Erik Wetterling – Riding The Resource Sector Down To The Abyss For The Eventual Outsized Gains When Sentiment Turns
Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins us to review how he is reshuffling his portfolio and adding in more beta optionality plays and small micro-cappers, in addition to the traditional quality alpha plays. He points out that you don’t want to be in beta optionality plays at the end of a long uptrend, but that is not where we find ourselves at present. Conversely, when there has been a long corrective move lower in the gold and silver stocks, and we see extremely depressed valuations for cashed up developers with ounces in the ground or even producers, that getting into more of these call options on higher metals prices and a sentiment turn can be a rewarding experience.
We discuss that many that have been waiting for breakouts in mining stocks before taking positions have been perpetually wrong-footed after a series of false breakouts, and that they’d have been better served buying into the downturns when sentiment readings were near their lows. He believes it is important to find companies with quality teams and projects that have the access to capital to survive this low sentiment, so that they can thrive when sentiment improves.
Some of the quality “alpha” companies discussed that have weathered the storm better were Western Alaska (WAM), Snowline Gold (SGD), Goliath Resources (GOT), Eloro Resources (ELO), K92 Mining (KNT), and i-80 Gold (IAU). Some of the “beta” companies with optionality to rising prices and improving sentiment were Nighthawk Gold (NHK), Integra Resources (ITR), Wallbridge Mining (WM), Liberty Gold (LGD), and Bonterra (BTR).*
*Western Alaska, Goliath Resources, and Eloro Resources are sponsors of The Hedgeless Horseman website, and Erik has shares of many of the companies mentioned in this interview in his portfolio.
* Shad has shares in i-80 Gold, Integra Resources, Wallbridge Mining, and Liberty Gold.
As for some of the quality growth oriented producers (like 1-80 gold or K92 Mining that Erik mentioned), or like Minera Alamos & Thor Explorations that we just interviewed in the last 2 days, or like Calibre, Karora, Orezone, Steppe Gold, Mako Mining, or someone had mentioned Asante yesterday…. they are at silly levels for multiple reasons. They are going to be expanding their production throughput, improving grade, and beefing up revenues regardless, not to mention all exploring aggressively to expand resources. To Erik’s point made in the last few interviews…. these companies growth is going to underpin better valuations eventually when they get rerated regardless of metals prices…. so if metals prices do rip higher eventually, then that will just be more optionality and upside torque beyond their growth trajectories.
I appreciate the extended commentary/summary you’ve included above with company names, especially since I’m unable to download the audio from weekday shows here in China.
Sure thing Terry. I like providing a bit more context in most of the daily editorials posted just in case people can’t listen due to time constraints (or hopefully to entice them to listen to the audio if they planned on skipping it).
Short generic summaries do little to get most people interested in listening and are “meh”. It is usually some more specific detail that catches someone’s eye and gets them to listen. I also list the companies mentioned for disclosure purposes, and because it always drove me crazy personally when I’d listen to an interview discussing companies and one couldn’t understand the speakers pronunciation of the company names.
Does the audio player above not work for you in China for just the “play” feature using the triangle icon , outside of the download down arrow link?
Our podcast is also carrired on the Apple ITunes, Google play, Spotify, Pandora. I Heart Radio, and other outlets in case any of those may be an option for listening alternatively.
FREAKY FRIDAY……………… AGAIN…………………….
It is startling how quickly we looped back around to another Freaky Friday already. Time flies…
Ditto……………….
Zipping along at breakneck speed…….
Dollar up which means I will be down for the week no matter what miners I hold.
Ready to be proven wrong.
Early voter for “UnFreaking Fridays”.
Dollar went from +.88 to +.34 5 mins before open. Bread crumbs maybe for the serfs….
Can not UN DO…… FREAKY FRIDAY………….. 🙂
Wait till the end of the DAY………..
Yes Lake, at the moment all about the dollar, now consolidating for a month or so between dxy 110 and 114. Holding gold price hostage. Same case for hopeless sector equities.
Pretty obvious stuff. Which way and when it breaks on a trend basis is anybody’s guess.
Observation # 6489123: NG Energy hit a new well recently, but the price of NG is only good every other day. Free and fair markets, without intervention, only exist on deserted islands.
It is probably more related to the $25 million financing
I don’t like the warrants for $1.08
Thanks Thomas. It is really disturbing that there may actually be a reason for a stock’s performance.
Observation #5:
Things that make you go Hmmmm: Another break-even day more or less.
Of 42 stocks;
55% were the opposite of yesterday
16.6% were the same on the green side as yesterday
14.2% were the same on the red side as yesterday
14.2% were yet to be reported despite volume (Viva Gold just reported up 40% but it is not)
Evewy Day Evewy Day Evewy Day
It’s late 2015 again for NEM but better. Don’t let the ugly sentiment (irrational fear) of the 95% (aka the herd) fool you.
https://stockcharts.com/h-sc/ui?s=NEM&p=W&yr=7&mn=5&dy=0&id=t6407827443c&a=1125477193&r=1666373043649&cmd=print
It’s 2008 again for NEM:Gold but better. Much better.
https://stockcharts.com/h-sc/ui?s=NEM%3AGLD&p=W&yr=15&mn=0&dy=0&id=t5832902685c&a=1242271352&r=1666373621139&cmd=print
Enough about NEM. What about IPT? They sure aren’t wasting any money in their marketing/PR department.
No they aren’t Terry and I like that about the company. I’ll be heading for the exit if/when management decides to allocate substantial funds to marketing.
Don’t let the current lack of action fool you into doubting it.
Matthew
Just a brief note to thank you for all of your charts.
