Erik Wetterling – Lessons Learned This Year For The Junior Resource Investor… Stick To The High Upside Explorers
Erik Wetterling, Founder and Editor of the Hedgeless Horseman website joins us to share a couple key takeaways from his investing this year in junior resource stocks. For Erik it’s all about focusing on the early on discovery plays that have good drill results and size potential. He shares a few companies that he likes currently.
Ex: Thanks for the info – I’ve been thinking about doing the same. There are many good buys to be had out there. Also, I don’t think another offer is in the cards but what do you think of the “Contingent Value Rights” being offered? Is there any real way to value those?
Hi Mike. Yeah, its a gamble to hold em’ or fold em’ at this point as there is a case to be made for Kinross revaluing higher in early 2022 which may lift Great Bear, and ties into the share component of the offer and the potential contingent offer you mentioned (which is based upon Kinross growing Dixie to over 8.5 million ounces and getting it into production). Those contingent benefits could take years to play out and that would be a long time to wait just for the potential of more Kinross shares, and in and of itself is not guaranteed. It’s the mining business after all, and projects have a way of getting delayed. Look at how Kaminak’s “Coffee” project was a big acquisition for Goldcorp years ago and it is still not in production. I’m just too impatient to wait around that long for Kinross to get Dixie into production.
Again, I’m risking that there could be an easy jump higher in the stock if Barrick or another one of the big boys comes in makes a counter offer, but upon further reflection, I see it as more likely now that Barrick would just come in and scoop up all of Kinross (including Dixie post Great Bear acquisition), for the win…
While Great Bear could still move higher on that or a move up in Kinross, and I’ve exited that potential now, I see many more depressed mining stocks that could go up 20%-50% in the first quarter of 2022 if there is a seasonal rally from here coming out of Dec tax loss selling. Some of them may end up being 100%-300% gainers in the next year or so, and I find that less likely to be so for Great Bear from current levels, so I booked the win.
Also, I washed out a great deal of my capital gains in other sectors with PM tax losses over the latter part of 2021, and figured I could add in some more capital gains now without it breaking the bank. Also I’m thinking it is better to just pay the capital gains for 2021 at lower rates, than whatever the potential rise in capital gains that may show up in 2022 if the Biden administration gets its wish.
That was my thinking on why I decided to just cash out of Great Bear, but the main reason was to redeploy into other names that I feel have more room to run to the upside in the next few months. Now just watch and Barrick will make a counter offer on Monday… (that would be just my luck…) Haha!
As mentioned before, I elected to sell my Great Bear and roll it into Emerita as it has been pending news for months. I thought that news would come before any change in GBR. I rolled a small amount into Great Bear Royalties as that was the plan to begin with…however Schwab has still not put a basis on the special offer shares I bought a year ago. I hate to rush them but I did tell them what I paid for them and the date they showed the purchase in my account. Even though that was everything they needed to know, they will not give the shares any value.
So, rolling GBR into Emerita seemed a safer play. Now I can start transfer of account action in January.
Lakedweller2 – Hoping you hit it big with Emerita on the news that Aznacollar gets awarded to EMO from the legal proceeding.
Ex: I sold 1/2 of my Great Bear and am looking at the Candy Store. Since my Novo Resources position is way past full I’m thinking of other places to put the cash back to work. There is Santacruz, Fury, Big Ridge, Elevation, Summa, Pure, Heliostar, Rockmaster, Idaho Champion, Sitka, Bitterroot and on and on it goes. Or I could do something very silly and boring and put it in Camping World which I also like lots —
Decisions, decisions, decisions………
Yes, agreed Mike. There is no shortage of opportunities or companies to accumulate at attractive valuations in the Candy Store at present. Out of the ones you listed there I’ve personally been building positions in Santacruz, Novo Resources, Elevation Mining, Summa Silver, Pure Gold, and Heliostar. I’ve also been trading in and out of Fury Gold all year, but got wrong-footed on it twice in it’s terrible decline all year, and currently am out of it for a tax loss sale until mid-January.
