what point will they be fully invested?
You’re not neutral or “flat” in cash when that cash is being inflated away at the pace that it is today.
Good point Matthew. Cash is actually a losing position, eroded by at least 9% based on CPI (and as we know the true rate of inflation is even higher).
Another fun interview. Joe won’t like it but he can listen to it first before telling us. I got my toe in the water of Snowline. I am thinking maybe this will be like New Found Gold as interest grows. Very possibly gets ahead of itself … maybe.
Thanks for that feedback Lakedweller2. Erik is always fun to discuss mining stocks with, and he’s picked a number of winners over the last few years before they were household names.
I don’t think ole’ Joe even listens to any of our KE Report interviews, and just comes onto the blogs
to troll resource stock investors. Again, one could make a small fortune just doing day trades or swing-trades that are just the opposite of his repetitive and dire “sell, sell, sell” calls. 😉
It’s good to have differing opinions no matter whether they seem credible or not, the future looks too much like tow the line or we will close your account. I don’t agree with Joe yet, but I’m glad he’s welcome to post here. DT
Sure he’s free to post here and as mentioned it’s fine to have differing opinions, but blanket buy buy buy or sell sell sell calls, with little data, reasoning, or a well thought out thesis are low value comments.
Anyone can get a bull horn and scream “buy” or “sell” from the rooftops, or throw out a random number target, but is that helpful to anyone?
What helps other investors learn or grow or get a slight edge is the rationale and reasoning behind a call (be it technical or fundamental or both), along with a time horizon or specific target, otherwise it is just noise. Making fun of people’s pain that got stuck in losing trades like Joe has done a number of time is not serving the community, and is more trolling.
So it isn’t a matter of agreeing or disagreeing with Joe, as he hasn’t even laid out any discernable thesis other than sell everything near the bottom of a 2 year consolidation in the PMs (usually not the time to be selling), and go to Cash because you are going to want it or need it (yet he never said what for).
People like Doc Postma or Jordan Roy-Byrnes or Dave Erfle or Dana Lyons or Jeff Christian or Marc Chandler or any of the others that have come on that have had a bearish thesis from time to time, will lay out the technical reasons, precise support levels with actual logic and thought behind them, or the macroeconomic data points, or intermarket analysis that they are watching to signal a bottom. They also frame their bearish comments within the context of still recognizing the longer term bullish set up. That is something tangible other listeners or readers can wrap their heads around. Sorry, Joe’s “sell, sell, sell” calls pale in comparison, are tethered to nothing discernable, and the last 4 times he’s come on pounding the table to sell, the PMs and mining stocks have rallied the very next day, so again, a great counter-signal.
Joe took my job away.
Lake, you have never had a job, you’ve been retired your whole life. Some people need to look around to realize how good life has been to them. LOL! DT! 😉
I guess the good part is that although retired all my life,I never was unemployed.
Lake’s biggest problem is getting his girlfriend to tie his shoes in the morning before her husband gets home, from the night shift. LOL! DT
EW simply invests in whatever Quentin Hennigh/Crescat and Bob Moriarty invests in publicly. Nothing unique or remarkable about that. In fact, its unremarkable.
It‘s a not too bad idea to follow companies Crescat has invested in. Dirty buyouts like Alexco’s might be prevented. And to have confidence in Q.H.’s expertise is a not too bad decision, I think.
And Eric does a lot of work himself, as I see it and he does’nt invest exclusively in “Crescat”-stocks.
I’m deeply grateful to those that offer me good information, the Kereport included.
Good points
Good comments and feedback Michael. Thanks for listening to the show and sharing insights here on the blog.
Yes, Erik is good at spotting trends and good valuations before they are more obvious, and sometimes that aligns with following sharp capital groups like Crescat, but not always.
I’ve watched The Hedgeless Horseman position in a number of winners in the resource stocks for about 6 years now since we became pals in 2016 and started discussing our investing strategies.
People would have done well following him into unloved risk/reward setups over the years, or at least learning from how he’s evolved as to when he enters a position, and when he goes big on a position. Not every pick of anyone’s is going to be a winner, and some will be big losers, but it comes down to when and at what prices an investor accumulates these stocks, and then when and at what price they fade out of that position.
Erik has done a lot better than most of the resource investors I observe, and has been in a number of the trending and winning stories of the last few years as a result. We have very different approaches, and invest in different stages of companies, but I have a lot of respect for the way he has built and actively managed his portfolio.
Ex, if you could go back in time and pick one point in history over the last two hundred years, what would you pick. For me that is easy, I would pick “Woodstock”. That was just the greatest moment for Mankind. DT
Haha! DT – that would be a pretty good one I guess in the real “Summer of love.” 😉
I guess I’d be curious to go back to a period of peak enthusiasm and growth in the roaring twenties (so late 1920’s), or I really like that period of innovation in the US and Europe in the 1880s-1890s where so many great inventions and quantum leaps in quality life were being made. It would be neat to get a bird’s eye view of living in that era.
Really the 1980’s were a pretty fun decade as well, so that would be nostalgic to go back and revisit.
Yes the 1980’s, everything came together and fell into place perfectly then.
