Weekend Show – Featuring Rick Bensignor’s 2022 Market Outlook and Joe Mazumdar’s Thoughts On Production and Development Stocks
Welcome to the 2nd KE Report Weekend Show of 2022. This weekend we spend extended time with Rick Bensignor and Joe Mazumdar. Starting with the broad financial markets, interest rates, and commodities, then moving to analysis on production and development resource companies.
Please be sure to go back through the week and listen to the market commentary and company interviews. We love hearing from all of you, please email us at Fleck@kereport.com and Shad@kereport.com.
- Segment 1 and 2 – Rick Bensignor, President of Bensignor Investment Strategies kicks off the show by sharing his 2022 outlook for US markets, interest rates, the USD and commodities. We also discuss the key macro factors driving all financial markets. Click here to learn more about Rick’s investment letters.
- Segment 3 and 4 – Joe Mazumdar, Editor of Exploration Insights wraps up the show with a focus on the investment landscape for production and development resource companies. We touch on gold stocks and base metals stocks, all with the investor in mind. At the end of the segment we also drive down to the exploration companies. Click here to visit the Exploration Insights website.
Exclusive Company Interviews This Week
- Fury Gold Mines – 2022 Exploration Plans at Eau Claire and Committee Bay and a Recap Of The Homestake Property Sale to Dolly Varden
- Blackrock Silver – A Review Of The 2022 Exploration Strategy And The Upcoming Maiden Resource Estimate in Q1
- Outback Goldfields – 2022 Exploration Plans For 3 Projects In The Goldfields of Victoria, Australia
- District Metals – High-Grade Sample Results From The Svärdsjö Property and An Outlook For 2022
- Wallbridge Mining – Company Projects, Recap Of 2021 Maiden Resource Estimate, And The 160,000 Meter Drill Program For 2022
- FPX Nickel – Recapping Final Drill Results From The Van Deposit and 2022 Plans
- Cassiar Gold – More Information On The Strong Drill Results From The Taurus Deposit At The Cassiar Gold Project
- American Pacific Mining – Recapping High-Grade Drill Results From The Madison Property And A Large Work Program For 2022
- Newcore Gold – Recap Of Work From 2021, New Drill Results, And The 2022 Focus And Strategy
- Heliostar Metals – 2022 Exploration Plans; In Both Mexico and Alaska
- Awale Resources – 2 Distinct Copper-Gold IOCG Targets Defined At The Odienné Project
Joe & Paul’s – Another Mining Podcast #11 – Mining Finance 2021 and 2022 Outlook
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CGS Mining & Exploration – Jan 6, 2022
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“Joe Mazumdar, editor of Exploration Insights and Paul Harris of CGS, discuss mining finance trends and where they may head in 2022.”
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https://youtu.be/c-wVKolx2pM
Rotation to Value Here to Stay as Fed Desperate to Vanquish Inflation Boogeyman
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By Yasin Ebrahim – Investing.com – January 15, 2022
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“The rotation to value from growth stocks has staying power as the sector can count on a powerful ally: A Federal Reserve desperate to rein in inflation.”
“The Invesco S&P 500 Pure Value exchange-traded fund has racked up gains of about 7% this year, while S&P 500 Growth Index is down about 5% year to date fueled by bets a rising interest rate will hurt sectors of the market with longer-term cash flow horizons like tech, or growth stocks.”
“Unlike previous rotations to value, which just last year proved to be fleeting, the current rotation has staying power as the Fed’s “narrative has changed dramatically,” Johan Grahn, Head of ETF Strategy at Allianz told Investing.com in an interview earlier this week.
“In the space of a few months, the Fed has moved on from “not even thinking about thinking about raising rates,” ditched “transitory” from its inflation vocabulary, and laid out the red carpet for policy normalization.”
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https://www.investing.com/news/stock-market-news/rotation-to-value-here-to-stay-as-fed-desperate-to-vanquish-inflation-boogeyman-2739809
Lobo Tiggre: This is the Year the Fed will be Revealed
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Palisades Gold Radio – Jan 14, 2022
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“Lobo discusses his thoughts on the Fed’s actions but notes that he is not an economist. Inflation appears to be the trend and even Powell has retired the term transitory. Shutdowns and supply issues will take time to resolve so inflation and high prices are likely to persist. What happens this year is anyone’s guess but the likelihood of a major market meltdown remains high. The growth outlook for overall equities does not look high.”
“Ultimately, gold is usually tied to the dollar and overall this past year has been good for mining companies. He is focused on building his gold and silver positions but remains very bullish on uranium. Uranium equities experience a lot of volatility but this can also serve as buying opportunities.”
Can Anything Tame The Inflation Beast Now That It’s At A 40-year High? Steve Hanke
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Kitco News – Jan 12, 2022
Guest(s): Steve Hanke Professor of Applied Economics, Johns Hopkins University
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“Headline CPI climbed to 7% in December 2020, the highest level since 1982, according to data released Wednesday by the U.S. Bureau of Labor Statistics.”
“Steve Hanke, professor of applied economics at Johns Hopkins University told David Lin, anchor for Kitco News, that inflation will likely remain elevated until 2024, after which the Federal Reserve will have to focus on reducing the money supply.”
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https://youtu.be/ucASZd7D9YM
Inflation At 40 Year Record High After Rising 7%. Feds To Raise Interest, Ignore Supply Chain Woes
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The Hill – Jan 13, 2022
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“Ryan Grim and Kim Iversen discuss the rising cost of consumer goods and the debt crisis currently facing some American families.”
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https://youtu.be/C8m4CtfkhN8
‘How’d You Get It So Wrong?’: John Kennedy Grills Biden Federal Reserve Nominee On Inflation
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Forbes Breaking News – January 13, 2022
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https://youtu.be/UilCdxAgf2U
Gold Prices Settle Lower, But Tally A Gain For The Week
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Myra P. Saefong – January 14, 2022
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“Gold futures ended with a loss on Friday, as some investors sold the precious metal ahead of the three-day holiday weekend in the U.S., but prices still tallied a gain for the week — their fifth in six weeks.”
“Prices for the precious metal had found earlier support from overall weakness in the U.S. dollar and declines in the U.S. retail sales and consumer sentiment readings.”
“Following Friday’s “devastating U.S. retail sales report,” prices for gold climbed, but then moved lower, pressured by “profit-taking against the news and ahead of the long weekend,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
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https://www.marketwatch.com/story/gold-futures-edge-lower-friday-but-head-for-best-week-since-november-11642164401
Gold Stocks: Protect The Profits
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Morris Hubbartt – Jan 14, 2022 – Super Force #PreciousMetals #TechnicalAnalysis #Video #Charts
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http://www.321gold.com/editorials/sfs/hubbartt011422.html
Ira Epstein’s Metals #Video (01/13/2022)
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#TechnicalAnalysis #Gold #Silver #Copper #Platinum
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https://youtu.be/0F2SEWAGl0s
Feb Gold Set Up For Breakout to $1881.90
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James Hyerczyk – January 12, 2022
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https://finance.yahoo.com/news/feb-gold-set-breakout-1881-060635046.html
Gold Stocks Are Historically Cheap says Resource Fund Manager Adrian Day
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Mining Stock Education – Jan 12, 2022
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https://youtu.be/lULRLDSjkNw
‘The Greatest Risk To Financial Markets’
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Jesse Felder – The Felder Report (01/15/2022)
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https://mailchi.mp/felder/greatest-risk-to-financial-market
I believe people will be surprised on the aggressiveness of the Fed this time around. Past histories of quantitative tightening and interest rate increases didn’t have the specter of inflation staring them in the face. This time is different and you can sense the unease of the Fed. They may do more damage this time around then the “experts” expect.