Santacruz up but Impact taking a breather these days.
I’m still very constructive on both Santacruz Silver (SCZ) and Impact Silver (IPT), and they are both some of my heavier weighted Silver positions personally. I believe they’ll both be multi-baggers over the next 12-18 months, and they have excellent leverage and torque to rising metals prices.
Reminds me of 2 silver miners back in 2006 and 2012. I had a 12 bagger going when Glamis announce a takeover of Western Silver. I sold with a 14.5 bagger of my original purchases. months later at closing Western would have been a 22 bagger,
Then Minefinders was bought out by a Pan American Silver. At the announcement in 2012 , I has a 28 bagger and sold all at 30x my original purchases. At closing again many months later, Minefinders would have been a 40x.
You win some , you win some greater. All expertise back then goes to David Morgan’s silver guru report that was $49 a year when I 1st enrolled around 2000 AD. Later on my son subscribed and I exited his report.The best part of those years was all Roth IRA investments in the miners and CENTRAL FUND OF CANADA, now a Sprott entity. I’ve been a Au/Ag Investor since 1977.
Good points Marty, and as mentioned I could be (and likely am) leaving some money on the table by selling Great Bear here (especially if there is a counter offer). However, there is also an opportunity cost to sitting in GBR waiting for Kinross to get rerated higher, and then build out Dixie to 8.5 million ounces, and then take it into production. If that yields another 30%-50% over 2 years it would be great, but there is no guarantee that a counter offer will come, that Kinross will get the resource there or get it into production. It is likely they will, but there can still be hurtles that are presented.
There are smaller-cap stocks than Kinross, that can move more in the next 2 months on a sector move that can also match those 30%-50% gains and then keep on moving after that. I may end up regretting my decision to pull profits, but there are plenty of other mining companies to invest in that also have good upside potential from here.
Hey Ex, What do you think about Superior Gold, I like them a lot. DT
Hi DT. I have a good weighting in Superior Gold and consider them an under-rated growth oriented producer on par with other peers like Karora Resources, Calibre Mining, Steppe Gold, I-80 Gold Corp, Minera Alamos, and up until the recent debacle Argonaut Gold.
I’ve also been trying to get Superior Gold on the KE Report for an interview for a few months now, but just haven’t got a response back. I sent over another email again this evening and hopefully we can get them on to overview the company for investors in the new year.
Had a look at SIG website because it seems to have all the pieces that I like. AISC is a little high but is coming down and should improve further as it increases production and becomes more efficient.
This interview is about 2 months old, but it is still instructive on how the new management team is going to grow the production profile from a combination of both the current underground, but also some new open pit resources, increase their organic ore throughput & production, and potentially optimize their other mill by supplementing with toll milling or a JV agreement with another company. This ramping up of production metrics will also lower the costs, improve their margins, and give them more capital to expand the operations and get busier with true exploration drilling on their property.
Matt from Crux investor asked the new CEO and CFO some very tough questions, about their turnaround plan, as this company had challenges in the past under prior teams, but if you listen to the answers, there is a logical and methodical strategy to get their ship turned around and really grow, which I think will give them the ability to rerate, in addition to whatever lift there is from a rising metals standpoint in later 2022 or 2023. So even if Gold prices stayed flat, they could grow and rerate, but any increase in metals prices would really accelerate their margin growth in a quite meaningful way, and allow them to get their other mill optimized and more feed sources going to feed the beast.
Superior Gold (SGI) – “The Plan is Get to 100,000ozpa”
Crux Investor – Oct 29, 2021
Interview with Chris Jordaan, President & CEO, and Paul Olmsted, CFO of Superior Gold Inc. (TSX-V:SGI)
Actually there is another interview with Superior Gold on Crux from just 8 days ago, which I’ve not watched yet, but I’ll post it here as it just surfaced on my feed. Maybe it will address some of the 2022 strategy the company is honing in on.
