David Erfle - Gold Market Commentary – Tue 12 Jan, 2021

Big picture for gold – Now is a good time to have some cash

Dave Erfle, Founder of the Junior Miner Junky joins me to outline why he has build up some cash by selling a couple junior gold positions. The reversal last week in PMs is concerning as well as the action in the major miners. We also look big picture at a couple other large markets that are contributing to the weakness in precious metals.

Click here to visit Dave’s site – The Junior Miner Junky.

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Comments:
  1. On January 12, 2021 at 11:25 am,
    Dick Tracy says:

    Now is the time to have some cash, The Cashman say’s Oh Yeah! There will be a big correction coming soon and no one including The Fed is smart enough to handle the reins of the financial calamity we face. DT

    • On January 12, 2021 at 3:20 pm,
      Excelsior says:

      DT, agreed that it is fine to have a solid cash position in these turbulent geopolitical and economic times. Thomas and I were actually discussing just that on yesterday’s blog with Doc.

      If there is the “Big Crash”, then I’m ready to buy it with “Big Cash”. Haha!

      Wishing the good folks here at the KER prosperity as 2021 unfolds.

      • On January 12, 2021 at 7:12 pm,
        Dick Tracy says:

        Hi Ex, there is no doubt in my mind that trouble is a brewing. You are right, when there is a break it is a good time to buy. History is about to repeat itself and I want to be in a position to really enjoy it. My private mind is telling me of the dangers of the situation and I am waiting for the next opportunity when Cash will be king. When the panic hits this time I will be waiting. I think it will be fun! DT

        • On January 12, 2021 at 7:53 pm,
          Excelsior says:

          DT – I wish you great prosperity in your path forward, and yes if the opportunities do present themselves, then there is nothing worse than not having the funds to deploy.

          My typical experience, was that I had already blow much of my wad when crazy pullbacks reached ridiculous levels, and had to throw a smaller amount of funds at an opportunity than I wanted to, or I’d need to sell something I liked and believed still had potential, for something I liked more and thought may have more or a different kind of potential.

          However, once one has a solid allocation in the sectors they think will do well, and then experiences big percentage gains in a certain area or areas of one’s portfolio, then it is a nice strategy to trim off part of the winnings (10%-30%) and move them over to the sidelines for opportunistic events.

          Historically, I’ve been good at trimming winnings, but then usually felt in a rush to reinvest them, only keeping 2% – 8% funds available on the side. This cost me a few different times, and I told myself, when going through the pandemic correction last spring, that the next time I have nice swing-trade returns and trim the winnings, that I’m going to move more profits over to the sidelines and not immediately redeploy them. I started growing that pool of sideline money last summer, as the PM mining stocks were starting to get frothy. Next I added to that pool with some of the profitable swing trades as they presented themselves for the balance of the year, as well as storing some in more royalty companies. In addition, I kept the remaining tax loss sales transacted in Nov & Dec mostly to the side without reinvesting them.

          ______________________________________________________________

          Even though I had done better, there was a voice of concern in the back of my mind, that maybe I was still too exposed to the resource stocks in my trading account, and that while I was feeling good for having tripled and almost quadrupled my account value coming out of the mid-March sector lows, I felt like it would be a shame to see those returns erased if there was some crazy geopolitical or economic event that crashed all the markets.

          I woke up late on the 4th of January, after a bad night of sleep, and tossed and turned at night and in the morning about potentially taking on more risk than I was comfortable with. I rolled out of bed and just decided, “today I’m going through and trimming the fat.” My biggest criteria was if I had multi-baggers in names, even if I really liked them, then I made a handwritten list to the side. I then went through and quickly glanced at a 5 year, 2 year, 1 year, and 6 month chart, and if it seemed pretty overbought, I trimmed. Next I went through companies that were flat and had been and reviewed their websites for any news or catalysts that may move the needle, and if it was too stagnant trimmed a bit of those back as well and reduced the position sizes slightly.

          Now, I did find a few positions I wanted to add to, so I did spend some of those funds and rebalanced the weightings inside my portfolio, but a lot of it, I moved to the sidelines.

          I popped on the KER on Jan 4th and posted this:

          >> On January 4, 2021 at 11:34 am, Excelsior says:

          “I pulled profits in about a dozen Gold & Silver positions this morning, just for the short term. My account has been ratcheting higher and higher, and I didn’t sleep well last night as a result. I raised tens of thousands of dollars today and am going to go take a nap. 🙂”

          “This is just a short term move to raise some funds, and I’ll likely buy most of those positions back if we see a dip later in the week.”

