Precious Metal investors need to look to the treasury market and yields for future price action
Brien Lundin, Editor of the Gold Newsletter joins me to look past the recent volatility in gold and silver prices to the bond market, which Brien thinks will dictate future price moves. It all comes down to real rates and the balance of inflation rising alongside yields. I also have Brien provide some insights on a stock he likes, Montage Gold. This ties into a comment on investing in the Ivory Coast.
Click here to visit the Gold Newsletter website where you can follow along with the companies Brien is recommending.
I believe I’ll have a chance to buy SILVER again $18-20 this half of 2021. Remember, we have NOT had any law or regulatory enforcement since BERNIE MADOFF, and that’s been 11.5 years , and now the inmates control Our Prison
But still have my 7 – $243 Bitcoin – Ad Infinitum
It would be nice if gold finishes the week at 1895 (or much higher would be fine):
A close above 1875 would be ok too:
Good charts Matthew. I’d be happy with a close at $1875 for the week. Thanks.
Gold managed back-to back daily closes above the 50 day MA (by one cent today):
If tomorrow is a dud, the risk of significant further downside is very real. Here’s HL for example (with various supports):
If the another big dip is in store, it will likely set up a very (VERY) important low.
Well, that is a concern, so hoping the Friday weekly close is “stud day” and not a “dud day.” I finally got a position started in Hecla.
Let’s say support levels break, in that example, do you feel HL would go down to those parallel red dashed lines to fill the gap right above $4.80-$4.90, or do you think it could fall as much as the 200 day MA at $4.62?
I don’t currently “feel” like it will reach either of those levels but you know how that goes once the bears get the ball rolling. So, yes, if it’s going to fall from here, I think 4.85-4.90 is probable and, of course, lower is possible. I sold 45,000 shares I’d like to get back so I’ll be watching the action closely.
Thanks Matthew. Yes, I’m very much hoping the line in the sand is held tomorrow and early next week, and that the bears do not get their ball rolling, as sentiment has already started to sour with investors the last month or two, and I’d prefer not to see a cascade down in prices, but as you mentioned would look to go bottom fishing if that is what plays out.
Matthew, I’d be curious to get your thoughts on the EXK Endeavour Silver chart.
It is oversold on the Slow stochastics, yet somewhat neutral on the RSI and CCI.
Pricing moved down past the 21 day EMA and held at roughly the 55 day EMA, and that low looks to have filled the prior gap. Do you think there is good likelihood of bounce here (providing the metals don’t fall out of bed)?
Based on that 50%+ move in 3 weeks, the recently overbought daily RSI and the looks of that MACD, I’m guessing it might have a little “work” to do before launching another sustainable rise.
A 4% rise tomorrow would look pretty bullish.
Thanks Matthew. Yes, EXK is at a confluence of resistance with that fork, to be above the KAMA, and that line from the prior peak. I guess the good news would be if it can close above all that meaningfully, but the metals are selling down slightly in overseas trading, so there is also a high likelihood that it gets rejected down further from where it sits currently. I’m in a real quandry about lightening up some on it, or holding for the potential pop, but will just have to see how Friday’s close looks, pan back to the weekly as you mentioned in the 2nd chart.
Silver finally took back the KAMA:
That is encouraging on taking back the KAMA, and pricing momentum is shifting back in Silver’s favor. Bring in the momo traders. Ha!
This is going to be an exciting year in many sectors, but I’m the most bulled up about the Silver miners, and can’t wait to see where the Silver juniors will run once the metal price gets into the mid $30s. Beyond that, we’ll all be elated if/when Silver takes another run at it’s all time high of $49 later this year or next.
This was posted on the other blog today, but I can’t remember Don D. being so enthusiastic about Silver in all my years listening to him. He mentions that in his 35 year of investing, that this setup in Silver and the Silver miners is what he has been waiting for.
Once-in-a-Lifetime Silver Stock Bull Market says Don Durrett
MiningStockEducation – Jan 21, 2020
Professional mining stock investor Don Durrett of GoldStockData.com returns to the show to discuss the current precious metals market, expectations for the U.S economy and share his thoughts on today’s junior mining sector. Don believes we are about to see a once-in-a-lifetime bull market in silver mining stocks. Don also shares insights on how he approaches junior gold and silver stock investing. Don has been investing in mining stocks since the early 1990’s. He is the author of “How to Invest in Gold and Silver: A Complete Guide with a Focus on Mining Stocks” which conveys Don’s well-thought out and tried approach to mining stock investing.