Superior Gold (SGI) – Technical Analysis & Due Diligence
Crux Investor – Dec 22, 2021
Gold Stocks in 2022 with Pro Mining Investor David Erfle
Mining Stock Education – Dec 30, 2021
“In this interview pro mining investor David provides his commentary on the gold price and junior gold stock sector. He expects a strong January ’22 performance from the gold stocks and is overall optimistic for 2022. He also shares his biggest winner and loser from 2021 and the key thing he learned in 2021 as a mining stock speculator.”
“Almost Everything You Hear and Read is Noise”
The Hedgeless Horseman (aka Erik Wetterling) – December 30, 2021
#VIDEO – “Discussing why I think stock picking is the most optimal way to play any market and why I think the price of gold, silver and mining indices is noise that could affect your portfolio returns in a negative way.”
The gold market will not be able to withstand the Federal Reserve’s plan to tighten its monetary policy in 2022, according to commodity analysts at J.P. Morgan Global Research.
In its recently published 2022 outlook report, the bank expects gold prices to fall to pre-pandemic levels by the end of next year.
“An unwinding in ultra-accommodative central bank policy will be most outright bearish for gold and silver over the course of 2022,” the analysts said. “From an average of $1,765/oz in Q1, gold prices are set to steadily decline over the course of next year to a Q4 average of $1,520/oz.”
Unfortunately, I can agree with that assessment although I would question the low.
I might have to agree with you this year……… 🙂
even in an election year….
Welllllllll,,,,,, J.P. Morgan Global Research & the Fed are peas in the same pod. They can’t say “the Fed is trapped and and if they raise rates too much the Market and all those retirement plans will tank” can they? Watch what they do not what they say.
Agreed Mike. We had already discussed this nonsense from JP Morgan on yesterday’s blog and my response was in the same vein of ignoring what they say, as it is usually a false indicator of what they actually do in their trades. Here was my response when SilverDollar posted about this same JP Morgan prediction:
“That actually encourages me that JP Morgan is bearish going into next year, as the policy with their calls on metals is the “do the opposite” strategy. If they are bearish, I get bullish, and when they get bullish, I get concerned.”
“Also their logic is wack. The Fed will be tightening once they start hiking rates next spring, because they are so far behind the curve with where inflation is, which is quite bullish for Gold, as Jordan outlined in this editorial. Historically rate hiking cycles have been bullish for gold, especially when real rates were still negative. How they determined that this was going to be bearish for gold at the end of the next year with an average Q4 price of $1520 is puzzling… but again, coming from JP Morgan…. encouraging. haha!”
“Gold started moving higher in late 2018, as a result of other Fed bungling of monetary policy, and it rose from fall 2018 (Oct/Nov) through early 2020, before there even was a “pandemic”. To suggest that the manufactured fear campaign around this “pandemic” is over is as silly as them suggesting that gold is going back to it’s “pre-pandemic levels” (as if it was Covid that raised it to all time highs…. nope).”
“Again, with regards to JP Morgan and their thoughts on metals, it is usually the opposite (and often times they are caught saying one thing and then trading in direct contrast to that). I see it as a net positive that Jamie and friends are bearish on the yellow metal in the latter half of 2022, as a contrarian indicator.”
Ex……..Since I have been busy over in the ORPHAN SECTION,
I am sorry I missed your discussion on JPM.
Nobody knows anything as Bobby M would say…
Logic says gold should go up…… Logic says there is no pandemic ……. logic says there should be NO FAKE FED…… but, here we are….. Long term I have not changed my mind….Gold going up…. 🙂
Good thoughts OOTB. Agreed we are in an upside down world and nobody knows anything. 😉
Cheers and Happy New Years!
Just as a reminder on why I do the opposite of JP Morgan says, relative to Precious Metals, here was their last year piece on why they expected Gold to be at $2300 in 2021….. Uhhh… Nope….