The Fed policy is likely to be a wrecking ball on the markets later this year for sure. The first few swings at the structure may not seem to do much as the structure can withstand those, but the repeating series of rate hikes will eventually get the breaking point where the structural integrity starts crumbling after repeated hits. Where that breaking point is, and how many rate hikes it will take is anyone’s ball game.
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It is going to be fascinating to watch it unfold, and see where things go.
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https://yplife.org/wp-content/uploads/2018/01/wreckining-ball-2-1024×576.jpg
This whole episode has not been unplanned as they want to do something that will be financially destructive for a large number of people.
Doc – normally I agree with you but re: the idea that the Fed will be aggressive with it rate hikes, I’m not so sure. I want to see what happens after the 1st and 2nd hike if it occurs. If the economy slows, inflation rates start to drop and the Fed sees the market tanking after their initial hikes will they really trash the market by doing several more rate hikes? Remember we are talking about folks retirement accounts. There are a bunch of folks out there with good track records still saying it is 1 or 2 and done.
Personally, right now I have no idea how this is gonna play out. I am going to watch how the system responds to those first hikes and not just accept the Wall Street wisdom that we will get 8 rate hike over the next 2 years.
Mike, you make a very valid point. I do know one thing—-the gold market will eventually let us know when the FED is getting queasy.
Doc – thanks for you response. On this point we totally agree. When the Fed finally publicly “gets queasy” and backs off from doing more rate hikes you want to be fully invested and ready for the ride.
Mike – agreed. It is interesting to note that “Wall Street wisdom” is now up to almost 7 hikes this year (Jamie Dimon from JP Morgan is expecting 7 this year… haha!), which seems incredibly unlikely, so expecting 8 rate hikes in 2 years is so last week…. LOL!
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I agree that there will be a breaking point somewhere in this series of hikes, but it is interesting how wrong “Wall Street wisdom” was this whole time along. First up, even after Trillions in government fiscal stimulus and Trillions in Fed balance sheet expansion, these wise financial profits doubted we’d ever see inflation even get to the Fed’s 2% target. Then these bozos thought the rising inflation would only be “transitory”, when anyone with any common sense knew this inflation was going to keep heading higher and be stickier after all that new funny money creation from nothing (and that it would not just be supply chain issue related… although that was a contributing factor).
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The inflation expectations from the market have remained low this whole time, because they bought the FED B.S., and they seem suddenly shocked by how high inflation has gotten. Then in the summer and Fall when inflation got to 4-5% they felt that was peaking out…. nope. Then when the October CPI reading of 6.2% pricing inflation came in they proclaimed – surely that was the top…. nope. Then when November’s came in at 6.8% it vexed them because it was even higher, and surely it must be the high-water mark…. nope. Then 7% CPI inflation poop hit the fan for December, and all those people stopped proclaiming inflation was just going to be transitory, or that it may be the high point. The main stream generalist investors were wrong about this the whole way along.
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Remember when most investor and financial media embraced the Fedbabble that they “weren’t even thinking about thinking about rate hikes until 2023.” Then it went from 2 rate hikes possible in 2022, to OK it will definitely be 3 rate hikes, to now consensus at 4 rate hikes, and now the bankster goons are calling for 7 rate hikes. The “Wall Street wisdom” has been wrong the whole way along.
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JPMorgan boss Jamie Dimon says the Fed could hike interest rates as many as 7 times this year
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Isabelle Lee,Ben Winck – 01/14/2022
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https://www.msn.com/en-us/money/markets/jpmorgan-boss-jamie-dimon-says-the-fed-could-hike-interest-rates-as-many-as-7-times-this-year/ar-AASMX6q
Doc, Ex, et al…..
It just occurred to me the Real Vision Daily Briefings are free for all to view on YouTube. Please take a look at yesterday’s, 2022-01-14. While I don’t always agree with Raoul Paul on the wonders of crypto and the metaverse he nails it on the Fed and how Wall Street always over estimates the number of rate raises to come. I really wish I could embed it in this post but alas…….
Please check out this interview, it starts about 3:30 into the video clip, you can see it at:
https://www.youtube.com/watch?v=bIOXgdfy6HU
Thanks Mike – I’ll check it out later this evening. I really like Raoul Pal and the Real Vision channel, and quite often watch their videos. I’m really starting to like Raoul & Grant’s protégé Ash on there… he is a sharp guy too.
That was a good discussion on many markets from Raoul Pal. Thanks Mike!
Doc,
Although I do not disagree with you I will just say that this time around as you say inflation is showing it’s neck and any minimal rate hike they plan to do won’t do a tickle imo this these minimal rate hikes have already been factored in by gold as the market is more forward thinking then we think. I don’t see it as an issue for gold and the miners. All prices in.
Let’s see what gives.. the Cad my good friend is ready to rock and roll!
This will definitely help the miners and gold you will see
Doc: Your analysis here is spot on. Often the second year of a presidency is where dirty laundry is taken care of, giving up some off year electoral strength to set up the next presidential election, e.g. Volcker during Reagan’s first term second year.
Good point BDC about the 2nd year of a presidency being quite turbulent, and 2022 definitely has that setup.
Doc: Agree with you on the aggressiveness of the Fed in upcoming moves. However, they’ll never become Volker II. I expect them to actually accept 20-25% failure in the equity markets, but not much beyond that before they reverse course to ease the situational losses to Wall Street. We can’t forget that they are a wholly owned institution by the Wall Street Banks. Mike in Albuquerque mentioned the Pension funds and we can’t forget the mammoth bond market. JMO
tipping point – NOUN · tipping points (plural noun)
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the point at which a series of small changes or incidents becomes significant enough to cause a larger, more important change.
The Federal Reserve has thrown speculative loans after speculative loans at The Bond Market and then there are the loans they made to maintain all of that speculative credit.
How much money have they thrown at the stock market. How many funds have they loaned for the purpose of carrying securities. How many securities have they invested directly into and hold on their books. As soon as the Big Bull Market appears to be on it’s last legs then they pump money into the broker’s margin accounts to keep the system elevated.
What a mess? One can indulge in all manner of dubious financial practices so long as prices in the stock market rise.
Yep. Sad but true DT.
DT – Just to show the insane situation the Fed has created I just checked one of my accounts. For each $10K deposited in Vanguard Short-Term Treasury Fund Admiral Shares I get around $5.00 a month – the local credit union is way worse. This is the Fed’s doing and has created the insanity we see in the stock market. Folks are being forced to invest in stocks in a search for yield at insane PE levels and taking risks that they really shouldn’t take.
Re: my comment to Doc above – if the Fed trashes the stock market with a bunch of rate hikes it also trashes the retirement of many, many Americans. 70 year olds don’t have 20 years for the market to recover.
We discussed this concept with both Joel Elconin and Marc Chandler this week about the T.I.N.A concept.
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There Is No Alternative – for most average people piling into the stock markets is one of the only things they can do with their wages (other than pile more into real estate, but not everyone has that option). As a result, many are using the S&P 500 or Nasdaq or related indexes as their savings accounts. Who can blame people?
Their saving accounts and deposit products like CDs and Money Markets offer hardly any yield and are being eroded by the ravages of inflation, so those are losing propositions. Currently holding money in anything bearing less than 7% interest is a losing proposition… How about those amazing 1.8% 10 year treasury yields everybody? Haha!
