Key Price Levels In Gold, Recent Outperformance In The Miners & Silver, And All Eyes On Jackson Hole

David Erfle, Founder and Editor of Junior Mining Junky, joins us to discuss the precious metals and mining stocks. We start off reviewing the key price resistance levels to watch in gold after seeing two stronger weekly closes. Next Dave points out the recent outperformance of the miners and silver, both to the downside and upside, and key levels to watch in the HUI and GDX.  The focus then shifts to Jerome Powell’s upcoming speech at Jackson Hole this Friday, and the market anticipation around the Fed announcing they’ll begin tapering their bond buying.  We wrap up with some thoughts from Dave on how he approaches managing his portfolio of mining stocks in the current environment.

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    Aug 25, 2021 25:10 AM

    I think its been a buying opportunity for explorers, although David wasnt too keen on the juniors last week, he seems to have tilted towards bargin hunting for quality juniors that have the funding . I just purchased a second parcel in a Fosterville play, bargin

    Aug 25, 2021 25:34 AM

    I don’t think lows are in, this was just a way oversold bounce in miners but when gold heads lower after this bounce miners will follow and we get another washout over next couple months before metals can stabilize and move higher.
    All you guys have said that we could test 1675 area before we can finish this consolidation. Stock market will also make it’s move higher to new highs and money will flow out of miners and into stocks which will cause the washout in miners and cause that bubble top in stocks.

    Aug 25, 2021 25:39 AM

    Also you say good time to scale in, that’s what you guys have been saying for the last year as miners have all been heading down, how much dry powder do you think people have or want to put back in at risk, better to wait for monthly charts to signal the reversal why get greedy most people are holding thier good picks and waiting long term run.

      Aug 25, 2021 25:58 AM

      That’s about right Paul.
      For the bulls, it’s all about hope springs eternal with the same technicals and rationalizing, of moving averages, pitchforks etc as a rubber crutch. Fact is, buying on hope not worth the risk, best to watch until there’s a meaningful reversal with some volume.
      Opposite with spx, grinding higher with a ton of fear for no rational reason.

        Aug 25, 2021 25:32 AM

        Some of us understand the extreme cyclicality of the sector and make it our best friend. The fact that so many people like yourself don’t understand it is only a good thing.

      Aug 25, 2021 25:12 PM

      Paul, when I personally discuss scaling into stocks during weakness, that should not be taken out of context, with some created Strawman arguments that implies everyone bought the top last summer and then rode things down all year only buying the entire time. That is NOT at all what I’ve discussed on here for years, nor over the last year.

      When someone is scaling into weakness, that does not mean going all in or that it is a buy and hold forever position. The other side of the equation is scaling out and selling during strength, which I know is how Dave Erfle also manages his portfolio.


      For example most wise investors (and in fact the majority of investors) were NOT piling in at the all the time highs in last July & August, so it is an error to assume that is the prices people paid for miners and assume those are people’s cost basis. Nothing could be further from the truth.

      I was on record here last summer as trimming back positions and selling the miners last July and into early August 2020 because the BPGDM index was flashing it’s most overbought reading of 100 for several weeks. If I anyone had realized it would have been the intermediate top of a correction that lasted over a year, then we all should have sold everything completely and left the sector for a year, but nobody was predicting that. Still, I harvested partial gains close to the higher levels in many miners.

      >> That is called “scaling out,” and it’s an important part of trading, to book profits in stocks that have made big runs from much lower entry points. The vast majority of the positions I was trimming back were entered during the Pandemic crash of March, and in April & May that followed, or they were positioned entered much earlier in the fall of 2018 or spring of 2019, and there were gobs of public posts of me buying into those weak periods as well.

      Next, I discussed scaling back into positions and fortifying positions into tax loss selling at the end of last year from late November through December (after the sector had already pulled back for the 2nd half of the year and were more oversold). That’s called “buying low,” something most investors claim they want to do, but typically fail to do. When they rallied going into January in the Q1 Run, then I had the sense to trim some of them back, and not just in the PMs, but also in the Uranium, Lithium, and Platinum/Palladium stocks.

      We discussed on here and on the daily editorials with different guests the opportunistic set up in March during the double-bottom in Gold at $1677 and $1673, and when many were still calling for much lower lows in the low $1600’s to $1500s and a bloodbath in the miners, I was cautiously deploying my dry powder and posted on it regularly. Those that huddled in fear waiting for the monthly charts to turn higher, missed getting in during that window, and the miners had a great rally in April, May, and early June.