          [update: I still haven’t purchased all those positions back yet, but did add to a half dozen of them over the last week]

          Next on the 6th in a discussion with David I mentioned:

          > On January 6, 2021 at 3:38 am, Excelsior says:

          “Regardless, if you’ve had been runs in certain miners, there is nothing wrong with taking a few profitable chips off the table in such uncertain times. I did the same in stocks I felt were getting a bit too far ahead of themselves, but left most of the core positions on to ride higher if the metals keep breaking out, and if the US dollar keeps weakening.”

          ___________________________________________

          Even after all that trimming in 2020 and 2021, I still have the largest allocation to the resource stocks that I’ve ever had in all my years trading, but this time as we sail into unknown and turbulent waters, I’ve still got 12% of funds on the sidelines (and had 18%, but did deploy the first 1/3 of the sideline pool over the last 2 weeks).

          I still have dry powder stored to the side, but the lighter is in my pocket and not in my hand at present. I’m waiting for a breakout or breakdown before doing too much more, but will still swing trade an individual stock or start a position if a new company pops on my radar.

          You said it best: “When the panic hits this time I will be waiting.”

          • On January 12, 2021 at 9:06 pm,
            Dick Tracy says:

            Hi Ex, I’m sure Jesse Livermore would approve of your trading strategies however he would find the number of stocks in your portfolio more than a bit onerous. I find it mind boggling that you can competently handle that many irons in the fire! LOL! DT

          • On January 12, 2021 at 9:41 pm,
            Excelsior says:

            Thanks DT – Agreed, my portfolio has become a bit cumbersome and I really am working on reducing the number of positions, and have a bit over the last few weeks. There are just so many interesting companies in the resource sector, that it’s hard for me to pass up a good deal. Most of the positions in my portfolio were birthed out of profits I pulled from other core positions that I ended up holding onto, to diversify out of those names and pick up more speculative risk. As a result, over time I ended up with far more Jr companies in the exploration and development side of things than I initially set out to have, so I felt I needed to add more producers and royalty companies to balance it out, and as a result, I now have a portfolio that is a bit too diversified. For the last year or so, I’ve mostly been going in and just dealing with the top dozen gainers or losers, and looking for value arbitrage to trim or add to them. There are times I’ve had funds to position, and when I go looking at my watchlist in each sector, I just start a small position, so I can start tracking it, and over time some of them have become more preferred positions, and others stayed small and ended up being more dead weight in the portfolio.

            It’s definitely time to prune the bushes and trim the hedges and get more concentrated positions in place, and at least chop the number of companies in half. I like my allocations to the PGMs, Uranium, and Lithium at present, so most of the trimming is going to need to come from the Gold, Silver, and Royalty companies. In some cases, there is a strategy to liquidate shares into the next key milestone for companies (like a first pour, takeover, optioning out a key project to JV partner, or good exploration results).

            https://2.bp.blogspot.com/–EzZCWZv7G8/T2Ao3EYvKJI/AAAAAAAACrk/B4-iZntryLk/s1600/irons.jpg

          • On January 13, 2021 at 10:51 am,
            Excelsior says:

            Did a bit more “nibbling” today in a few companies, adding to my positions in Baru Gold, Goliath Resources, Westhaven Gold, and Freegold Ventures; along with initiating a new position in NewCore Gold. I trimmed back some gains in my Ur-Energy and Jaguar Mining positions.

          • On January 13, 2021 at 10:53 am,
            Excelsior says:

            I’ve taken my available funds down to a 10% position on the side, but may go looking for a few positions to lighten up on or liquidate to get that raised back up a bit more.

      • On January 13, 2021 at 9:22 am,
        Thomas says:

        I don‘t want to sell battery metals at the moment. I think they will still move a lot higher when Biden is in office. There should come a large investment program and Biden already said that he wants to great many new jobs in the green energy space.

        • On January 13, 2021 at 9:55 am,
          Thomas says:

          create green energy jobs

          • On January 13, 2021 at 10:46 am,
            Excelsior says:

            Thomas – which battery metals companies do you currently own?

            I agree that Copper, Nickel, and Lithium should continue to run in 2021.

          • On January 13, 2021 at 11:16 am,
            Thomas says:

            TKO, MIN, IVN, LAC, SLL, NLC

          • On January 13, 2021 at 11:19 am,
            Thomas says:

            Any good nickel recommendation?

          • On January 13, 2021 at 1:31 pm,
            Excelsior says:

            Many people like the deposit type at FPX Nickel.

            I’m exposed to Nickel through my Platinum/Palladium stocks:

            Group Ten Metals, Platinum Group Metals, Jubilee Platinum, Grid Metals, Generation Mining, and New Age Metals

            I trimmed back Grid and Jubilee today.

          • On January 13, 2021 at 11:42 pm,
            Thomas says:

            At the moment I only have Nornickel and Noront as candidates

            Both are not unproblematic. Nornickel ist a Russian company and Noront is far away from production.