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Rick Bensignor didn’t mention it this time, but may have last time, that the average household is now taking on way more risk than at any other point for decades, as the savings model has been crushed and everyone that is piled into equities, due to recency bias, believes the markets can only go up… which is not true. Corrections do happen, and sometimes multi-year corrections.
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Remember back in 2001-2007 when people believed real estate prices could only go up? That fallacy is what eventually led to the 2008-2009 Great Financial Crisis and the home bubble and commercial real estate bubble bursting. We’ll see the exact same thing in this “Everything Bubble” that has been blown since then for the last 12 years with easy money coming to an end, and with all the insane and frothy hot-money speculations like meme stocks, cryptos, NFTs, SPACs, and unicorns flying higher and higher…. we are definitely seeing “end of cycle” behavior. This too shall pass…
Agree that too many believe the fallacy that everything only goes up….there are no real estate agents I know that think the real estate market will ever correct here in Canada. Of course most of them have never experienced a crash in housing cuz it’s been so long ago…..markets are the same. I have a friend whose strategy is to be in cash waiting for a 10%+ correction and then buying the dip (buys etf)and cashing out when he makes 20% or more. Of course he’s been in cash for over a year and made nothing but what happens if there is a correction of 25%+????
Great points Wolfster. The trend is your friend… until it isn’t…
Hi Wolfster, we had a real estate correction in Toronto at the end of 1989 and the beginning of 1990 which finally bottomed in 1998. It destroyed a lot of lives and marriages. A lot of people I worked with owned 2 or 3 houses and they were all adamant that Toronto real estate could not and would not correct.
Houses where I live were selling in 1989 for 1 million plus. At the bottom of the correction prices had dropped below $350,000. Prices have now soared whey beyond 2.5 million into the cloudless blue empyrean.
Real Estate in Canada will destroy a lot of marriages and dreams and it will be much worse than the last time. Forget about 25%, I’m seeing 60-70%. DT
Great discussion Ex, Doc, Mike in Albq et al. If the inevitable market correction happens is sitting in cash now the investor’s best decision…then buy? Or is now the time to buy all the washed out gold/silver stocks?
It’s the perennial question…strong cases to be made for either course. I don’t pretend to have the answer.
Thnx again.
blazesb – Yes, the perennial question – “To buy, or not to buy?” Haha!
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Nobody knows the right answer all the time, but there are various approaches to scaling in, or waiting in cash to poach a good deal, or waiting for things to prove a new trend is in motion, or buying when things are depressed for the potential rerating. Those different approaches all have different risk/reward set-ups, and different payoff’s depending on which way the markets move, how quickly or prolonged, and to what extreme, so it’s all a spectrum of choices to make based on technical and fundamental probabilities.
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Personally, I’ve decided to take an admittedly pretty extreme position in being so exposed to the precious metals at this point, with some diversification, but not enough to balance out the overweight PM holdings. If things turn against gold and silver stocks then it is going to be tough for me, but but I can shed some stocks due to the sheer number of them held if things get ugly for a protracted period of time. On the positive side, if the PM miners really run hard in 2022 then I’ll have positioned very aggressively for that potential, and stand to have outsized returns. So more a higher risk/higher reward positioning at this point, and likely far too risky for 80-90% of investors, so definitely not something I’m recommending others due. I likely should have far more funds raised and on the sidelines at this point and more diversification to mitigate the risks, but my conviction is just high that if the PMs are going to keep this bull market that started in the miners in Jan 2016 going, then they need to get on their bike and ride by the end of 2022.
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It doesn’t have to be and insane parabolic move, but just as steady outsized gain for the year compared to other sectors, for me to be a happy camper. It also seems unlikely that 2022 will be as bad as 2021 was for the PM miners, although anything is always possible… but my bets have been placed that overall 2022 will be a good year in the PMs at one point, at which I’ll likely reduce down my position sizing substantially and redeploy those funds into other sectors for diversification moving forward.
Interesting looking Copper chart from AllStarCharts:
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https://cdn-ceo-ca.s3.amazonaws.com/1gu60h5-5DBD51C3-EF90-4942-B0AA-F15FD7D6C749.png
Plan for Decades of High Commodity Prices, BlackRock Says
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Thomas Biesheuvel and Francine Lacqua – Bloomberg – January 12, 2022
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“Commodities prices may stay high for decades as mining companies struggle to keep up with demand from the energy transition, according to BlackRock Inc.’s Evy Hambro.”
“Raw materials, and shares of some companies that produce them, hit record highs last year as massive global stimulus measures underpinned consumption. At the same time, the switch toward a greener world is creating fresh demand for metals such as copper, lithium and nickel.”
“That trend’s unlikely to change anytime soon, Hambro, BlackRock’s global head of thematic and sector-based investing, told Bloomberg TV on Wednesday.”
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https://www.bloomberg.com/news/articles/2022-01-12/expect-decades-of-high-commodity-prices-blackrock-s-hambro-says
Many posters including the guest and ex have been very keen in later have of this year creating a bottom in miners and gold due to fed hikes and what they are following.
Glen has a complete different perspective.. Let’s make this clear the bottom in gold is already in and yes “ I’m putting myself out there” make no mistake” I personally disagree with most of the guest wondering second half of the year etc. I believe many of you including the host of the show is going to miss the boat and be mistaken with later half of the year and rates yada yada.This is no attack on anyone it’s just plain to obvious from my calculations, charts and massive psychology that everyone listens so much to lord powell lol.
Remember these words and matthew could disagree and chime in or Jerry, you are going to see a movement up in the miners as I’m typing that will blow many off you away and the ones in cash will be chasing and asking questions later.. the market is priced in and not to many have figured this out. I’m trying to help many of you who just don’t see what’s coming.
The move will be explosive and won’t give many time to dip in only at higher prices. And by the time you realize it we are at the top of an amazing move and then the correction comes!
Glen
By the way I think Matthew warned about this and In regards to divergence.. also graddy has mentioned this.. be safe to all second half of the year your chasing imo..
Glen!!👍😀
Glen……… I will hang in there with you……….. I think you are correct….. the bottom is in…….
Lot of people throwing in the towel on gold, …which makes you wonder….
The problem with the bullish view on PM’s in the very near-term is most likely, we’ll have some rate hikes, no more QE, and possibly letting the bonds run off their balance sheet all coming in the next 3-4 months. If PM stocks are still “stocks” as Rick Rule says, and we have some sort of pull-back, or worse, a liquidity event, then those PM stocks will most likely pull back as well, along with Gold & Silver. The US Dollar will be bid, and that will be close to the event that Doc and Jordan have been talking about. I agree with that view, and hope it comes.
Glenfidish – thanks for sharing your views and outlook with us here at the KE Report.
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As for me missing the boat on PMs…. very unlikely, as I have over 70 gold and silver stocks, and added to dozens of positions or started new positions mostly between Aug-Sep and Nov-Dec, many of which are already in the money. If the PMs take off from here and just keep running higher, then trust me — I’ll be laughing all the way to the bank. Haha! 😉
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As for the interest in the Fed rate hiking cycles, from myself and a number of our guests like Jordan Roy-Byrne, Dave Erfle, Craig Hemke, Brien Lundin, John Rubino, Steve Penny, Mike Larson, and others… It is because they understand that the last 4 rate hiking cycles were very bullish for Gold and the PM sector. Also worth noting is that what kicked off this whole bull market we are in was the Dec 2015 start of the new Fed rate hiking cycle (after 8 years without a hike). Therefore, it doesn’t seem like a stretch to believe that this coming rate hiking cycle from the Fed (which most believe may start as soon as March… less than 3 months away) may be the catalyst to launch gold higher as more hikes come in as the year unfolds.
