The Macro Set Up In Gold And How To Manage Portfolio Risk Yet Still Capitalize On Opportunities

August 4, 2021

Dave Erfle, Founder of The Junior Miner Junky, joins us to share how he’s looking at the macro set up in gold and how it contrasts with the commodity sector at large and the general equity markets. There are parallels Dave sees to the current markets and the 1970s markets where rising inflation was dismissed until it caused stocks to roll over, and then the precious metal sector took off.  We then discuss the potential opportunities at present in quality mining stocks that have corrected down in pricing, and what qualities Dave looks for in positions he buys and recommends. We wrap up with general trading rules for how he actively manages his portfolio, while also managing risks in times like these.

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    Aug 04, 2021 04:16 AM

    Good interview – like David’s comments about lifestyle companies and bad management

    „The worst management can take a project and screw it up“

      Aug 04, 2021 04:57 AM

      Thanks Thomas. Yes, I felt Dave made some really solid points at the end about scaling into oversold positions on weakness using stink bids, and being prepared to add if they drop a bit more.

      He also discussed managing risk in one’s portfolio and being willing to cut a losing position, and why it is so difficult for investors to admit they’ve entered into a position in company that where the thesis has not panned out.

      From a macro standpoint, his analogies with our current set up, to those of the 1970s, were interesting to consider. In the 70’s initially the markets were unfazed by rising inflation, and continued along with business as usual, but then eventually inflation was unavoidable and when the markets corrected, the precious metals started to garner more interest. While we may see inflation taper off in the short-term, there is little doubt that medium to longer term inflation is not going to just be “transitory” and when the markets register that, and when investors realize their buying power is being eroded, they’ll rediscover the ole’ barbarous relic…. Gold.

        Aug 04, 2021 04:05 AM

        For those that may not have been familiar with the Glengarry Glen Ross speech from Alec Baldwin, this was the clip we were joking about.

          Aug 04, 2021 04:03 PM

          Not quite Mary Poppins, but a good facsimile. Reminds me of Church Camp during the holocast.

          Aug 04, 2021 04:04 PM

          After watching the clip again, it occurred to me that I messed it up

          – First prize was a Cadillac Eldorado (not a vacation as I stated).
          – Second prize was a set of steak knives though
          – Third prize was “you’re fired!”

          Still, the point remains, that some investors may want to fire some of the stocks in their portfolio, take the tax loss, and redeploy into a story where the thesis is working, or when one sees the potential of a turnaround, or value driver for the company.

            Aug 04, 2021 04:10 PM

            I guess the steak knives were second prize to fight your way out of the room to avoid getting fired.

            Aug 04, 2021 04:13 PM

            Or to stab one’s ears out to not have to hear Alec Baldwin’s sales manager schtick any longer. Haha!

            Aug 04, 2021 04:16 PM

            Dave Erfle cracked me up when he went into “A-B-C Always Be Closing…” from Glengarry Glen Ross, as I was really not expecting that line to come up in the discussion; and did my best to tie 3rd Prize in with managing one’s mining portfolio. LOL!

            Aug 04, 2021 04:43 PM

            A-B-C is now going to mean “Do Something” when dealing with my stocks. But, unclear where to go from there…
            Sold a couple before A-B-C today that I will take and add to a couple of others…when settled Friday. Got my self living day-to-day with cash. But fired several this week already. I hope there are 8 steak knives instead of 6.

    Aug 04, 2021 04:28 AM

    blah, blah, blah. Measured gdxj move to 92? On vacation? blah, blah, blah. Comments directed only to Erfle. Junior Mining Junky glad fly.

    Aug 04, 2021 04:28 AM

    It’s funny how many of these companies have little to no insider ownership. If there isn’t at least 10% insider ownership you should avoid them like the plague. It’s very easy to see what insider ownership is in these companies, and I don’t know why any of these newsletter writers and analysts would recommend buying them. Come to your own conclusions about that.
    But I think 99% of these companies are utterly worthless and the PM space is a black hole where money goes to die.
    If you must own gold stocks, just buy the royalty companies and high margin producers, it’s the easiest & safest way to play the sector.
    Looks like the PM sector is dead in the water anyway, the trend is down and the fact that today’s early rally in gold and silver collapsed soon after the market opened should have anyone invested in this space very concerned.

      Aug 04, 2021 04:43 AM

      The biggest gains by far come from the tiny caps over and over again and even the bad ones fly when an intermediate uptrend develops. “Dead in the water” currently equals great opportunity.

      Reason for concern might develop but today changed nothing for the worse.

        Aug 04, 2021 04:50 PM

        Good points Matthew. The tinier market cap companies, even the not so great companies, can still move higher the most in bullish impulse legs, and ones that have pulled back hard or have been dead in the water, (providing there are not major issues fundamentally or it’s not just a lifestyle company burning through money without building value), can be the better current opportunities.

        As the saying goes, “In a strong bull market even the turds will float and the turkeys will fly”

    Aug 04, 2021 04:16 PM

    Some Silver charts, that some of you guys may be interested in.

      Aug 04, 2021 04:21 PM

      Thanks IrishT. I enjoy getting Patrick Karim’s technical take on things, and occasionally briefly check his Twitter account for any chart’s posted at Badchart1 over there.

      Patrick also gets featured on the weekly reports from our pal Steve Penney (@SilverChartist).

        Aug 04, 2021 04:28 PM

        Here’s another recent one from Patrick K.

        Bear Market For Silver Junior Miners?

        By: Patrick Karim – Aug 1, 2021

        [he doesn’t think so moving forward – we are at the bottom of the arc support or the cup based on his chart]

          Aug 04, 2021 04:12 PM

          Ex, maybe you guys can bring Patrick K on your show? He’s a darn good technician and I follow him on Tradingview and his expertise is mostly on charting side but guy has some great insight when it comes to plotting charts.