      Again, I lighted up a little bit in June, and started nibbling again during the weakness in July. The all-time high in my trading account was on June 1st, and it had been continually running to new highs in both April and May, so it wasn’t nearly as bad of a market as many are making it out to be, especially if they had scalped positions in the quality names and mid-tier producers, which had a solid few months in the Spring.

      Also in mid-July, when the weakness really set in on some of the stocks, and few started to really tank, below my new trading cost-basis in them, then I decided to take tax losses in them, to wash out the captial gains from earlier in the year. I’m still up on the year and haven’t washed out all the gains yet, but took a big chunk out of them by washing them out with losses. The other result was plenty of “dry powder” to deploy again into new names, or held aside to repurchase in 30+ days.

      I’ve stated about a half dozen times on multiple blog posts on here that I started buying back those tax loss sales again last Friday, this Monday, and this Tuesday, now that the wash periods were past, and since the stocks are now much lower at much better cost-basis entries. There were likely many other investors that did the exact same thing and that is where their dry powder came from, in balancing their portfolios.

      So when people are talking about scaling in during weakness, that is in the context of having trimmed solid gains into strength, or having freed up funds by selling other portfolio dogs. Hopefully that helps clear up the confusion some are having by running with a false narrative.

    Aug 25, 2021 25:58 AM

    Matthew, the extreme cyclicality of the sector you speak of with great authority has been anything but your friend for months now.

      Aug 25, 2021 25:51 AM

      You are correct if your focus is on my day-to-day dollar balance but dead wrong if you look at the deals I have obtained. As I pointed out recently, my IPT position has doubled this summer and other positions have grown as well. The next step is to sell when appropriate instead of quaking in my boots and selling due to fear like most people. The moment Brixton hit .57 one year ago, I told my wife that we wouldn’t see that price again for a very long time and sure enough, it didn’t go one cent higher. Now I have all my shares back and then some (1.73 million).
      It’s the same thing over and over again. Everyone bitches about this sector most of the time because most would rather see steady tiny “up” days that amount to 12% per year than to plan for fleeting moves that can quickly deliver ten times that. People’s expectations are funny. You can’t expect everything to be easy during corrections in a sector that offers the massive gains that this one does. The lack of conviction that most people have doesn’t help them and comes from a complete lack of understanding of markets and the Fed’s actions as they relate to markets. Everyone including Martin Armstrong was calling for another big drop in gold in the first half of 2016 while I discounted that possibility completely and had become very bullish around the beginning of that year – about a month before the best newsletters. Not one guest or listener here came close to making a call like this one:

      Most were bearish and the rest were in a hopeful “wait and see” mode. It’s been similar at every important low.

      More important than anything above is the simple fact that most people buy high and sell low because most people can’t stand uncertainty or being uncomfortable. That condition is permanent so most people compound their problems and lash out at everything they do not understand, like how to use pitchforks or any other technical tool.

      Aug 25, 2021 25:36 AM

      When IPT went up 103% in one day, someone here called it a parabola (implying instability). So, while many would sell such a big, quick win aggressively, I said the following:

      My bullishness in the face of such a rare gain had to be backed by analysis, not statistics since one day doubles are rare but one day doubles on no news are extremely rare.

      Aug 25, 2021 25:45 AM

      Me and my simple charts were also right about a company I didn’t own. After IVN went up 113%, I said the following:

      Then it went up more than 5 fold more (about 433% in addition to the 113% for a total of 932%).

    Aug 25, 2021 25:19 AM

    your link above to a post you made in april 2016 on a past success of a 113% gain as evidence of justifying your current investment / speculation strategy is nuts.

    Aug 25, 2021 25:29 AM

    “Real Gold Bull Market at least 12-months away says Jordan Roy-Byrne”

    Aug 25, 2021 25:31 AM

    You’re reading comprehension is nuts if you think my gain was 113% that year. Your logic also needs work if you don’t understand why I use the evidence that I have at my fingertips to debunk your completely ignorant view of technical analysis. You could go back to each major low since 2016 and see that the same was true for them too. The bears were bearish at every low and never once said to BUY.
    Btw and fyi, 60% of my 2016 portfolio of miners went 10 bagger while the rest still performed superbly. Last year, the whole portfolio went nearly 5 fold. I have no reason to mind these corrections.