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My point has consistently been that we’ve been in a bull market in Gold since Dec of 2015 and since Jan of 2016 in the mining stocks, as there has been a pattern of higher lows ever since then on the gold chart. I’ve likely posted that chart about 2 dozen or more times in the last 6 years, even when many others doubted the bull market all along the way in 2017, 2018, 2020, and 2021. Heck some people continued to believe we were in a bear market until 2019, despite all the facts and evidence to the contrary.
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Even last year, there were many technicians and commentators that expected the double bottom in Gold at $1673/$1675 to fail and break to lower levels. I never felt that was the likely scenario, but was open to considering anyone’s thesis as valid that was very bearish expecting gold to break down into the low $1600’s or the 50% retracement back to $1570 as a possibility. (but that never meant I felt it was a probability, and in fact I often countered with that would mean Gold making a new lower low for the first time during the whole bull market, and that a break below $1675 would actually greatly concern me in that regard).
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As we all know, the March 2021 low of $1673 from that double-bottom pattern WAS, in fact, the most recent low in Gold, and it was already back-tested in the August 2021 swoon down to $1676, and that March double-bottom support held once again. I’ve pointed that out numerous times, so I’m not sure how anyone could confuse my stance as anything other than bullish this whole time, in contrast to many that kept calling for a final washout to new lows much of last year, and some even into this year.
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The other point I’ve made is that it would be best if Gold held above the next higher low of $1721, and that I’d prefer to not see a move below that, but definitely not below $1673. So how anyone could think I’m still expecting a lower low is quite puzzling, and could only arise from someone not really reading or comprehending what I’ve actually written over and over again.
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If one is pointing to the interviews we do with our guests, then my job is to ask them questions about their outlook, but that doesn’t mean it’s my outlook. If I know that they are looking for a move lower in the PMs in the early part of 2022, then my job is to ask them where they believe support will come in and what levels they are watching for. If they are really bullish, then often Cory & I will push back on their bullishness in the interview to see what may change that thesis or where they’d concede a corrective move was underway. Often I’ll ask a bullish person to consider the other possibility that gold pulls down pre-rate hike. If they are bearish, then I’ll ask them to consider that the pattern of higher lows has held, and we’ve already tested the $1673-$1677 zone 3 times now and it held each time, to see if that matters to them. Neither Cory or I agree with every guest we bring on, but we try to get a range of input and theories on the show and let the listeners decide which voices they resonate with.
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So, me asking a bearish technician, on the show or the blog, where they see support coming in if we do pull back down pre-rate-hike, is not even close to the same thing as me stating I believe we are going to bottom in the latter part of this year, so not sure where that perception is coming from. (?)
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We’ve discussed a number of times the potential for an up-leg in gold gaining more traction in the latter half of the year, as more rate hikes come in and are processed by the general markets; but that is not the same thing (at all) as stating we expect a bottom in the second half of this year. If people heard or somehow assumed anyone was talking about bottoming in the latter half of the year, then they need to clean the earwax out of their ears.
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Most of the guests are in the same camp, expecting the latter part of the year to be more bullish after the rate hikes get started. A few guests like Jordan or Doc Postma mentioned there was a potential of it taking 6-12 months for the PM sector to bottom, and that may carry into the latter part of this year, but they both stated they are open to reviewing the pricing data as it comes in post rate-hike cycle starting. That is not my personal outlook, but I’m willing to consider that as a potential path forward from people I respect like those 2 gentlemen.
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Bottom line: Looking at the Fed rate hiking cycle as a potential accelerant to the next big leg higher in the PMs, also does not negate the PMs from rallying in the first quarter, and I’ve stated repeatedly that generally the Q1 Run is bullish for the PMs in Jan/Feb and sometimes even early Mar. Being especially bullish on the 2nd half of the year also has absolutely nothing to do with where the bottom was put in Gold or the miners, (which so far was clearly last year as previously mentioned).
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Having stated my medium to longer-term thesis, I’m still an active swing-trader, and do lighten up on partial positions if things get overbought, and buy them back when they get oversold. (buy low, sell high… isn’t just a theory for me, I actually trade that way in real life). For the last 6 years I’ve bought in tax loss selling and and trimmed back in the Q1 Run and have posted on that a number of times (last year was the only odd year in that after such an epic run in late 2020 that I sold in earlier January for the mining stocks, and lighted up the dual-listed silver stocks in early February on that #SilverSqueeze surge higher.
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So, as an active trader, if we get a good rally into later January into February, then I may trim some and fade some positions into that rally, and then buy them back on any potential sell down into March. Conversely, if we get the pre-rate-hike pullback that Jordan and Doc Postma are expecting, then I’ll deploy my remaining dry powder which is only around 3% remaining. That is just a shorter-term swing trade though on partial positions, and should not be confused with the fact that I have 6 dozen gold and silver stocks in place for the larger bull market trend which is still unfolding.
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Hopefully that helps clarify any confusion on my position on gold, and the mining stocks. Ever Upward!
As a close follower and believer in your trading activities and theories, I think your words are 105% in line with everything you have been saying or doing for years. You have been very open about your thoughts and actions on a daily basis and have been overly kind in offering information and assistance to “anyone” seeking a valuable learning experience. All things you would never be expected to do. You have sacrificed your personal time and given your personal knowledge far beyond the norm. All one has to do to share in your wealth of knowledge is ask…you possess some rare qualities in that you have a willingness to share knowledge you have worked hard and diligently to acquire for nothing more than a “thank you” from those of us that have benefitted greatly.
So…Thank You.
Wow. Thanks so much Lakedweller2 for those very kind words. It is genuinely appreciated.
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That response from you is what keeps me working hard and trying to help other investors by sharing whatever info and perspectives I do have, and truly trying to pay forward all those individuals that likewise took time to help me along the investing journey. I’m still a firm believer that in smaller communities like the KER crew, that we can crowd-source and flush out some good ideas, sectors, companies, technicals, fundamentals, and investing wisdom that will give us all a slight edge, and make us all more better informed. Ever upward!
I agree with your statement Lakedweller2. Ex has given much over the years on this site. Big thanks to Ex!
Thanks for that comment Canuckski. Right back atcha mate!
Let’s all keep sharing great ideas here with the KER crew.
My point Ex,
Is for all the listeners to get a different perspective then yours. You have clearly come across and you seem convinced 100% from your tone that fed hikes are coming and tour looking for the miners to run lower. That’s exactly what I’m reading from your tone. So forgive me if your saying that’s not what your saying? Each interview or most you keep bringing that up. You can be in both sides and play it safe. However you can but that would me a very conservative approach maybe I’m much more aggressive and assertive with my approach no knock on you.
Again your message has been the same from my views that you see these hikes coming and therefore you see the miners going lower the second half of the year. Is there anyone else out there that reads the same thing? Maybe I’m deaf but not stupid. I’m not signaling you out I’m just wanting to know your exact position. So now your saying your 70% in so that is a good thing imo I did not know that previously and I’m not sure if you disclosed that. I know doc is like 70% cash. If that’s the case then yes that puts everything to rest and thank you. I’m just a curious bunny lol.
Anyhoo thank you for all your work by the way I’ve been trying to keep up with your post.
You can let all the guest that you interview that Glen believes the fireworks start right now. This first quarter is going to shock everyone I truly believe even doc!
Glen
Thanks Glenfidish, but I don’t think you are interpreting what I’ve said or what I’ve written correctly, which is why I just clarified it at length up above. Even after that, it doesn’t seem like you understood what my position was, so I’ll try again, and will just respond to lines from your response to try and clear it up point by point.