Thank you for the kind words Shad! Certainly have a lot of losers. Especially “paper losers” at times like THIS. Some have fortunately worked out very well which have more than paid for the rest. All one can ask for I think! 🙂
Always a good chat Erik. Yes, we all have our fair share of paper losers at present, but in a year or two they’ll mostly be multi-bagger winners. Looking forward to doing those future interviews together and reflecting back on these times as the great accumulation period.
I don’t mind that Crescat joined me in Brixton months ago. Even better, Robert Friedland got involved in a big way.
There was news today, btw:
https://brixtonmetals.com/brixton-metals-receives-initial-payment-from-pacific-bay-minerals-ltd-with-respect-to-the-earn-in-agreement-at-its-atlin-goldfields-project/
Looking at BBB as well and have a small starter position Matthew. Problem for me is more lack of money than lack of what looks like excellent R/R stories now for sure :>
Michael,
To me it makes perfect sense. I would take QH’s geological insights over my own >1,000,000 times over for obvious reasons. They typically support their plays as well in PPs so it helps move things along and not risk stalling or bankruptcy. Also they obv want max value and share appreciation since they do not work for salaries unlike the management team. This is why they tend to push for big step outs and quantum leaps in growth which I also like. Again I am happy with owning a lot of Crescat plays because it simply makes sense to me due to the reasons I just outlined. So far it has worked out rather well to boot!
Best regards
SIL hit a new multiyear low vs SOXX this week. It just doesn’t get any better than that folks.
Rising yields, recession, inflation at 40+ year highs, and silver miners can’t even outperform the most growth and interest rate sensitive sector on the planet, which was at nosebleed levels in early ’22 after going up well over 10x since 2011.
Silver is in all likelihood going to be range bound for a year in a new lower range. I would guess that the 100 WMA is going to cap any move in silver, more or less, for the next 12+ months. I’m sure silver will have its day in the sun, but it is basically untradeable. And with prices capped for now, the miners will probably languish too. Again, some of these stocks could test their 100 WMAs, which would be a huge rally from here for many of them. But that’s it. From now until we get a monetary reset, they will be untradeable unless you get very very lucky. They haven’t respected long term moving averages whatsoever, and I don’t think they will going forward.
If and when silver does get it’s bubble, I am expecting it to be very short lived–two years or less and more or less straight up. Again, you won’t be able to trade the move. God only knows if the silver miners will even react proportionately, since they tend to discount the end of silver’s moves well in advance of tops. Blah.
There’s nothing short lived about a two year move in this sector. 60 percent of my miners went up over 1,000% in one-quarter that time in 2016. “Straight up” is fine with me.
Well I won’t see the silver miners rallying up to the 2016 high as success. They need to do multiples of that, in my eyes at least. I’m just not sure if they will have enough time to do that.
I think there is a fair argument that playing silver futures with say 3x leverage won’t get you further than silver miners during the next and IMO final phase. I am closely watching SIL’s 200 WMA vs the 600 WMA.
Meant to say the 200 and 600 WMA of SIL:SLV.
Oh yes, Matthew,
those magic months in 2016 were like manna from heaven. A reoccurrence of something similar could reward all of us for enduring these torturous periods we are experiencing so often.
And lately a feeling is creeping inside me that we are nearing something of the sort again.
Heads up!
If by nearing you mean 8-12 months out, I agree
It will most likely coincide with the Fed pausing rate hikes by year end, and then accelerating as they shift back over to cutting rates in Q1 or Q2 of next year.
I’m with Michael. We are near a strong turn, not in 8-12 months and not necessarily coinciding with any particular Fed policy change.
The setup is better than any we’ve seen since at least 2016 for the juniors and significantly better in some ways.
IPT:GDX reached its highest level in almost 3 months today and is up almost 30% since bottoming in June…
https://stockcharts.com/h-sc/ui?s=IPT.V%3AGDX&p=D&st=2021-06-30&id=p64071577395&a=1172593559
Like I said, you can expect a rally of some sort any day now, and it may be pretty significant, but it isn’t going to be remotely on the scale of 2016 yet. The 100 WMA is now sloping downward across the PM complex. I think the 100 WMA will more or less cap any rally until the 100 WMA crosses back below the 200 WMA.
So while we may not make a lower low from here, a rocket launch type rally that leads to 10x type moves is months out IMO. Instead, over the next 3-6 months we could get something that looks very much like the choppy mess we got from summer of ’15 to January ’16 or the choppy bottom we got from ’18 to ’19.
Just a glance at the charts should tell you that the MA situation at the ’16 low was much worse than now:
https://stockcharts.com/h-sc/ui?s=IPT.V&p=W&yr=7&mn=11&dy=0&id=p20041951048&a=1211126096&r=1658515632578&cmd=print
As for the need for the 100 MA to cross below the 200 MA again, I completely disagree. That assumption ignores the vast long term technical/fundamental improvements of the last 7 years.
For the record, when I say this setup is better than that of 2016, I’m talking about the health of the move which includes duration. I am not predicting the same gains over the same short period, although it is possible.
FREAKY FRIDAY…………..again………… can’t wait to see how things are going to get screwed up….
Before he comes on an craps all over the board (again), it is interesting to note that, once again (for the 4th time in the last 2 weeks), Joe calls for “Sell, Sell, Sell” and then the next day all 4 mining ETFs have been up and in the green all day. He may be the best contrarian indicator out there. Haha! 🙂