1:00 Gold price
3:00 Silver price
3:29 Mining stock portfolio hedges now?
5:28 Economic contraction worries?
8:33 Lesson learned in 2020?
10:38 Biggest mining stock gainers in 2020
13:36 Silver stocks
15:12 Once-in-a-lifetime silver stock bull market
Hearing Don D this excited about Silver has me this excited as well:
Jonathan Mergott: Best Performers to be Junior Silver Miners
Palisades Gold Radio – Jan 21, 2021
GLD:SPY is squeezed tight between a support resistance and will likely breakout tomorrow. My guess is an upside breakout. It’s hard to believe but I drew that dashed green support way before price reached it. It was based primarily on the February 7 high and secondarily on the November 11, 2019 close so I was surprised to see the current price action show it so much respect. Notice that the day of the big dip below it (1/8/21) to fill that 2/18/20 gap still closed above it.
Based on that, and if GLD starts gaining ground on the S&P 500, and there is a bounce…. then do you think that if the markets had a larger correction later this year, that they may head down while Gold holds more steady or even heads higher in the face of the larger market correction?
I remember back after the 2008-early 2009 Great Financial Crisis, that after most asset classes crashed, that Gold & Silver really started to recover in later 2009 and going into 2010 & 2011 much faster than the general markets, and wonder if we may see a similar pattern play out again if there is another big market correction in 2021.
I think gold will hold up better than most expect during a stock market decline but I do not see the stock market crash that so many are expecting. In fact, stocks could be starting a melt-up regardless of gold’s next move and could outperform it for awhile. Even if both rise together, the stock market could sufficiently outperform gold to test its mid 2018 high versus gold. That’s an outperformance of 12-13 percent from hear. I know it seems unthinkable.
Wow! I was not expecting that answer about the stocks markets potentially doing a melt up from here, and outperforming gold by 12-13%. Now I’m rethinking my new short position on the Russell 2000 and my volatility position in VIXY. I mostly put them in place in case there were any political fireworks this week that caused a market dislocation, but it looks like we have moved through this period much more calmly than I was expecting.
Very interesting, but it is good that you feel if there was a decline scenario in the markets, that the yellow metal would hold up well.
That’s here not “hear” 🤦♂️
The daily and weekly charts look friendly to your shorts and suggest good near term profit potential but I doubt very much that any near term decline will mark the final high.
Ha! I knew what you meant, and figured it was just a voice to text word swap.
That makes sense, and I guess I’ll just ride the short positions for any near-term decline, and then exit, to get out of the way of the rebound, and that potential of a melt up in stocks. I got them as chaos insurance, but will just target making them quick profit scalps, and then move those funds back into other assets or to the side.
Thanks for the feedback.
If I remember correctly, which is always an issue, my miners were at a high point when the tank of the general markets occurred in 2008 time frame. My miners went down more than the general markets to at least 50% or more drop. Then the miners led the way. This time (for me) I am sitting 20-25% down from my July top and have been range bound for 4-5 months. My expectation is that if general markets tank, miners will be hit again even though many of us are not at a high point like the general markets just because that is how algos operate…its like an involuntary reflex. I would expect miners lead the way out but then my guess is based on history the rally is limited in time despite the economy being in a shambles. Also based on 12 years of history, nothing says they can’t continue to intervene in the general markets and keep their bogus train rolling and blame it on that pesky inflation that they always falsely report one way or another. Once the Government opts to intervene in markets, true markets don’t exist. It is similar to “one lie begets another”. I always look at experts like giving us the best advice on how things should be…but don’t stray too far from the bomb shell as intervention in markets implies the unexpected.
David – thanks for sharing your experience in the miners versus the markets in the 2008 time frame and the move out of the bottom the following year.