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> Glenfidish, you just wrote: “you seem convinced 100% from your tone that fed hikes are coming and tour looking for the miners to run lower.”
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>> Me: No. I am NOT expecting the miners to run lower, and if anything the coming rate hikes will be a boon to the PM sector, therefore lifting the PM miners higher in the latter half of the year. As I’ve repeatedly stated, I believe the low for gold and the miners already happened last year. For gold the low was in March at the double-bottom in $1673 and I’d be surprised and disappointed to see it break below there. For the miners, it depends on the individual company, but most of them bottomed in September or December, and I’d expect those lows to hold moving forward. Therefore I’m not expecting lows when the rate hikes begin, but rather a boost to the PM sector.
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> Glenfidish you then wrote: “Again your message has been the same from my views that you see these hikes coming and therefore you see the miners going lower the second half of the year. Is there anyone else out there that has reas the same thing? ”
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>> Me: No. Please see the prior answer, as that is not what I’m expecting at all. Other than Jordan or Doc Postma, none of our guests have even mentioned the potential of a low in the PMs for the 2nd part of 2022. That is not my belief personally, as I do believe the lows are behind us, as stated numerous times now. Really most people we’ve brought on the show are in that same camp expecting a very bullish 2nd half of 2022 in the PM sector, due to the Fed rate hiking cycle running it’s course. Maybe we’ll all be wrong and maybe we are all on the wrong side of the boat… time will tell…
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> Glenfidish you wrote: “So now your saying tour 70% in so that is a good thing imo I did not know that previously and I’m not sure if you disclosed that. ”
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>> Me: No that isn’t what I said at all. I have 70 PM stocks in my trading portfolio and have stated several times over the last few months, that this is the largest concentration to PMs that I’ve had in years in my portfolio, (after paring back my Lithium, Copper, PGMs, Base Metals, Cryptos, and Cannabis stock positions as 2021 unfolded, and rotating those profits over to the PMs).
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I stated up above that I have 3% dry powder (meaning I am 97% in on my PM positions at present). That is about where things have been since late September. While it varies slightly from month to month based on what I buy and sell, I’ve stated consistently that I’ve been mostly all-in on my PM positions since September, and did trim some back in Oct/Nov rally to raise some funds, and then redeployed it in December along with doing some horse-trading and rebalancing for tax loss selling, but have remained mostly “all-in” since the Fall. I’ve probably done about 150-200 trades overall in the last 6 months, and while much of that was swing-trading around core positions, some were in other commodities, and the net effect was an increased concentration in my portfolio on gold, silver, and PM royalty stocks.
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Now when discussing only the Uranium stocks, I did write on the blog a while back and over the last 2 months that at one point I was 70% deployed in those (more like 75% now), but that was strictly in the U stocks, and that was never mentioned up above.
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* Here is what I wrote up above and will just repost it, since it was already clearly stated:
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“As for me missing the boat on PMs…. very unlikely, as I have over 70 gold and silver stocks, and added to dozens of positions or started new positions mostly between Aug-Sep and Nov-Dec, many of which are already in the money. If the PMs take off from here and just keep running higher, then trust me — I’ll be laughing all the way to the bank. Haha! 😉”
“Conversely, if we get the pre-rate-hike pullback that Jordan and Doc Postma are expecting, then I’ll deploy my remaining dry powder which is only around 3% remaining. That is just a shorter-term swing trade though on partial positions, and should not be confused with the fact that I have 6 dozen gold and silver stocks in place for the larger bull market trend which is still unfolding.”
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Glenfidish – Since I’m mostly fully deployed at this point, and since I have 70 positions in gold and silver stocks, then I do sincerely hope you are correct that the “fireworks start right now.” Cheers! 🙂
Sorry ex for my mis interpretation. Thanks for taking the time to clarify your position once again. It is very reassuring that you’re very deep in as I am and a few others so this is great news on my part. Also thank you for taking the time to consistently put good information out there I know it does consume your time so as another poster said it is greatly appreciated it is not an attack by any means. If anything I’m more stoked that you Matthew and many others or a few others are in this is very important to me personally as I use a few of you as a reference point just to measure the stick. I do believe in what I’ve said and I think the fireworks are going to start the Canadian dollar is looking like it wants to explode higher let’s get a little luck on our side amigo
Forever up!
Sure thing Glenfidish, and right back atcha mate. Bottom line, I believe we are both pretty bullish the PMs going into 2022 and while my bullishness is more medium term, it would be fantastic if we saw some short-term strength, and I appreciate you sharing your insights with all of us.
As I understood, DOC is 80% in cash, because he expects another bottom and ex is 97% invested, mainly in pm miners
Both positions have some risks
DOC might miss the run, if there is no sell off event. Ex might be beaten down in a sell off event
I guess both are smart guys -:)
You probably have do be prepared for both scenarios
That is correct about how both Doc and I are positioned Thomas. My risk is extreme if we have a big sell down in the PMs because I have such a huge weighting to them now. I do have another 20 stocks in other sectors (Uranium, Copper, PGMs/Nickel, Zinc, Cannabis), but with 70 PM stocks, I’ll be screwed if we sell down hard and for a prolonged time in 2022.
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I believe Doc Postma said he was about 82% in cash when last we spoke, but he did mention earlier in the week he nibbled at a beaten down PM mining stock, so that may have changed. The risk he would face is if the PMs started ripping higher, then he’d be averaging up and chasing prices higher.
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Between the two of us, I feel at much greater risk, and have considered lightening up some if we do see the Q1Run in later Jan & Feb in the PM stocks to build up a bit more dry powder, and I do feel very over-exposed to both gold and silver stocks, but in particular to the gold stocks.
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The last time I checked about a week or two ago, about 42% of my trading portfolio was in Gold producers, developers, and explorers, and 28% was in Silver producers, developers, and explorers. I believe an additional 10% was in PM royalty stocks. The balance is mostly in Uranium and Base Metals miners. At the time I had 2% spare funds available, and I’ve trimmed back a few positions since that post and now have 3% funds available. I mentioned my goal was to get my gold from 42% down to 25% and for silver from 28% down to 25%, so at one point (likely on a solid rally), I’ll need to shed some positions, especially gold positions.
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Nobody can accuse me of not being bullish the sector though, nor of not putting my money where my mouth is… I feel very much like I’m at the craps table, with stacks of chips all over the place, and I’m either going to generate some income as the numbers keep coming up (good swing trades, company takeovers, company re-ratings, good surprise drill results), or hit it big on the pass line with the point number (big rally in the PMs lifting the whole sector), or get my clock cleaned if 7 rolls… (Craps = one more big correction in the PM sector that really sucks).
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Now, if we get a big sell-off event in the PMs though, then I’ll be forced to sell into the carnage, and that will sting and will mean I’ve lost a bunch of money. That’s a pretty big risk, but one I’m prepared to take, because I do still have other sectors like Uranium doing well, and have a retirement account in traditional US equities with some Emerging Markets, and a healthy savings position to weather any short term stormy weather.
I have about $7.29 in cash …but instead of 65 stocks, I have 20. About 40% of my portfolio is short term gains, so I really don’t want to take the profits and then have them go down and have a tax bill with an account of half its value…so if I am confident The Fed has set up perfect conditions for general market failure, I will have to see how they believe they can fix it. I don’t think they can without lying, massive under-the-table bailouts and fraudulent actions. If they are successful in being blatant criminals, then I will be in trouble.
