A focus on resource and gold stocks – What to look for and how to trade into the stocks
This week again confirmed the recent shift in investor sentiment toward a more risk on/growth trade. Commodities and currencies were boring, while gold had a little bounce back from the waterfall decline in the prior week.
On this Weekend’s Show we focus on investing in resource stocks, primarily precious metals and energy stocks. Please be sure to go back through the week and listen to the company updates and market comments. And please keep in touch by emailing us at Fleck@kereport.com and Shad@kereport.com.
I hope you al have a great weekend!
- Segment 1 – Dave Erfle, Founder of The Junior Miner Junky kicks off the Weekend Show by breaking down the gold chart from a short and longer term perspective. We then move into the gold stocks and what area of stocks Dave is focused on.
- Segment 2 – Richard Postma, AKA Doc, is up next to follow up on the bearish short term outlook for gold. Doc has a different strategy when it comes to entering PM stocks which he shares.
- Segment 3 – Jayant Bhandari joins us to highlight a couple companies he is invested in, Montage Gold and O3 Mining. He has some very interesting comments on each of the Companies and what could turn into a new area play.
- Segment 4 – Josef Schachter, Founder of The Schachter Energy Report wraps up the Weekend Show with a discussion on the energy sector. Particularly oil which has held up very well during the recent correction in commodities.
Exclusive Company Interviews This Week
- Gold Mountain Mining – LoI singed with New Gold to Increase the tonnage limit, what it means for future production
- GR Silver Mining – A focus on the expanded 14,000 meter drill program that’s all exploration
- BeMetals Corp – A precious and base metals exploration and development Company with projects in Idaho, Japan, and Zambia
- Bunker Hill Mining – A comprehensive update focused on the new management tam and plans at the Bunker Hill Mine
- Metalla Royalty and Streaming – The recent royalty acquisition on the Côté Gold Project, including near term cash flow and significant exploration upside
- Great Bear Resources – Overview of all the drilling at the LP Fault and the move toward a resource estimate
- Outback Goldfields – More information on the start of exploration at Ballarat West and 2 ongoing programs around the Fosterville Gold Mine
- Ero Copper – Recapping strong copper and gold operational results and over 36 drills turning at 3 projects
- Bonterra Resources – An updated resource of over 3million oz gold and exploration continuing with 10,000meters/month being drilled
- American Pacific Mining – This stock has been moving in the last 5 weeks, we discuss what’s driving this move
I would stick to the best of the bests and concentrate on a few themes that you can follow.
In my view, management is the most important criteria.
Good management can weather bad times
Poor management can destroy companies with good assets
How many stocks to hold:
Rick Rule: only hold as many as you can keep up the research on, on a weekly basis. I can’t remember the suggested hours on each but I think he said 5-6 hours. There was an interview recently, possibly by Jake Bussey (sp?) where Rule lays out his “rules” for investing.
Eric Sprott seems to like Junior Miners and goes after those with large prospective resources and drill results, but he will spray his stuff around and when he hits, he appears to shift his concentration to amore “all in” approach. “ All in”” appears to be less than 20% of the company to avoid reporting requirements or board actions. People come to sprott and/or he has access to top geos or investors.
Excellsior on this board can tell you his method of a broad brush of all levels of miners and how he balances his risk.
Also, Matthew who has large positions of a few.
I tend to look at the morning news and look for exceptional drill results, take a bite and then add to those that move and reduce those that don’t. I look to conferences for those that are chosen to present and see if they overlap with mine, or repeat at multiple conferences. I take into consideration the letter writer and their track record with the public.
However, contrary to many, My interest in trading is at a low point as my account rotates stocks daily. Some up and some down almost everyday for 10 months. I have rotated stocks to see if it matters, and recently I have worked my account from 65 to about 35 of those that have show profits. It has ‘t mattered. Most days I break even. Some days I get an irrational smash. Very few days maybe a +3% but capped. What you can be sure of, that almost everyday there will be a morning smash shortly after open. Then recently, there appears to be more radical end of day trading (last 30 mins when it is said managed money comes in). Last week I asked Schwab to flag my account as “not available” to loan my shares to “short traders” as there appears to be a higher level of price suppression than usual. All this is FWIW info because I am not very technical about things and fundamentals can be overruled by insider algos. I stand ready for some day , some Regulator is allowed to do his/her job. It is more likely the economy will fail first from the corruption not being addressed.