I was only stacking Silver in 2008 & 2009, but I was hungry for PM investing info at that time and was watching on Kitco how well the miners started doing later in 2009, compared to other markets. The miners outperformance was getting so noticeable that by 2010 that I started trading the miners in lieu of buying more of the physical. By the summer of 2011, I had sold most of my physical stash to keep piling into the miners, but alas, in September, the top came in the PM bull, and I remember it being timed out with the higher and higher margin requirements on the futures contracts, until it halted the metals advance, and then the miners started their descent. On a brighter note, we had a big Silver party in the fall of 2011, where I funded it for friends that came in from out of town with some of the gains from selling the Silver bullion. I believe in taking a small percentage of gains and blowing them on some fun event, and we had a great time. Those friends asked in 2012 if we were going to have another Silver party in the fall, and I said not this year but maybe next year. Then 2013 hit and I had mostly exited my positions, but I was sick of getting blindsided, and decided to spend more time learning to trade using TA and how to trade bear market rallies.
To some degree, I may still be an early trimmer due to really getting more into swing trading in 2013, 2014, 2015, and I’m always waiting for the other shoe to drop, instead of just letting good positions stay whole and run the distance. I’m getting better at that, but when to sell is still far trickier (even when using TA) then when to buy. Buying low is the easy part, but holding and remembering to sell high, is the part I see most traders struggle with. Well, we are all works in progress, and just trying to get better and learn more every day.
As for the trading portfolio in resource stocks I had a bigger value at the end of last year than in the summer, but I trimmed a number of positions back in July & August when the BPGDM index got way overbought at a 100 reading for several weeks, and did a lot of swing trading in Sept & Oct, then ratcheted down the trading from late October through late November, as I was side-tracked with the cross country move, I started trading again in December and hit the highs for the year the end of last year, and had my all time high in the portfolio on Thurs January 7th. and am down about 9% overall since then, but essentially back to where I was in late December, which was still great as it was the all time high for me up until that point in time. My goal is to preserve capital as well as make gains trading, but I have had more funds to the side the last 2 months than I’ve ever had. Granted I’ve deployed a big of those funds now, and even today went a little wild with the buying.
Looking forward to taking things to the next level in 2021, but I’m ready to ride the rollercoaster markets in the process. Ever Upward!
Great info hate that I missed the Silver Parties. What I am guilty of most of the time is riding through the bad. It turned out very profitable after March 2020 when over the next 3 to 4 months I achieved the biggest trading tax bill ever…then I let the account erode despite adding to my tax bill. On the bright side, it is the biggest trading tax bill ever. I am learning something from you and the rest of the Korelin tribe, but I need to learn more and ACT on it.
Looking forward to things at the moment and still having fun trading “happy” to “glad”, but want to get back to selling those big profits again…(famous last words)
This may come across as overly cliche’, but I really believe that the best is yet to come in a few different sectors, Silver, Uranium, Battery Metals (Copper, Nickel, Lithium) and specialty metals over the next 1-3 years. It may be that everyone is overly bullish Silver, but I agree with sentiment in that Don Durrett interview linked up above in this blog that Silver doubling or tripling here is going to be a generational event, and plan on having front row seats.
Wow, glad I raised cash & kept my shorts on—
Yeah, the pre-market activity is looking like a red day in the general markets.
The VIX is also up roughly 9%. I’m in the same boat you are, with shorts on, but don’t want to overstay my welcome, or exit too early in those positions.
Buzz if you have nice gains in your short positions today, then are going to pull profits heading into the weekend, or hang onto them for next week to see if there is follow through?
Stiff upper 272 Boundary resistance.
However, Piano support is holding.
Focus remains FOMC Wednesday.
Significant gaps are on the upside.
Sold warrants. Great rewards when right.
Too illiquid for usual trading.
Best at true bottoms.
Doc’s call ?
Well I got stopped out of my voyager digital yesterday….don’t use the trailing stop losses to often but with how volatile this one is I didn’t want to give back all my profits for a nice short term gain.Mention this in case anyone else was following it….the real news is orezone and its financing for mine construction
Wolfster – Thanks for the heads up on that breaking and long-awaited Orezone news.
That’s a big milestone, and moving them towards graduation to a producer, where they mentioned first gold pour at Bomboré by Q3 of next year. Nice!!
Well, the market sold off on the financing news, but that is typical, and it’s a rough day in the resource stocks anyway. I still see that news for Orezone as great for the big picture, but don’t want to buy any more, as it is already at the desired weighting in my portfolio. Today would have been a good day to add though, for folks that were underexposed.
Orchestrated walk down starting in London, as usual. Friday is becoming automatic.
Happy to have picked off 400- EXK @ 4.32
Well played Marty. I’ve hovered over the buy button a few times on EXK, but am just holding what I got for now. Good trading to you sir.
