Erik Wetterling – Smart Money Is Positioning In Gold Stocks While Retail Investors Withdraw
Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins me to review the odd dichotomy between the smart money, (high net worth investors and large companies), positioning into the gold stocks, versus the very low overall volumes and lack of retail buying seen in the gold stocks. This is typically what we see during turns in a given market, where smart money is buying as dumb money is liquidating during sentiment extremes. This type of scenario should be a bell ringing for contrarian value investors.
We then shift over to 2 advanced explorers with development potential in Brazil, that Erik feels are misunderstood stories in the market, that have released constructive news which fell on deaf ears. The companies discussed are Cabral Gold (CBR.V) (CBGZF) and Altamira Gold (ALTA) (EQTRF).*
*In full disclosure, the companies mentioned by Erik in this interview include personal positions in his portfolio, and they may also be site sponsors on The Hedgeless Horseman website at the time of this recording.
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Click here to follow Erik over at ceo.ca
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Good question to ponder DT. I would imagine a large number of investors are buying US equities or ETFs in their trading accounts on margin. That can be a very nice multiplier on the way up in a bull market, but a big hinderance on the way down in bear markets.
If the long running US equities bull market does eventually come to an end later this year, then that could be another force for investors to grapple with (margin calls). There was a little bit of that in 2022 when markets corrected, but they only went down 20%-30% in most cases and then quickly reversed higher again.
That short-lived bearish move was not very dramatic or prolonged, so it spared the generalist masses the true carnage of what a protracted bear market can do. That corrective move down also didn’t really grind investors down to the point where they stopped buying the dip, and so it didn’t break their spirits. It is that kind of real bear market sentiment (like we see in PM equities now) that just becomes a selling cascade to the downside, and that is what really triggers those margin calls.
When investors stop loading up during pullbacks, and adding money to their trading accounts, but rather, start selling because they have to, which leads to panic selling, then it can be a whole different kettle of fish.
For now, those that have been buying the dips in the Dow, Nasdaq, and S&P 500 on margin, are likely smiling bigly. That remains the trend until something bigger breaks or disconnects in the financial sector.
THH Case – Stillwater Critical Minerals (PGE): A “Platreef” analogue in the US backed by Glencore and exploration run by the Ex Head of Exploration for Ivanhoe Mines
Erik Wetterling – The Hedgeless Horseman – February 7, 2024
The above article from my buddy Erik on Stillwater Critical Minerals is very well done, not just on the company fundamentals, but also some broad comments on the nickel market.
I’m biased as a current shareholder of PGE, but any way one slices it, the current value proposition remains one of the most extreme disconnects there is in the sector, with regards to the insitu value of the metal they have already defined in the ground versus their current market cap.
How many Americans actually own stocks on margin in the spring of 2024, I guess we will find out! DT