Thanks for the weekend show!
On the topic of arbitrage in the Ely/Groy merger: Ely traded around 1.15 AFTER the news broke of the 1.46 cash/shares offer from Groy. On Friday Ely closed at 1.37. Why it doesn’t trade higher is an ongoing debate.
Hi Jetty. Well, at least we got Jayant onto the show as requested, and he offered his thoughts on the Ely Gold / Gold Royalty Corp merger. It is normal for the company being acquired to trade at a slight discount to the overall cash/share offering, just in case the deal falls through, or because no buyers want to pay full price for the smaller company being acquired, or else it would just make more sense to wait until the transaction is complete.
There are times where an arbitrage forms that is so large between the 2 companies in a merger, that it can be exploited for easy gains. At this point at $1.37 for ELY it is pretty close to the $1.46, and there are a few other nuances to the deal if you read it over where if too many people want a cash settlement then it may be a mix of cash + some shares, and if too many people want the new shares, then it may tip the scales towards shares + some cash. Since nobody knows the disposition of the majority of investors plans at this point, then there is a lower value on the Ely shares right now than the deal amount due to some of this uncertainty as to how things will get settled. Personally I liquidated my shares this last week, as I’m not interested in the assets that GROY has that are far away from development or production, and would have preferred to have seen ELY merged with one of the more solid mid-tiers that already have their own cash-flowing assets, like Maverix, Metalla, Nomad, VOX, EMX, Altius, or Elemental.
At least the team behind Gold Royalty is good at raising money and promotion, so for those that hang onto the combined company, they should get plenty of market pumping from Amir, David G., Ian T., and there crew of followers.
Wishing the best for everyone, whatever they decide (cash, shares, selling, or holding), and it was nice to see some consolidation in the royalty space. It would be nice to see more of it as things progress as there are just so many royalty companies now. Sailfish FISH is looking to sell their assets piecemeal or to get bought out, and then there are all the other smaller companies that could get rolled up into other companies like Orogen, Trident, Empress, Abitibi, Golden Valley, Globex, etc….
What I’d like to see is some of the mid-tiers do mergers of equals and really make some companies that are larger and attract more generalist interest.
Great insights Ex and thanks for getting Jayant on to share his thoughts. It will be interesting to see how this all plays out. I also look forward to consolidation in the royalty space.
Thanks for the comments Ex.
Doc, I think it’s more like the wilderness, desert a bit too extreme
Sorry , Cory, you butchered Joseph’s last name spelling & pronunciation
SCHACHTER, NOT SCHATCHER
You’re right, sorry about that. I put the ‘t’ in the wrong place…
Time for Trader Vic, Cory
I 2nd the nomination of Trader Vic.
Hi guys. I did relay the message to Cory that folks would like to hear from Trader Vic. We are working on getting him in the schedule soon. The schedule has been cram-packed lately, and always in flux, so sometimes it takes a little while to get everyone’s schedules coordinated, but we appreciate the feedback and ideas of different pundits that people want to hear from. Keep the great ideas coming.
https://www.youtube.com/watch?v=UUKR13Gnebc
McCleod talking his book, but telling some truth.
Great interviews with great questions from bothers Cory and Ex!
I gotta tell you that Doc with his years of experience and knowledge like bob M keep guys like me humbled. There is no perfect method as I have learned that the hard way but much what doc says is align with my thinking recently and how I have begun to approach miners.
Doc although a popular name in here will never be a popular choice around here because he is not in line with most investors in the ker. But I what I respect about him is his willingness to tell you how it is and I repeat glen and doc were probably the only two bearish folks about a month ago. I was clear that to many on the bullish side and it didn’t sit well.
Glen mentioned double tops and m patterns same shit. And that miners were headed lower led by companies such as USA.to. Does anyone remember this?
About a week ago I changed my tone slightly with a more positive slight outlook for gold. Although I respect hourly, daily and weekly charts, my mind will always be set at the monthly and longer term picture because that’s mostly how I trade king positions trying to make large profits as doc mentioned. I can wait out a year or two from a good bottom.