I’m also tempted to buy some more SILV at current levels. Are you still in Silvercrest Marty?
Reduced my position in SILV 30% and jumped into Reyna in late July @.53. Better than that, sold another 30% 12.80 – 12.88 Jan 4 , on the open along with the other 3 stocks that were up 14% at the open that memorable day. Still in a 28.5% cash position. Hope to buy more SILV in the lower $8s
I also sold SILV on Jan 4th Marty but didn’t get as good of price as you – I sold at $12.39. I’ve actually traded into and out of SILV so many times it is hard to keep track, as I pulled a big chunk of profits in 2020, but kept on trading it throughout the year and this year.
I first started buying on (03/03/20) @ $6.92, then (03/06/20) @ $6.78, then (03/11/20) @ $5.61, then (03/13/20) @ $4.10, then sold some on (08/12/20) @ $8.69, then sold some on (08/21/20) @ $8.77, then bought some on (09/23/20) @ $8.32, sold some on (01/04/21) @ $12.39, then bought some on (01/05/21) @ $11.60, then bought on (01/15/21) @ $9.25, then added most recently on (01/19/21) @ $9.22.
I’m not sure how it worked out for last year on profit percentages due to the FIFO sequence of buy/sells, but know I did pretty good in Silvercrest. At present my cost basis on the position I have left in place is $9.63, so a bit underwater on this position, so yeah adding another trance in the mid to lower $8’s would be great and lower my cost basis some. Even adding some here at $9.30 would help a little bit, but there are many other smaller junior fish to fry 🙂
Yes, I’m glad you brought up Reyna. I just got at starter position on the 8th of Jan, but may be adding either 2-3 more tranches over time. I’m not sure if it will come back down to where you picked it up in July, but if it drops another 15-25% that would inspire me to layer a bit more into that position. With a world class Geo like Peter Megaw on their Advisory Board, then I’m expecting big things from this year’s exploration campaign.
What I like most about Reyna besides Peter Megaw, and The Team there,is the fact they have 4 target properties, one of which is in Nevada.
Nice interview @VRIC WITH CEO there.
Many other terrific interviews there. It class presentations, Q&As
Nice. Thanks for the heads up Marty, and I’ll go check that out this weekend. If it is that 7 1/2 hr video I started it but didn’t get all the way through it.
I had posted this video interview on Reyna on the KER blog this last Tuesday, but will repost it here since it’s relevant to this chat.
Greg McCoach, The Mining Speculator & Peter Megaw, Reyna Silver (TSXV: RSLV)
Reyna Silver – Nov 17, 2020
“Reyna’s Chief Technical Advisor, Peter Megaw and Greg McCoach, editor of The Mining Speculator, discuss the Company’s recent acquisition of the Medicine Springs silver-lead-zinc project located in Nevada, as well as some recent updates on Reyna’s high-grade district-scale silver projects in Mexico.”
“Dr. Peter K.M. Megaw, Consulting Geologist and President of IMDEX/Cascabel and co-founder of Minera Cascabel and MAG Silver, has 40 years involvement in Mexican geology and is well-known in the Mexican mining industry.”
I opted for buying some tax loss sales back today, where I had trimmed the positions down to just a tiny tracking position since mid December – Nighthawk, Brixton, Triumph, and Newrange. Also, I added some to my Nomad Royalties position, since it has underperformed the other royalty companies and looks like a more attractive value here.
I also picked up a bit more Azimut Exploration and Kootenay Silver today.
I sold my Aurcana today as Dave Kranzler expressed some valuation issues with its current price. He is looking for catching it at half the price. I had a profit so I took it and bought some Aurion that was something that Luctenhave mentioned. My second Finland project along with Palladium One. I also picked up a few Cartier as they are taalking an aggressive drill program. Somewhere this week I picked up some Azarga to get the uranium exposure and added to Clean Air Metals. And EX, good timing on GBR as it might be getting out of hibernation. Seems to be some activity other than just good drill results…$70 million bought financing.
Good trading David. Well I trimmed back my Aurcana position on Jan 4th, but added a bit back on Jan 8th. I generally don’t like adding too much when companies get close to first pour, as that is when I like to take more chips off the table. I did that with Pure Gold the end of last year, and have recently done it a bit with Alexco. Normally new mines have issues to work out and many investors sell on first pour, so I like to get in front of that selling and those potential issues.