Makes sense Lakedweller2, and yes, the tax ramifications of shorter-term trading are definitely a factor to consider as we have discussed in the past. If I see the potential for as series of good trades that pull in double-digit or sometimes triple-digit gains, then I’m fine locking in the profits and paying the higher tax bracket on an overall larger cumulative gain from trading, but if you do that one year and then one’s holdings tank the beginning of the next year, then it can be an off-putting experience.
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I’m a big proponent of planning one’s tax situation far in advance of the year ending to make sure one has it covered (and ultimately make some tough decisions towards years end if necessary), rather than waiting to the first quarter of the next year to hopefully make enough on trades or have a few winners to cover last year’s taxes. Last year, in a way worked out well, because going into the summer, I was concerned about just how large the capital gains were and how I was going to cover them from the Copper, Palladium/Nickel, Lithium, Crypto stocks, but the PMs took a dump and allowed me to wash out a big percentage of gains by taking tax loss early in July/August. However, then the Uranium stocks ran even higher into that September surge and I cleared out 85% of my U stocks initially on that move (but have since bought them back up to 75% positions), and I was worried again about capital gains, but then the PMs took another dump towards year end allowing me to wash those out too with tax loss selling. 🙂
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I’m fine if the PMs want to have a more positive year now, as I’ve repositioned much more heavily in gold & silver stocks now, and will be happy to pay taxes on an extraordinary year if we see that play out. If not some of them I’ll hold into 2023 and drop it down to longer term holdings and the lower taxation level.
The one nice part of the Tfsa here in Canada. No tax planning for the big winners..I always tell people to max out their tfsa before the rrsp despite the tax savings created by contributions…they get you back when you start to cash out your rrsp
I was adjusting taxes starting in June last year and since Emerita is a large percentage of my portfolio (which is a one-time thing due to potential from my perspective), naturally short term profits are in an imbalance. My goal with Emerita is to shoot for long term gains and hold like I did with Great Bear. I rotated Great Bear constantly but I have only sold enough Emerita to cover the cost of painting, roofing and replacing the entire HVAC system in our Texas house. That used up most of my shares under 50 cents, but I replaced those shares plus more with the sell off of my Great Bear shares on the buy out offer. One of the other reasons of holding the Emerita shares with profits is that I am still waiting for the Aznacollar (sp) ruling and a lot of drill results that were projected early last year…in reality, all movement to date is on history and not reinforcement of known data. Therefore, I feel like I am still riding the initial purpose for the original investment, and should not deviate from holding until “news” drives a readjustment or not.
I guess the point being, it is an abnormal distribution of risk within my portfolio, but the overall risk may in reality be less than usual, if that makes sense. FWIW
Yes, that makes a lot of sense from a tax and longer term holding strategy Lakedweller2.
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Congrats on the mining profits being converted into the tangible roof, and HVAC system. “Raise the roof!”
I am somehow in the middle with 60-50% cash at the moment and would be very well prepared, if DOC is right.
I would like to better understand DOC‘s position as I am normally in the Glen/ex camp. My large cash position is more by accident -:)
I was 60% in cash, because my largest lithium play got a buyout offer mid of last year and I am waiting for the paycheck. 50% now comes more from the situation that everything is flying in the lithium space.
It is the first time in my investment career that I experience a real bull market where everything is flying. It is a real pleasant experience, if everything makes repeating double digit gains in a very short time frame. It was a bit frustrating to see the gold miners staying flat last year when all the lithium explorers were flying. Hopefully I get the same experience with the gold miners at some point.
Congratulations Thomas on the big wins in the Lithium sector.
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Out of curiosity, which was the company you had that was taken over – Millennial or Neo-Lithium?
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Personally, I did incredibly well with my longer term holdings in Galaxy, Orocobre (who merged this year), Pilbara Minerals, and Lithium Americas Corp, but have now sold out of all of those during the course of 2021 and had some good swing trades in Neometals, Critical Elements Corp, and Leading Edge Materials along the way (and also a very bad trade in Nemaska Lithium a few years back). It feels odd to not have any primary Lithium exposure at present, but I rotated all my Lithium profits into the PMs in the 2nd half of 2021, and in retrospect should have held just a bit longer to them as they just kept trucking higher into the year end.
Neo Lithium
I bought most of it actually in February 2020 just before the COVID sell off
It went from 50 cents to $6.50 Canadian
I stayed all the way from near the bottom until the buyout
Wow. Great job Thomas! Really well done sir.
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I had trimmed back some Lithium miners in January, then added to a few during the Covid crash in March/April, but then trimmed back out of mine in the late summer and fall. I was very happy with the gains, but in looking at some of the charts just now, I left a lot on the table as some of them really kept on running into year end. Some of the stocks I rotated into had nice bounces out of Sept and so far out of Dec, but I’d have done far better just leaving the money in those Lithium stocks though. They just seem so stretched to the upside at this point, but I guess that is how manias go….
I think lithium and also to some extent the other battery metals are in a super cycle for several years to come
In the lithium space probably no bargains are left. Personally I like copper the most at the moment. My tax loss buy of 2021 is a copper producer that was sold at cash value.
Yeah, I still believe Copper could have a $5 handle at one point in the year to come, and still have some positions left in place, but have greatly reduced their position size last year, and I sold out of many of the other copper stocks I held earlier last year.
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I still have some core positions related to copper with Sierra Metals Inc, Wester Copper & Gold, Libero Copper & Gold, US Gold Corp, Kodiak Copper Corp, Granite Creek Copper, Northwest Copper Corp, and the yet to list Coppernico Metals (formerly known as Sombrero Resources). I also have a position in Nova Royalty that has both streaming and royalty assets on copper and nickel, so I guess that would count. Some stocks in other categories (like gold and PGMs) still have a nice copper exposure like McEwen mining, Generation Mining, or Group Ten.
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Last year at different points I also had Filo, Atico, Regulus, Amerigo, Excelsior, Dore Copper, Blackwolf Copper & Gold, Triumph, and QC Copper, and I’m looking at getting a few of those back at one point (well not Filo it just kept running higher).
Well that saved me from writing a long update of my perspective……I agree Thomas that copper is where it’s at other than the PM’s and there are some interesting exploration plays which Ex touched on in his list. Kodiak and Blackwolf are the obvious safe jurisdiction plays. There are a few in SA but I’m just worried how the so called “great reset” will play out in the regions. I also favour uranium over the other battery metal plays as the issue of getting enough power is the bigger issue going forwards.
On a different note, I see that REE plays like Ucore have started to show signs of life again after big sell offs.
Good thoughts on the continued solid outlook for Uranium stocks. I also worry about many of the South American and Central American jurisdictions, but hell, Mexico concerns me half the time as well. Many of the good Copper plays are in South and Central America, just like many of the best Silver plays are in Mexico, so whatya gonna do? Haha! As mentioned somewhere around here, Libero Copper has me really animated for Copper, but they are in Colombia, Argentina, and British Columbia, so not without jurisdictional risk for sure…
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Yeah, the REE sector is starting to wake up more, and it has been nice to see Ucore Rare Metals on the move lately. I’m pretty close to parity in it now, but it is one I see as more a medium-term position-trade, more so than a shorter-term swing trade, so I’ll likely hold it for most of this year. Heck, I may even make UCU a longer term “value trade” for the next few years.
If it has been posed elsewhere sorry but there is a great interview with Jessie Felder over at Wealthion where he discusses all this stuff peppered with lots of good info on inside seller activities. He goes into gold at the end and what will happen when the Fed gets “queasy” and has 2nd thoughts about more rate hikes. A really great listen.