I mentioned awhile back in a heated argument that gdx would fill its nasty monthly gaps and it has filled one and one more to come at 32 and change. The monthly looks terrible and all indicators point down and if that monthly closes below the important moving average, look at the stochastics.. better yet don’t look at it because the drop will be ugly and alarming and that is factual.
My point is this, doc raises a good point regarding the macd nick name Big Mac lol.. if it’s headed we’re I think he believes it’s headed then gdx can head as low as $14-$18 by September if this is his bearish view. This would mean a very nasty move down of which I have not ruled out one second.
If the machines/banks/algos/hedge funds keep naked shorting and filling up there bellies of which I see is happening, then they can ride this to September low. For the sake of all of us I wish not. But the strategy here is clear fill up our bellies by naked shorting and then when happy happy, short the dow and reverse the move on the miners. These guys make money both ways!
One word=Bankers
Why does glen talk about glen in the third person?
am I missing something?
Not sure what your question is B?
Let me recap.
1. Great interview by ex and Cory
2. In line with everything doc said
3. I’ve been in line with him from before awhile back. Is this the part your not understanding? That doc was not alone in his thinking no more no less
Glen
Thanks for the kind words Glenfidish.
Cory & I try our best to ask probing questions balanced on both the bullish and bearish thesis to hear all sides of a discussion and what technical targets or fundamental drivers folks are looking at.
It was nice getting the insights from our guests for this weekend’s show (Dave Erfle, Doc Postma, Jayant Bhandari, and Josef Schachter).
Ever Upward!
It sure was Ex and I think you have given the ker and us and the audience a really good injection of life and fountain of youth per say to the daily blogs. Something that was missing! I like your style and the way you just get to the point with the hard ass questions.. because n reality the audience wants to hear this and your not shying away from asking them. Cory is also doing a great job.
In a different I hope all is doing ok because it sucks ti hear his grief and his loss in fact it made me weak to know this. We all have loved ones and I’ve been around here way too long and literally have rejoiced and debated everyone lol and in the end I couldn’t have it any other way because there is no other place like the ker!
So ex keep pushing Cory to the limits! I love it and keep doing whatever it takes to pump the ker.. we need to be voiceful and have the best guest ever.
Cheers
Thanks Glenfidish.
Yes, we are working on growing the site, continuing to find and talk with great guests to bring onto the show, finding interesting companies to interview that have a compelling investing thesis, and we’ve been working on expanding into more commodities and small-cap sectors.
I’m older than Cory by about a decade, so I appreciate the fountain of youth comment as well. Haha!
Yes, we are all saddened by Big Al’s loss, and wish he and his family well during this tough time.
As for your feedback on the questions we ask, thanks for those comments. We do our best to be balanced, so if someone is overly bullish, we ask them to elaborate on why that is, but also will ask what could derail that thesis. If someone is overly bearish, we do the same thing and ask them to unpack why, but then ask would change them to be more bullish. In the same sense, if someone has an investing narrative where they have distilled things down to 1 prime mover or fundamental/technical driver in their narrative, then we may ask, is there really just that 1 driver, and couldn’t there also be these other areas XYZ…?
Sometimes in hindsight, we wish we’d have asked different questions, or that we could have gone a different direction in a chat, but we don’t have a rigid format and tend to let the conversations flow organically as the talks unfold.
Quite often we have an interesting 10-15 minute chat before recording and have a general feel for where we are going to head with a discussion, and then we hit record and suddenly the talk can take a turn and go a completely different direction… I’ll think to myself, “Well that was interesting, but now I wish we’d have recorded the pre-call as that was very interesting as well and covered a completely different topic.
We really appreciate that so many sharp folks are willing to invest their time to share their insights with everyone here at the KER. Ever Upward!
Doc has a history of being bearish at major bottoms of gold/gdx.
If gdx is below 20, gold is probably falling below 1400. There is a strong correlation between gold and other commodities. A bear market in gold implies falling commodity prices. It is possible but I doubt a new bear market in commodities has started.
Anyone have DSI data for gold & silver?
Just yesterday someone shared the DSI for gold and silver on another site.