            Aug 04, 2021 04:43 PM

            Yes, good suggestion CaliJoe. We’ve already discussed him internally as someone that it would be nice to hear from on Technical Analysis.

    Aug 04, 2021 04:01 PM

    VWAP indicator is intra-day…currently GDX is below vwap, so not yet bullish….we are in TomDemark 8 of 9…this could be a pullback zone and the continue up for gold….

      Aug 05, 2021 05:12 AM

      WOW!!!! My hero, haha! Don’t hear anything about this other than the odd side column in the paper. I was wondering why the quick reversal in Alberta. The big problem is the left wing political party has surged in popularity while the ruling conservative party has dropped in poles to where if there were an election the left wing party would handily win a majority mandate to mask, isolate and socially distance the populace. This isn’t just about C19 but also to do with the environmental push to tax CO2 and stall all petroleum related progress even though Alberta has cleaned up it’s production greatly. If we had the support of British Columbia we would already be on our way to separating from the rest of Canada.

      BTW, I want Canada as a whole to succeed as we are not the politicians we elect, but through lack of good choices are subjected to their ideologies.

      Thanks, Mathew, for all you do…

      Aug 05, 2021 05:59 AM

      Also, Dr. Deena Hinshaw was the hero of the left wing when she was apparently contradicting the ruling conservative government’s C19 policies by suggesting masking, tracing and distancing but is now completely vilified by the left wing for becoming a political pawn of the conservatives for advocating dropping all the above restrictions. Maybe they need to see this video too, much like “A Clockwork Orange” when the guys eyelids were held open, haha…

    Aug 04, 2021 04:26 PM

    The conventional market is struggling here with the monthly MACD at an overbought signal not seen in 40 years. If it pukes soon, the PM area will not benefit initially.

    Aug 04, 2021 04:29 PM

    A remaining positive for gold is the fact it has yet to have a close below the 20 month SMA of the BBs. It’ll be close this month.

    Aug 04, 2021 04:55 PM

    Early in October 1929, Charles E Mitchell said, ” Although in some cases speculation has gone too far in The United States, the markets are now in a healthy condition. I know of nothing fundamentally wrong with the stock market or with the underlying business and credit structure. The public is suffering from brokers loanitis.” Because of who he was the public listened to his noise. The disaster was impending.

    Aug 04, 2021 04:16 PM

    The smart money knows what’s coming, which is why the junior miners are getting smacked. The smart money also is and has rotated out of the general markets.
    Black swan / everything bubble inbound.
    Two or three weeks away is my guesstimate.

      Aug 04, 2021 04:58 PM

      I do have that sense of the other shoe about to drop inthe general stock markets, and worry about what action to take in a “sell everything” market liquidation event.

      I’ve had that same concern for a while though, and the general stock indexes keep getting bought back every time the dip to the 50 day MA. There are strong HFT machine trading algos programmed to keep buying the dips, so until they get triggered to start selling, then we’ll see more of the same. However, when yhe selling does finally come, watch out below as we may finally see a nasty corrective move.

        Aug 05, 2021 05:33 AM

        Not that I’m a negative nelly or anything like that, but, I’ve been waiting for years for this crash. This is “the one” that cleans the pipes and ends the manipulation. The same market riggers we always bitch about will be the ones being crushed.
        The stock exchange will no longer be ruled by big government corrupt hacks running big tech and using that against the people. And the fed (which is already impotent) will be crushed by the crash. The fed is holding 90% of the public debt. Both will go bye bye.

        Long time coming. Feels right as rain.

    Aug 04, 2021 04:38 PM

    This is a timely must-watch…

    MASS PSYCHOSIS – How an Entire Population Becomes MENTALLY ILL

      Aug 04, 2021 04:18 PM

      Ditto……… It was a GOOD ONE……..

        Aug 04, 2021 04:22 PM

        Here is a good one to go along with Mass Psychosis……
        RETARD FAUCI….. I told ya…. it would go on and on… LMAO….

          Aug 04, 2021 04:45 PM

          The sheeple are like happy dairy cows that don’t know that Fauci wants to turn them into beef cows.

            Aug 04, 2021 04:11 PM

            It’s a sad state of affairs for the sheeple indeed.

            It’s like the Orwellian 1984 scenario has now fully arrived, with the “groupthink” of human society following the rest of the hear, and the media constantly morphing truth into a fictional narrative through Orwellian “newspeak.”

            Merging the concept that he wants to turn them into beef, with the year 1984 makes me think of this blast from the past…

            Where’s The Beef Commercials – Wendy’s 1984


            Aug 04, 2021 04:11 PM

            hear = herd

            Aug 05, 2021 05:53 AM

            “Soylent Green is made out of people!”

            Aug 05, 2021 05:18 AM

            I noticed when I am in Texas that there are not enough shade trees for all the cows that want to stand under them. Life is hell.

    Aug 04, 2021 04:58 PM

    Hey take it easy on the sheeple, it’s no fun working part time at Walmart or Taco Bell.

      Aug 04, 2021 04:52 PM

      There’s no shortage of well-off sheeple and it is no fun living with the fruits their ignorance.

    Aug 05, 2021 05:19 AM

    GDX price action…above neutral TAS profile=bullish….above OUL 34.01=bullish….low volume reversal yesterday negated the TD9 structure=neutral….intraday price is below VWAP, as such, this where institutions add to positions for clients…..standard technical panes show a bottoming action, although weak especially S.S and OBV……prognosis is guarded favorable….GLTA

      Aug 05, 2021 05:32 AM

      no idea why my lower technicals panes did not get populated…i do not know if it is fixable the way the post mechanism works at T or S…glta