They split the interview into 2 parts, see:
https://www.youtube.com/watch?v=FgTFvJf5Uec&list=PL7vUOWh5dtHN0HL-ckjHLeXfW8vZgo0H8
https://www.youtube.com/watch?v=-xWe8kZDcO4&list=PL7vUOWh5dtHN0HL-ckjHLeXfW8vZgo0H8
Hey Ex……I think there’s an interesting topic when you mention filo as one that you won’t get back into right now cuz it’s been still running higher…..there are countless number of plays I’ve avoided getting into after they’ve had big runs and I feel like I missed the boat and never bought at all in the end…even after they’ve had a partial pullback. The last one that comes to mind is Great Bear. Doc Jones approach has me reevaluating my thoughts on things(or my stubborn pigheadedness)…. if the play is confirming the thesis are you still not going to get 2x or more even at the given levels on a play that’s being derisked as it moves forwards?
And with regards to Doc Jones I’d be interested if there are plays out there that he not only wasnt interested in cuz it didn’t fit his criteria but were a huge red flag……meaning it was way overvalued on the basis of a totally flawed thesis.
Wolfster, this is a very interesting topic (when to trim or sell completely out of a winning position), and I believe it is the much harder of the two tasks between buying and selling.
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Buying low is hard for many investors, because it is sometimes psychologically difficult to buy into a sector or stock that has not performed well up until the point of purchase (due to their recency bias). For some reason, the bargain-hunter in me doesn’t struggle with buying low personally (and I’ve been in the resource sector long enough to have seen plenty of pain, drawdowns, and mismatched valuations).
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However, when a company or sector does start ripping higher and higher, and suddenly one has a windfall of profits, it is hard to know when to book the profits and take the win, and to know when some companies have become incredibly over-valued. As mentioned above I did sell a few Lithium companies too early last year as a result.
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Yes, as you mentioned, there are those incredibly rare success stories like Great Bear that just keep running and running and running to the upside. You also brought up Doc Jones, with his great call on Emerita Resources this year that kept running and running higher. Those are the exceptions though, for sure, and not the rule of course. Think about it, we could conversely name hundreds of resource stocks that had huge moves, and then rolled over, and everyone felt it was temporary and destined to run higher and to the moon, but gravity set in they cratered back down the other side of the parabola.
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The parabolic rise and then the tragic fall is FAR more common and in most cases taking the profit in a blow-off top or extreme valuation is the smarter and more defensive play. There are soooo many times I pulled profits on an excellent trade, only to watch it roll over and plunge down bigly, and thought, “Whooo, I dodged a bullet there.” There were so many cult stocks that went up 3x, 7 x 10x+ and everyone was so convinced they’d be a 50x or 100x stock and you come back an look at them a year or two later and they’ve given up 50%-90% of their gains, and their cult of followers has morphed into a bitter bag-holder therapy group. Sadly, very very few companies are “buy and hold” material over longer period of times, and 99% of resources stocks are for trading, in my opinion.
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With Filo, there is no doubt that they are one of the standout success stories in the copper explorers from last year, along with Solaris Resources, and they had some stunning drill results in 2021 that animated the market and I sold into the initial strength, and did leave some on the table as it kept climbing higher. However, at this point FIL is priced for perfection, and from what some people I respect have observed, the altitude of the project may be at best-case problematic, and worst-case a potential deal killer. I just don’t have any interest chasing it higher at this point, and I made money on the stock, but didn’t anticipate they’d just keep nailing it like they did with the drill bit. Congrats to any investors that bought pre-discovery hole like I did and were able to ride it to it’s current valuation, as they are a rare breed.
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In contrast, my largest Copper position now is Libero Copper and Gold because I believe their Mocoa project is very similar to Solaris’s project, and that their Esperanza project is a good analog to Filo’s project in Argentina. They have 2 other projects in B.C. (Big Bulk and Big Red), which Big Red is the one that may be a good JV project for a larger producer to partner with. I’m very interested to see how the drill campaigns at Mocoa and Esperanza go for (LBC) this year, and they already have resources and historical drill holes similar to what Filo has, but without the $1.73 Billion valuation that Filo already has. In contrast Libero Copper & Gold is valued at $28 Million, so I’m more keen on their being a multi-bagger rerating in it, than buying into Filo at these lofty levels.
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As for which companies Doc Jones doesn’t like, we don’t normally get into trash-talking companies publicly (that is what our pre-calls before starting recording are for — haha!), but I believe he has publicly disclosed in one of our earlier interview that he felt like Spanish Mountain Gold was a charade and unlikely to perform as advertised for a few fundamental reasons.
Agreed there are far more 1 drill hit parabolic plays then those that continue to confirm continuity….my personal experience is that I almost put all those big movers on the ignore list….the ones that are for real still have meat on the bone and I’m missing out on obvious double triples or even more….looking at plays like Ivanhoe,Arizona Metals and Great Bear are great examples…..that’s why I decided to buy Emerita even at these levels.
Interesting info on the Filo and that’s the type of info that’s valuable not necessarily trash talking…Spanish Mountain has been one of those go to every time Gold pops but I think most of us consider uneconomical at the best of times
The Libero I’ve had as possible addition for a while now but go sucked in by what I thought was an overdone tax loss selling in Blackwolf but appears to be utter lack of interest instead.
Good thoughts Wolfster. Yeah, if a company continues to execute over and over again, like a Great Bear, or Ivanhoe, or Arizona Metals, or recently Emerita, then they are the ones that can buck the trend. In days gone by…. Claude and Atlantic Gold and Roxgold were like that as well. Then again, we see plenty of companies continuing to execute and put out great drill holes that have gone relatively nowhere or sold off – look at Wallbridge, Benchmark, GR Silver, O3 Mining, Integra Resources, Impact Silver, Treasury Metals, Triumph Gold, Sabina, or even producers like Calibre or Karora that have been killing it and barely getting traction. Sometimes, it is the confluence of factors driving a stock beyond just the work they did, which includes marketing & promotion, or an area play, or vocal supporters, or key strategic shareholders. For example, remember the gold rush into the Pilbara in Western Australia a few years back where all of them were racing higher, based on the Novo Resources surge.
Or how about the mad dash into Newfoundland last year in 2021 where companies without any drill results back yet were running in sympathy with NFG that doesn’t even have a resource estimate or economic studies yet? Are all those moves sustainable… nope, but they had that extra component of investor excitement, a narrative, and good marketing. Look at Eskay Mining running so high last year beyond were producers are even valued in market cap, and some of just on news of finding more potential porphyry centers, but without drill holes on them…. It was in the Golden Triangle, next to Skeena and other historic or currently producing mines, and it caught the attention of investors, with good promotion from Quinton and Crescat, and boom… it took off like a scalded cat to the upside.
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However, even if we look at some of the takeover deals this year – sure their were serially successful companies that kept executing that were acquired like Great Bear and Roxgold, but there were other takeovers on companies like GT Gold or Pretium or Fiore, where it was clear to see they had period of success followed by losses in investor confidence, and parabolic moves up then down, and then another cycle of ups and downs, and then a 3rd cycle, etc… so those are ones where investors can be left as bagholders, or position prior to run or a takeover and make out like bandits.
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I did good getting in Eastmain right before Auryn took them over as another example, but it was a trainwreck up until that point. I also got in Richmont and Klondex right before they were acquired for big win, but longer term shareholders remained quite bitter. Sometimes the most attractive positions in takeovers are in the companies that are distressed like that. Remember Guyana Goldfields and Gold X getting nabbed, or remember TMAC or Primero.