      Aug 25, 2021 25:35 AM

      I have a feeling you didn’t rotate into OIH, XOP and several MLPs last fall when I talked about doing so myself. They had a helluva a run since while this sector corrected. Sitting in cash after selling gold/silver miners last year was not ideal.

    Aug 25, 2021 25:51 AM

    Matthew, I’m glad for your past success back to 2016. I just question your claimed success of the past year.

      Aug 25, 2021 25:07 PM

      I made no claim about my success of “the past year” but last year was fantastic. Leverage helped a lot and margin debt is cheap at IB.
      Here’s a relic from 2014 when someone here said I was euphoric:

      Round and round it goes. I don’t know why I keep bothering to post anything at all. When this bull matures, it’s going to be unbearable as a flood of uppity dumb money comes into the space from other sectors. All of the same old lessons will have to be retaught to people who are certain they know better despite zero previous effort studying the subjects (like money/gold, Keynesian economics vs Austrian, etc, etc). I won’t be a part of it this time around.

        Aug 25, 2021 25:26 PM

        Agreed Matthew. The past year was fantastic and my best trading year on record personally, where my trading account surged up over 400% from the March 2020 Pandemic Crash lows to June 1st. I was also buying on margin for a big chunk of that year, which is risky and not recommended for those that can’t actively trade their accounts and manage that risk accordingly.

        Now admittedly it has been a tough last few months in most of the commodities sector, and I’ve lost about 25% of the value of my trading account during that time frame, but I’m still up at the highest level I’ve been compared to any other year, and still sitting on capital gains from this year that I’ll have to deal with on next years taxes. (then again, the year isn’t over yet either 🙂 )

        As mentioned in my long rant up above, that wasn’t accidental, and involved periodically buying into the weakness, and then trimming into the strength, and being fairly aggressive with sector rotation inside of my diversified portfolio.

        Like usual, there were very few voices on here buying during the times of weakness, but there were some like yourself, David, Marty, Dan C., Charles, Doc, and few others I’m likely forgetting to mention at different points in time.

        I’m quite aware that some of our guests like David Erfle or Steve Penny or Goldfinger or Brien Lundin, etc.. were also at least buying some tranches in stocks they liked during those time periods of weakness, so good on them. That didn’t mean that any of us just bought the whole way down or the silly notion that everyone’s cost basis was the August 2020 highs. I seriously doubt any of those folks went all at the top last summer, so that whole narrative is bunk.

        On the other side of the coin, there also weren’t many voices discussing trimming back positions on the stronger periods of time, but a number of the same names just mentioned above and some of the same guests on the show did a good job actively managing their accounts. All of likely made some bad trades and one’s we regret in hindsight, but I got far more right than I got wrong, and overall it has been an awesome year & 1/2, and really last few years since the fall of 2018 in the PMs and commodity sector.

          Aug 25, 2021 25:55 PM

          You have my trust.

    Aug 25, 2021 25:20 PM

    Matthew, don’t let this sheeple deter you.

    Aug 25, 2021 25:58 PM

    That was an excellent interview that helped me personally. Very intuitive questions. You are a natural.

      Aug 25, 2021 25:34 PM

      That’s great to hear David. These interviews help me as well, and often the discussions we have before the call or after call as well. Dave Erfle is a sharp guy, and we are blessed to have him come on regularly and share his time and insights, just like we are fortunate to have all the guests come on the show.

      Many people don’t realize that each week there is no guarantee that any of these guests are going to come back and invest more time with our audience, and it is easy to get out of a rhythm or just fall out of touch.

      Hopefully folks here at the KER appreciate the conversations we post, and guests we work to schedule in each week, as the scheduling gets pretty hectic many weeks, and sometimes Cory & I are working from very early to very late to get everything coordinated, recorded, edited and posted.

      Most of these guys have the heart of teacher and servant, and their hope is that some listeners may at least check out their free weekly letters and updates and dig a deeper well with the thought leaders that resonate with them.

      Ever Upward!

        Aug 26, 2021 26:51 AM

        Just like a few of the others who participate daily….. ootb..keeping a low profile… lol