Yes, I also just got into Aurion yesterday, due to coverage from LucTenHave, and just got into Great Bear on Wednesday. It’s been a bang up week for new positions, adding to old positions, and selling or scaling out of a lot of positions. I’m kind of done for the week though unless anything wild happens in the next few hours.
David you mentioned Cartier, Azarga Uranium, and Clean Air metals. I have positions in Cartier and just picked up a position in Azarga, but have not looked at Clear Air Metals. I’ll check it out and appreciate you sharing your daily trades.
Not sure, if mentioned the following but picked up some Pan Global and Sun Summit (having a decent day) and added to Blackrock, New Age, Silver Tiger and the Porcupine.
Ah, you must be following Eric Coffin and the MIF picks then with Pan Global and Sun Summit. I’m still looking into those personally, but good luck in the trade.
I also have been nibbling at Blackrock, New Age, and Silver Tiger, but not Moneta. However, by way of my position in O3 Mining, they have now teamed up with the Porcupine, so there has been a bit of cross breeding with the JV.
The last comment about adds were over the last couple of weeks. Clean Air I got from the MIF as well as adding back Pan Global (Spain). I added to Blackrock as the CEO was pumped at MIF and Eric Coffin and Dave Kranzler are supporters.
Haha! I just mentioned above you must be following Eric Coffin and the MIF picks and should have read this first. Funny. Yes, I was happy to see Dave Kranzler pick Blackrock as one of his 2 big picks for 2021, but am still not sure about Cabral – the other pick. I’ll look into Clean Air and Pan Global and Sun Summit over the weekend.
Possibly a mistake, but I wasn’t comfortable with Cabral’s latest drill results. Simultaneously I wanted to get some uranium and some multi-faceted miners or add to what I have. Quentin Hennigh high on Cabral but I can’t buy everything I like.
Yeah, that makes a lot of sense David. Whenever I have too much doubt on a story matching the current valuation, I take solace knowing that there are so many other choices to deploy my capital. Every day there are interesting opportunities in multiple sectors, and sometimes when I’m burnt out or over exposed on gold/silver miners, then switching focus to a different sector like Uranium or Copper or PGMs is a breath of fresh air.
Good trading to you!
Scorpio Gold (SGN.v) went on sale today leaving a gap between.125 and .14. I own some and bought more this am.
I got none at .115 but was filled at .12, .125, and .13
Thanks for the chart, much more sophisticated than mine, haha. Looks like it stopped dropping at an important line.
Oh Matthew, I was keeping my eye on on Scorpio for a potential pick up at just under .95. I figured it was going to possibly get there by mid next week. Now that you shed your light on that ticker and took a big bite, it probably will start creeping back up.
By the way, I’m catching up on the past week of comments as I settle in front of the computer. I have to say that it appears you’ve shared a great number of charts this week, so a big thanks for that Matt. I always open every one. Thank you.
Canukski, you never know, it might still head for your target next week. There’s Fibonacci fan support at about .108 next week:
Improving weekly EMAs and two forks:
We just had the lowest weekly close since mid July:
Weekly Ichimoku Cloud support was tested today:
The 600 day EMA was pierced for the first time since 7/10/20…
Thanks for the charting on Scorprio Matthew. Beautie-ful. Thanks!
High Tide (HITI.v) banging against 50 cents today, bought more this am. Up 17% today.
Seems like Great Bear & SILVERCREST are victims of being too successful in their resource development, both seeming to have glass ceilings on their $13 price. But the fact that SILV WILL BE MINING IN < 7 years when the industry norm is 8-20years is saying a lot.
Ex, I don’t know if you recognized the price pattern inter day the middle part of the year in SILV,, but I caught on within weeks where the stock was moving up 5.5%, 7.5% at the opening, and retreating inter day similar amounts. I would say I caught at least 12-15 of those moves enough to add 2200 additional shares in trading.
I like my 60K share position in REYNA and still a substantial position in SILV
Thanks for that heads up on the trading pattern with SILV. I noticed that a number of stocks in the Summer were gapping up to start and then tapering later in the day, but hadn’t specifically singled out Silvercrest with that recurring pattern. It seemed to be trend across a number of stocks, so I did pull profits in the first hour of trading, and buy shares in the last hour of trading in a number of shares. I’ve also been doing well lately selling into a loftier pre-market price in a number of stocks, and then buying it back mid-day in the normal trading session. Some times there are some wide double-digit spreads between the bids in the premarket and the asks in the main trading session.