          • On January 14, 2021 at 12:21 am,
            Thomas says:

            Some ideas

            – Lundin Mining
            – Western Areas
            – South 32
            – Vale

          • On January 14, 2021 at 12:32 am,
            Excelsior says:

            Thanks for those ideas Thomas. I have Noront and Western Areas on the Nickel/PGM watchlists, but haven’t taken a closer look at either of them in a quite a while. I figure 6 PGM/Nickel stocks is a good allocation, but sure wish I would have pulled the trigger on Sylvania Platinum, back when I bought Jubilee platinum, as it has also has had one heck of a run the last 2 years. Same thing with FPX Nickel, I was aware of it and following it the last 2-3 years, but never positioned in it, and it sure had a big run in 2020.

          • On January 14, 2021 at 12:34 am,
            Thomas says:
          • On January 14, 2021 at 2:17 am,
            Excelsior says:

            Thanks for posting that Western Areas presentation Thomas.

            I didn’t realize they already had moved so far along with their large nickel development project, Odysseus. It looks like a very solid project. It was also interesting learning about their project in development the Scats heap leach.

            Impressive work being done to move assets into production in this metals cycle. Nice!

          • On January 14, 2021 at 9:28 am,
            Thomas says:

            I found a royalty company focused on battery metals, Nova Royalty

            https://www.novaroyalty.com/company/about-nova.html

  2. On January 12, 2021 at 12:09 pm,
    bonzo says:

    Now you tell me. It’s too late as I bought Labrador and Brixton this morning. O well, I should be fine when gold goes to 8K in 2 years as Michael Oliver predicts.

  3. On January 12, 2021 at 12:13 pm,
    bonzo says:

    O no, my order to buy Timberline just executed. Who else owns Brixton, Labrador, and Timberline?

  4. On January 12, 2021 at 3:23 pm,
    Excelsior says:

    (SAND) (SSL) Sandstorm Gold Royalties Announces Record Revenue in 2020

    January 11, 2021

    “Sandstorm Gold Ltd. is pleased to report that the Company has sold approximately 52,200 attributable gold equivalent ounces and realized preliminary record revenue of $93.0 million for the full 2020 year. ”

    https://www.sandstormgold.com/news/press-releases/sandstorm-gold-royalties-announces-record-revenue–in-2020

  5. On January 12, 2021 at 4:23 pm,
    Excelsior says:

    Great risk/reward research to parse through from Don D.

    __________________________________________

    Don Durrett @DonDurrett Twitter:

    >> List of 53 Silver Miners.

    https://twitter.com/DonDurrett/status/1346559355093569537

  6. On January 13, 2021 at 2:57 am,
    Excelsior says:

    (ROXG) (ROGFF) Roxgold Produces 133,940 Ounces Exceeding 2020 Production Guidance and Provides Outlook For 2021

    12 Jan 2021

    – Preliminary 2020 gold production of 133,940 ounces exceeded the Company’s annual consolidated production guidance of between 120,000 and 130,000 ounces
    – Achieved record annual plant throughput of 512,276 tonnes, exceeding nameplate capacity by 27%
    – Reported preliminary gold production of 35,191 ounces in Q4 2020
    – Mined a record 149,347 tonnes in Q4 2020

    https://ceo.ca/@businesswire/roxgold-produces-133940-ounces-exceeding-2020-production

  7. On January 13, 2021 at 3:00 am,
    Excelsior says:

    (JAG) (JAGGF) Jaguar Mining Reports Fourth Quarter Production with 22,532 Gold Ounces

    12 Jan 2021

    “Annual consolidated gold production for 2020 increased 23% with 91,116 ounces compared to 2019 production of 74,083 ounces; in the upper half of the 2020 production guidance of 84,000 to 94,000 ounces of gold despite a tumultuous year dominated by the COVID-19 pandemic. Both mines saw significant improvement from 2019 production levels with Pilar up 25% and Turmalina up 20%. Q4 2020 consolidated gold production increased 12% to 22,532 ounces, compared to Q4 2019 production of 20,029 ounces.”

    https://ceo.ca/@accesswire/jaguar-mining-reports-fourth-quarter-production-with

    • On January 13, 2021 at 3:25 am,
      Excelsior says:

      Now that’s a bonanza Silver hit from Vizsla. Kaboom!

      • On January 13, 2021 at 1:33 pm,
        Excelsior says:

        Apparently the market doesn’t care about bonanza grade Silver hits, and is just using news to liquidate. That has been happening the last 2 weeks in many miners, and it has been a “sell the news” type of environment.

  8. On January 13, 2021 at 6:13 am,
    BDC says:

    XAU not ‘Swing Saturated’. GDX and HUI are.
    Could be more bottoming, but not necessary.

  9. On January 13, 2021 at 6:29 am,
    BDC says:

    Dollar gap closed. May be headed higher.

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