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Then there are companies doing consistent good work, without the fancy narrative, flying under the radar of investors herd mentality. Look at Corvus from earlier this year — I got in during the spring based on the solid drilling results they were seeing at the Lynnda Strip, figuring either Coeur or Anglogold Ashanti would take them over, and then boom that is what occurred from AU, but some longer term shareholders were miffed about it at the takeover didn’t make them whole.
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It also comes down to ones goal for an investment. Does someone want a safer derisked company that is plodding along for an easy double or triple, or do they want to speculate in a distressed company with real and genuine asses underpinning them for a 40%-60% takeover premium, or do they want to take on a huge amount of risk on a speculative drill-play and swing for the fences for a 3X-10X return?
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I’d submit that it can also just be about getting a sector correct that is going through a mania narrative as we’ve seen in the past in Rare Earths, Cannabis, Cryptos, Vaccine Stocks, etc…. just look at how well the Palladium stocks did in mid- 2020 moving into early 2021, or same thing with Lithium stocks all the way from the pandemic crash to present. Look at the Uranium stocks surging over a similar time period from the spring of 2020 to present. There are tons of garbage Palladium, Lithium, and Uranium stocks that just rocketed higher with the rest of the herd, because there was wind in the sails of that sector. That may be more important at times than the individual stock selection, although both are important.
Ex, I’ve speculated in ladies with genuine asses underpinning them a few times myself.
Blazesb, you were in with the MOb?
You guys are funny. I meant genuine “Assets” underpinning them. Haha!
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Cheers!
blazesb – you beat me too it …..
Since my time is more limited these days I’ve narrowed my list down quite a bit so I’m not sure if it’s just the PM plays I follow so I’ll ask those of you who have a larger basket to hopefully respond to what I’m seeing on my narrow list…..a big drop in daily volumes these days.
Wolfster, excellent observation. I’ve been watching the dropping volumes as well on a number of the PM stocks and the PMs themselves. It indicates a loss in interest and it seems you see this over time after a run up in a sector that then enters the doldrums that often lasts for some time. You can see it on the monthly charts after every bullish move. That’s just another reason I feel 2022 will be a year of bottoming for the PMs and the stocks. I am not the least worried about missing any turn in the PM stocks. If the technicals start to show a sudden turn, there is more then enough time to invest heavily at low levels to catch the move higher. I’ll tell you one thing—with narrowing of the monthly BBs the PMs better make a breakout soon or it’s not going to happen for some time yet. Another negative for a lot of the stocks is that a number of them are now taking out their monthly MAs to the down side—those will now serve as another resistant area going forward. I’m now in the average lowest price area I’ve ever been in the PM area and if it plays out the way I think it will play out will be in the best position I’ve ever been. I would not have to buy any more positions at this time (being in the huge cash position that I’m am) and if these stocks went to their previous highs, my portfolio would be higher on a dollar basis then it was when we began the trek down in August of 2020. Patience is important to avoid catching that proverbial knife that has rendered so many scars on the palms of some investors’ hands.
Good thoughts and words of caution Doc. Yes, the lower volumes show the apathy in the sector for sure, and just the lack of interest from most generalists. Right now it is just resource investors trading amongst ourselves for the most part, and it will take a larger catalyst to get the pricing trends and volumes moving in a more bullish way once again.
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I still personally believe the Fed rate hiking cycle kicking off in March-May and then having a series of hikes, may be that catalyst, but that is still a few months away from starting, and it will take a few month of Fed execution to see if the general markets have a response, and if the main-stream financial media starts looking at just how high they can hike before there is a tantrum.
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It’s pretty clear though, that they can’t hike rates up anywhere close to where inflation has been the last few months in the 6%-7% range, and it is possible when more generalist process that reality, and that negative real rates are going to be here for a while that we see a rotation out of bonds and into gold with some capital, or some investors hedging with the PM sector. That may be a good catalyst to bring in larger volumes but it will likely be in the 2nd half of the year for all that to play through. Cheers!
Good points doc! I’m rooting for you as well as for all of us. I’m just super bullish and can live with the outcome regardless.
Thanks to all of you for indicating your positions that’s more than thoughtful note for some people it’s very personal so it’s greatly appreciated. I’ve stayed in my cash position many times before I am down now to about 2.2% left in my cash for deployment as I most recently but I am Gold at its low. I’m basically all Lynn and as X mentioned it’s a risk we take sometimes but I’m standing by my risk as he is and I think there’s good things to come.
Glen
Glenn, I sold out of my IAG position on its’ recent run and will get back in when it challenges it’s lower monthly BB again. It looks like it wants to move lower again. It’s well below where I sold it on its’ recent move higher.
You’ve probably seen this Taylor Dart piece on IAG but here it is anyway.
https://seekingalpha.com/article/4479912-iamgold-cheap-for-several-reasons
Terry, much thanks for the article which I had not seen—-just an interesting quote from it—-“Finally, looking at the technical picture, the outlook isn’t much better here, with Iamgold trading in the middle of its trading range, with no support until $2.17. When it comes to sector laggards, I prefer to buy at support or lower and would never chase a sector laggard in the middle of its trading range. So, even after the 20% decline, I do not see this as a low-risk buy point for the stock. For Iamgold to become even remotely interesting from a swing-trading standpoint, the stock would need to dip below $2.15 per share.” That quote just validates my statement awhile back when I said I love to purchase a company when price impinges on the lower BB of the monthly chart and “someone” was critical of that statement. The price of $2.15 is very close to the lower BB and that is when I would “consider” purchasing the stock again.
If gold strengthens into the end of this month, I bet the loonie will, too and it will be on its way to USD parity and probably within 3 years.
https://stockcharts.com/h-sc/ui?s=%24CAD&p=M&yr=17&mn=0&dy=0&id=t0886325314c&a=1098286138&r=1642368195196&cmd=print
The dollar bounced from MA and fork support but I think it’s going lower for awhile.
https://stockcharts.com/h-sc/ui?s=%24USD&p=W&yr=6&mn=3&dy=0&id=t1350690376c&a=653766793&r=1642369758899&cmd=print
Natural Gas : Pull Back to Confluence? : Deeper?
https://saturationtiming.blogspot.com/2022/01/natural-gas.html
Well it’s a snow day for me…when I was younger nothing stopped me from doing the hour drive that turned into 2 1/2 but not when I can stay home and watch a slow trading day cuz US markets are closed……uranium stocks were down down under…not the start I’d like…hopefully the green I see in PM’s continues and goes higher
Yeah if I get more uranium plays it would be Denison and Nexgen but for now I still love the extra leverage that the urc warrants offer
Denison and Nexgen are 2 of the 6 Uranium stocks in my portfolio, and I’ve been in those, and swing trading around core positions, for years now.
As expected an extremely slow and quiet day except for Ucore
Yep, very nice to see that 18% surge in UCU Ucore today. It’s about dang time that people woke up to how much of a player they are going to be in the REE space as things develop. Their separation and downstream processing is the main value driver, but they also have their Bokan deposit to feed their integrated supply chain internally.
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>> This older video lays out their 5 point growth plan well:
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Ucore Rare Metals Inc. | 2021 Business Plan – Pat Ryan, Chairman of the Board
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https://youtu.be/INAZAtXEMFw
Thanks to all the KER guest contributors for another great week of daily editorials, company interviews with management, and another solid weekend show with Rick & Joe.
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Also thanks to all the listeners of the podcast, and those members of the KER crew that post and participate here on the blog, and all those sharing insights with our community. Ever Upward!