That was some good trading in SILV on your part, and a really nice Reyna position.
Yes, I agree that the speed with which Silvercrest has gone from explorer to developer and slated producer is way ahead of the industry norms, and that is because their team is top notch, as is the asset. I’m really interested in all the other veins that they have are open for exploration and may be more of the same. They could continue to blow our minds with more bonanza grade drill hits all across their property for years to come. Exciting!
Are those the 2 main silver stocks you hold, or are there any others you are liking. I’m in a larger basket of 24 Silver stocks, so I have my own Silver ETF going. Haha!
EX, still an overweight in AXU, WAS TRYING TO BUY THE OPEN today ,missed by a few cents. Got on board when AUMN WAS HIGHLIGHTED ON MININGSTOCKEDUCATION BACK IN May @ .2207, 50k shares. Added to AUNFF when Bill Powers- MSEDUCATION did an on site tour of the Colorado property, impressive!
Have a lot of VIZSLA ALMOST A 5 bagger in spring @ $2.10, 22k shares near $1.18. Still a nice position in MAG WITH the property next door to their JV @ Juanicipio, PROLIFIC!
Still riding SBSW, MTA, SAND. WAS LATE GETTING back into EXK. SOLD ALL MY WPM @$ 55, adding again here @40. Bear Creek , sitting for a long while , now at a loss. Wish I had bought more CAPSTONE , AN 8 bagger on 2k shares, same as ESSKAY & Eloro when Tavi Costa presented them in early August. Positions also in Discovery, B2Gold AUY, SABINA & GROW, USAS
That’s more like it Marty! Very nice portfolio of companies and I hold many of those same stocks (out of the ones you mentioned – Alexco, Golden Minerals, Aurcana, Vizsla, Sandstorm, Endeavour, Sabina, and Discovery). I had Metalla but sold it a few weeks back. I’ve never owned Mag Silver, Wheaton, Bear Creek, B2Gold, Yamana, Eskay, Eloro, or Capstone, but they are all very solid companies. That’s a top shelf portfolio amigo.
With regards to Aurcana, that was a great site tour that Bill Powers filmed, and I watched that right when it came out, but was already positioned prior to that. Up above, David and I were discussing it, and I sold some on Jan 4th, and then felt underexposed and bought some back on the 8th, but am just holding what I got until they get commercial production underway.
I missed the boat on Eskay and Eloro and they have been on a tear, and I watched those same Crescat Capital video presentations with Tavi Costa and Quinton. We can’t own all of them, so I backed other horses, but I do regret not getting into those 2 earlier. Heck I’ve regretted watching Great Bear go higher and higher for a long time, so that is why I decided to jump in during the recent pullback this week to go on the rest of the journey into the great unknown…. Cheers!
Of the ones Ex has mentioned, I am heavy into Alexco and am doing well there. I bought into Yamana and it has more than doubled (108%) since purchase. I have also been holding a decent chunk in Mag for years, adding a number of times over the past eight months. Also, am holding Endeavour as well as Metalla.
Those are some solid companies to be in Canuckski. When the next wave higher in the metals prices come, these mining stocks will grow to the point where even many bulls (including us) will be surprised. It’s going to be a fun ride (with a few bumpy sections, spills, and thrills).
Seems EB Tucker singlehandedly has market propelled Nova Royalties to a 4 bagger in about 10 weeks
For real. I was quite interested in Nova Royalties when they launched, and heard EB cover it initially, and thought to myself, “I’ll just wait until the initial excitement wears off and buy it on the pullback.” Then EB promoted it everywhere I looked, and Metalla was simultaneously surging, so he kept saying look at Metalla, that is what Nova will do, and then look at Nova… At this point I’m still not going to chase it, but if there is some wild corrective sell everything smash down, and Nova gets hit, then I’m going to spring on that one. Right now it does seem to be getting ahead of itself, but wow, congrats to all the investors that caught that rocket ride.