Gold=16
Silver=24
In this environment, that’s probably good enough.
CORRECTION: it looks like 16 for gold must have been for Thursday because someone else shared it this morning and said it is now at 14. As Bob M. points out, below 10 is extremely oversold. By other measures (not DSI), gold is already at an extreme and therefore contrarian very bullish.
A gap down followed by a strong reversal on Monday would be perfect.
Thanks for the update Matthew.
Pyrite,
Doc gave his opinion does not mean you have to be in line with it. They are possibilities but this far he has been right and so have I with miners going down while many were talking bull flags.
I don’t study everyone’s history because if we all did we could find wrong in everyone. But his king term approach recently and purchasing approach recently is very astute and if it’s true that he’s has only committed 1/3 or 2/3 of his funds then he is much more ahead then many. Just my thoughts
It’s clear if the macd goes we’re he says it going then absolutely 100% gold can go down to $1520 -$1550 and do that in 2-3 months easily. That would be be a bear within a bull.. Many of our guest have said the cup could take much longer which means a drop is very possible.
Personally I would have liked to see strength now and ended the month higher on the monthly but we would have to have a miraculous move up in three days to turn the red candle in gdx and fold up. It ain’t happening. So it would indicate to many further weakness. Matthew has made a strong case for the opposite and under cutting and turning up! I actually hope matthews case works out because doc is very bearish..
I have slightly less then 5% left and I’m not buying anymore until we either are much higher or we at an ugly bottom. There is only so much powder
I’ve pointed out repeatedly that the quarterly and yearly picture is being ignored. That ugly monthly MACD would be far more likely deliver a much lower low if the quarterly MACD was on a sell signal but it isn’t; it looks quite healthy, in fact. This correction is the biggest in years because last year ended a three year 80% move and did so with a very overbought “hockey stick” advance. The bigger picture is as bullish as can be and this correction has done it’s job. Gold is no longer a sure thing in the minds of the vast majority but IS a sure thing in reality. The next three years are going to smoke the last three.
Matthew
I’m not discounting what you are saying. I’m almost out of powder. I hope your call for very soon wins as I have had enough with this correction. It is the most bearish I have seen recently.
Again very good points in what you are saying. It is without a doubt a very deep correction already.
I have to agree with the smoking Mathew.
Charts are not needed, gold protects purchasing power, more money printed the more gold moves up.
Pretty simple actually. But I guess alot of people dont know that.
So, with trillions printed, we can expect some “smokin gold”
My kids and grandkids are going to be happy I knew that. 😉
COT positioning is the most bullish it has been since the top last summer (from a contrarian standpoint) and open interest just hit another new low. Such readings are not necessarily great for timing but it would have been a bad sign if they were mostly unchanged over the last two weeks.
I have a feeling that we could see a further reduction of commercial short interest after the low and into strength. Covering into strength does happen occasionally and can be very bullish. I expect open interest to turn up sharply when the low is place.
What happened to the GDXJ measured move to 92? anyone remember that call from last year?
Hi al, Whenever you have talked about your lady, I couldn’t help but notice the greatest love and respect you hold for her. You are truly blessed having that relationship.I feel your anguish and Offer you my sincerest Condolences. I get the feeling that a great many of the participants on this site are in the “Waiting Room”. Permit me the observation that with that soulmate time truly flies! Life is like a roll of toilet paper, the closer you get to the end of the roll, the faster it goes. So for everyone who still has time, enjoy every precious moment. Brotherly love to all, Ian
+1 Well said FIH. It is easy to take for granted the little things in life and the people we care about most, and in such a crazy world it is important to remind ourselves to enjoy the precious moments we have with our friends and family. Our human connections and our personal health is the real wealth we have and part of true prosperity.
I will repeat what I’ve been saying infinitum—-this is NOT 2011/2012— it’s a painful experience that we’ll have to put up with. We have to work ourselves down on the monthly MACD for any meaningful big uptrend in the future. The strength indicators are with us. We’ll form higher monthly trading ranges for these stocks then we had prior to the previous run up. We will be lower in gold pricing for awhile then the highs of 2011—that is a positive since we have had gazillions of money printing since 2011 and are lower then that price. Another point—-unlike 2011/2012 the monthly MACD will in all probability not go into negative territory but will bottom at 0 or even above since this is characteristic of a correction albeit longer then we like. This is a bearish correction in a long term bull run. It may be painful but we will get through it and the next run should be the one that goes parabolic since the FED will really screw things up when it becomes apparent that another taper is just a promise of more financial market disruption.