I have been trying to teach myself charting for the past 6 months; being able to review your annotated charts (in great detail) has been extremely helpful to me.
For example, I am trying to add pitchforks to my library of pattern analysis tools; being able to see your strategies and techniques (of pitchforking !) is a great way for me to learn.
BrianE
BrianE, you’re welcome. Pitchforks are worth getting to know as they have utility beyond what might be obvious to those who don’t use them often.
Here are some worthwhile videos on the Andrews pitchfork from Coghlan Capital:
https://www.youtube.com/watch?v=lxFDbYh5fus&ab_channel=rapidfx
Wow ! Bookmarked for watching this weekend. Thanks Matthew
This one shows several other types of pitchforks…
https://www.youtube.com/watch?v=czkhPR4W4L8&ab_channel=ChartRepublic
GDX is the buy, not SPY…
https://stockcharts.com/h-sc/ui?s=GDX%3ASPY&p=W&yr=5&mn=3&dy=0&id=p58646933140&a=1246629293
Silver stocks are a much better buy than commodities.
https://stockcharts.com/h-sc/ui?s=SILJ%3A%24GNX&p=W&yr=5&mn=5&dy=0&id=p29534631029&a=1243598237
The CDNX may have bottomed unless TLS is too strong IMHO, thanks for the charts. Did lots of trading including catching a down move in silver with HZD…
Dan, I think the CDNX probably has bottomed. I’ve had a lot of buy orders filled lately.
https://stockcharts.com/h-sc/ui?s=%24CDNX&p=D&yr=1&mn=0&dy=0&id=p95005386780&a=1219911686
That is a big change in volume into the mini bear market, I didn’t notice that before.
The weekly and monthly charts also look good:
https://stockcharts.com/h-sc/ui?s=%24CDNX&p=W&yr=5&mn=0&dy=0&id=p54193925595&a=1162141959
130 minute SILJ chart is great and getting better:
https://stockcharts.com/h-sc/ui?s=SILJ&p=130&yr=0&mn=3&dy=18&id=t3355399876c&a=1273292157&r=1666375171417&cmd=print
Great charts Matthew!
Brixton has held my .15 low call few weeks back when i had dialogue with green and he spoke about the moving averages. The divergence is very clear to me and now what I have been awaiting for in regards to hui/xau is happening. If they finish close to that green moving average in the monthly, it’s check mate. We will not get lower prices on these miners😀
Just look across the board on a monthly and see the start of the w formation yet to be completed but just starting. The miners are clearly the place to be.
Brixton seems to be under professional accumulation lately.
Weekly bull hammer unless it drops in the final half hour:
https://stockcharts.com/h-sc/ui?s=BBB.V&p=W&yr=6&mn=3&dy=0&id=p75983291397&a=635402369
The dollar almost swung $2 today which made those algos buy some of my miners. Finished the week in a gut way.
Matthew:
Thanks for getting us to this point and all the great charts over time.
Ld2, you’re always welcome. Isn’t it something the way even a “normal/healthy” pullback is able to demolish new (and appropriate) bullish sentiment?
You are right. I have a low tolerance for the miners ever to go down with the crap economy they throw at us. I stay fully invested despite it all … just because criminals suck … and your charts say it may be right and fundamentals say it makes sense. I have no tolerance for intervention. I don’t think intervention is anything but a coverup for theft.
I hope you took my question as a general one because it certainly wasn’t directed at you in any way. I’ve just noticed a huge amount of despair on several sites lately that I don’t believe is/was warranted.
Nope. Didn’t take it personal. Just commenting on uour correct observation. I lost my tolerance of lack of Regulation of Central Banking a long time ago. They may think they are over regulated, but there is still the Criminal Code which is totally ignored by the Justice Department. No “person” is “too big to fail”..
Good. Since central banking is nothing but unsound morally and economically it should be regulated out of existence. Anything less leaves the greatest fraud in history intact along with the growing global tyranny which it underwrites.
Looks like gold is double bottoming at a Schiff pitchfork support. Gold made a new price low this week but it wasn’t a new low relative to this fork support or the 100 week MA…
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=5&mn=0&dy=0&id=p02151960528&a=1274289722
I completely agree with Erik that now is an ideal time to look at reshuffling one’s portfolio, and that the “beta” optionality plays (Developers with defined ounces in the ground and cash in the bank, or steady Producers) that will rise first with an increase in metals prices and improvement in investor sentiment makes a lot of sense.
There are about 2-3 dozen Developers that have proved up solid deposits over the years, and often were the market darlings a few years back when they were earlier stage explorers, but now they are being valued like roadkill. Out of the ones he listed I personally own Integra Resources, Wallbridge Mining, and Liberty Gold, but he’s correct about Nighthawk Gold and Bonterra as well. I’d throw in that is the same thing with Treasury Metals, Chalice Gold, O3 Mining, Cartier, Troilus, Amex Exploration, Skeena, Montage, Newcore, ATAC, Probe, Maritime, US Gold, Freegold Ventures, etc… etc… We see the same thing in many of the beat up Silver developers with fantastic optionality to rising prices and improving sentiment like with Discovery Silver, Kootenay, Silver One, Dolly Varden, Silver Tiger, GoGold, Golden Minerals, Metallic Minerals, Defiance Silver, GR Silver, Bunker Hill, Orex, Silver Bull, etc….
At one point, these ounces in the ground are going to be rerated much much higher, so there are solid opportunities to exploit the market inefficiencies when everyone has left the sector in despair and thrown their hands in the air in disgust. It is not the time to be selling out near lows in disgusts, but rather, picking one’s spot to accumulate into the blood in the streets.