EX, do you get a sense by way of CEO.CA IF Great Bear were to be taken out, what kind of price are the boys thinking it would take to do a deal. If I didn’t think a deal were in the offing, I’d sell my many shares; it may be 4-8 years for it to be a mine
Well it’s a big room for Great Bear over at ceo.ca, and there have been 100-140 investors in there most days, with all kinds of theories of the buyout premium, on the size of the resource estimate when it comes out, and many of them are pie-in-the-sky.
There are many savvy investors that truly believe they could have a resource that goes over 10 million ounces, maybe as high as 20 million ounces, and are working numbers based on those figures, but I believe they are overly optimistic at this stage. I saw a few folks make the case for 7.5 million ounce resource when they do the maiden resource, but again, feel this is still too optimistic, and I’ve watched over and over again in this industry where investors have too aggressive of estimates coming out of the gates, which is what leads to a speculative bubble, and then disappointment when the actual numbers come out.
In many cases, and it is true with Great Bear, early investors that see success in drilling have valuations tied to these inflated resource models, and then if the actual resource comes in at half of that or a third of that, there is a huge letdown and exodus and then anger turned towards the company they used to love. It happened in Uranium with Nexgen, and the sky was the limit, until it wasn’t, the stock cratered for 2+ years, and over time they continued to build the deposit closer to initial estimates, and the stock price came back and rerated higher. This initially happened to Orezone, to Nighthawk, to Azimut, etc… even Novo went through a similar trajectory.
My personal view is I don’t care if GBR has 7.5 Million or 10 Million ounces coming out of the gate in their initial resource estimate, because it is easy to see that it could grow to that over time. If the maiden resource comes out with only 2 million or 3 million, many will be really disappointed, but I’d be thrilled as it is big enough that a Major will want to buy it. Also retail investors forget that the acquiring companies also want a good deal, and they are going to pick off a good resource BEFORE it grows to it’s full potential, so that they can develop it and pay a smaller premium. If Great Bear can put out anything more than 1-2 million ounces, which should be quite doable, then it is a huge success story in such a small time, but there may be an adjustment to the market cap valuation when the resource hits. I actually hope that is exactly what happens, that the pricing comes way down to reflect the reality of the resource (instead of the priced to perfection scenario), and I’ll buy a lot more of it at that time, when other jump ship in disappointment. That is what I’ve done in all the company examples mentioned above, and it has been very profitable. There is nothing I love to buy more than a quality asset that has proven ounces in the ground, that gets into a funk when it doesn’t go to the moon and investors illogical projections come back down to Earth. That is where it is safest to buy, and then ride it up through the rerating as they company does grow the resource steadily over time.
Another one I’m doing that with at present is Wallbridge. Fenelon is a world class asset, there was all this hype for so long, expectations were too high, the stock price has come off now, and it is an amazing deposit, that will grow over time, and all the other land that Balmoral had in Detour Lake is insanely valuable. Now that the froth is gone, it is time to accumulate. I believe Great Bear is possibly the best gold exploration success story of the last 2-3 years, but investors, like normal, are expecting too much, and when their expectations are dashed with the reality of the resource estimate, then I’ll add quite a bit more. Now, if GBR does put out an intial estimate of 7M-10M ounces, then of course, we’ll all celebrate and put on the party hats, because it will get scooped up right after that, but I think it will take more time to play out. 2M-3m ounces would still be amazing, 4M-5M would already be world class.
Such an awesome response Ex. Thanks for your contribution.
Thanks Canuckski. Glad to bounce around a few ideas here with the KER crew.
Thanks, my friend. Been on the beach the last 5 days in Daytona , another 2 weeks here while the Northeast has a cold spell
AMY, okay, this is just getting ridiculous, haha.
Wow, Dan, I hope you own a ton of it!
Maybe a Xebec (XBC) Stock… same-ish industry.
I own none but have owned it before, I keep thinking that it is the end and it does this!
Hi Dan – Yes, It’s really amazing the run AMY is having, and I also used to own it, as we discussed the other day, so it is bittersweet to see it finally have success, but not be positioned. Overall I’m very happy for their company, and that they are finally getting their moment to shine, as well as for investors that stuck with them through the tough period to get to the euphoric period. Truly epic price action.
Wow Dan, great run on that puppy. Always gets my blood pumping when I see that scenario.
It’s all about the ESF, THE MOST SECRETIVE, UNTOUCHABLE, UNHEARDOF ENTITY IN THE FEDERAL GOVERNMENT. Where do you suppose the missing 100 trillion evolved from.