When this bounce happened right after the first Obama election in 2008, miners went up 2X and more in one month.
GDX — How Deep? : https://tinyurl.com/scuj24rs
Updated to more bullish scenario. Too many bears about!
Matthew, ex, doc and anyone else!
What are your thoughts on the short ratio “ within the miners”? Now I have not gone through every single miner but have gone through mine. My consensus and readings show that the short ratio has been substantially reduced from previous month in majority if my miners. This seems really good. Even if they continue to naked short.
Glen
Hi Glenfidish – Yes, the short ratio coming down in your mining stocks would indicate that overall investors and funds are less bearish on the future outlook on the miners, and that much of the downside is priced in at this point.
However, it is still a mixed bag. I’ve noticed the short positions coming down in many of the larger producers, but it has gone up in many of the more liquid juniors and smaller producers.
There is a nice feature over at ceo.ca where you can quickly see how the short position in any stock is trending over the last 6 months, and there is an up arrow or down arrow to see the latest trend in the overall short position sizing. In toggling through about 2 dozen stocks real quick, it’s about 50/50, so really it is stock dependent.
The fails-to-deliver are also interesting.
https://images.fintel.io/us-gdx-fails-to-deliver.png
Ex thank you for all that and keep ion the great work!
Matthew I looked at your above chart failure to deliver. Now I hope this is not a timid question but maybe some of us want to know in lamens words what this all means!
Are you saying the people shorting are not full filling there obligations and covering back?
Thank you
Investopedia (linked above) did a good job explaining in layman’s terms but Patrick Byrne might make it clearer…
https://www.youtube.com/watch?v=I0WXg5T3cBE&t=9s
This is also interesting but not about FTDs:
https://www.marketwatch.com/story/gold-is-ready-to-rally-and-the-fed-and-interest-rates-have-nothing-to-do-with-it-11624324598?mod=mark-hulbert
The DSI for gold is close to bottoming levels. Few more days of this trading action will guarantee a short term bottom. The one more low crowd might not get their wish.
I can see the recent low at 1761 being slightly exceeded but doubt very much that the March low will be.
https://www.youtube.com/watch?v=kSUQY8B0qu4
GROY town hall
Please pass this on to any troubled vet you know:
https://www.youtube.com/watch?v=Dk1zpHNtXUk
Big Day awaits………. JUNE 28……… let’s see what happens……. 🙂
Emerita – Anatomy of a 10-Bagger : https://tinyurl.com/8j3hwus4
Alternating days except for Emerita. Same algos.
Daily smash on Emerita now. Will see if it finishes the day positive as it was only up +17% so far.
It occurs after a high volume Shooting Star.
The question now is: “When will it be retested?”
Hi:
Can I start today off with a simple but hard to answer question? Over the years I have gotten interested and bought small to medium positions in many, many miners. Frankly way too many. As I look at the small fund I’ve built I see some doing well, way greater than 100% gain, some at a break even point and other that are simply losers.
How do I rationalize this mess? I still have a full time job and tracking 200+ investments is more than I can handle. I try to limit risk by sizing positions. Also, a couple of years ago I started investing in energy, copper, uranium and necessities like potash along with some specialty companies like CWH & OSTK that interested me. So, I’m trying to do a bit of diversification. By and large that has worked out. My largest miners by $’s are ARNGF, AUY, BTG, FFMGF (blessed be the name of arbitrage – thanks Jayant), ISVLF, KOR, MGMLF, NGD, NSRPF, PAASF, SKREF & USAS and most are up, a couple are down. On average with these I have been able to “buy right and sit tight”.
So, how do I sort the wheat from the shaft? I can’t spend my days dancing around positions as I work full time.
As always thanks to all for what they do – you all have helped me a lot. My purpose here is to ask “how to fish” not “where to fish”.