Erik Wetterling, Founder and Editor of the Hedgeless Horseman website, joins us to discuss the large disconnect being seen in junior miners from the rest of the precious metals sector, which has largely been trending higher most of the year. As a contrarian value investor in the gold and silver junior mining stocks, Eric mentions that this is one of the most extreme mismatches in valuations versus potential upside that he’s seen or expects to see again.
Next we reviewed the tendency investors will have, after a protracted corrective period, to take profits too early after seeing some of these miners finally start to move higher, and balanced that out with the personal journey all investors are on and that some may just want exit positions after reaching parity again. Erik expands on why he feels it is far to early to be considering an exit strategy, when there is so much upside still left in the sector if it gold was to break higher out of the cup and handle pattern, and that some of the larger miners have only now started to break meaningfully higher. Erik’s basic premise it buy companies where he feels they have a substantial undervaluation at present, and to hold them for 1-3 years until the valuation is more properly factored in.