The fact that JP Morgan is bearish on Gold moving into 2022 is a solid bullish contrarian indicator.
Gold will soar 22% next year as investors protect against rising inflation, Goldman Sachs says
Ben Winck – Nov. 17, 2020
“The bank holds a $2,300-per-ounce price target for the precious metal, implying a 22% rally from current levels over the next 12 months.”
The Canadian dollar is well above last week’s low after turning up where it should have.
The Fed created an economic mess and wants to inflate away their mess. That is gold positive. Raising interests rates against a “real problem” would be a “real solution” but they can’t cover the corruption by a “real solution”. Lip service would be also gold positive but they will couple false claims with actual intervention….that is what will hurt Gold. Simply Fraud….
They will ultimately be forced by the market to raise nominal rates but real rates will be kept very negative. The switch to rising nominal rates will not only NOT be bad for gold, it will be very good for it as it will show that the market finally (correctly) expects inflation going forward. In addition, the market will therefore be much less enthusiastic about the bubbly stock market and its record PE which will see profits evaporate do to inflation. It will be much harder for the “P” to remain where it is if the “E” is falling since the falling E would send the PE into a hyper bubble. However, there’s good reason to think that the repudiation of stocks is still not imminent so the stock market could very well continue to outperform gold even as gold rises and the gold stocks take off. The inflation created under the cover of this covid horsesh*t is far from being fully discounted by the market and if the central planner authoritarians start backing off from their insane demands, the market could fly as the economy would almost instantly run much hotter than it has in years.
I should have added that stocks would also benefit from pressure on the bond market. It is still very early in this paradigm shift and our true “1970s moment” is probably a long ways off but the conditions will keep improving for gold until we get there. Remember that interest rates rose along with gold for most of that decade and negative real rates began much earlier (while the dollar was still pegged to gold).
Good stuff Matthew. They have pretty well held perceptions together for longer than we would have thought possible. They have been able to do it because Regulators have been neutralized. They will continue the charade until they can’t and it will be at that point there will be nothing left of of our Constitutional protections or Republic. I will be dead and have regrets that I could not effect the outcome.
Jeff Clark: Skyrocketing Silver Price
SN – Silver News – Dec 27, 2021
“Jeff is Senior Precious Metals Analyst of GoldSilver.com. An accomplished analyst, author, and speaker, Jeff Clark is a globally recognized authority on precious metals.”
Ira Epstein’s Metals Video (12/30/2021)
Technical Analysis, Gold, Silver, Copper, Platinum
The 18 month low for SILJ this month happened around at least three interesting supports.
Newmont is up 18% in the last 4 weeks while Harmony is up 20% in the last 2 weeks.
I said Hecla was oversold and a buy on the day that it bottomed 2 weeks ago and now it’s ready to continue higher.
That is encouraging to read as a Hecla shareholder.
The following silver chart looks better when you can see the whole 9 years that it covers but the 5 years that most of you can see is good enough.
Jeff Christian thinks silver is going down next year; I think it could easily see $37 in the first half of the year. The following is a quarterly chart so most of you won’t be able to see it properly.
Something gotta go up if there’s gonna be inflation(Yogi Berra).
+ 37. A Silver price at $37 would really supercharge my basket of silver miners in a meaningful way. Really any break above $30 on a weekly basis would really get things rocking in the sector, and that seems quite reasonable in the year to come. However, not many are expecting that in the first half of the year, so it’s encouraging you’re that bullish Matthew.
A number of technicians are much more worried about a break below $21.41 down to the $18.50-$19.00 level, in the first few months of 2022, so that has been a storm cloud overhead. Of course, it would be ideal not to see things get that depressed, so I’m not rooting for that scenario as it would put the hurt on my portfolio of miners. I was thinking a break above $30 may tie in with with the period of time right after the Fed starts hiking rates, but was anticipating that would be more likely in the 2nd half of the year. If the Powell and the Fed goons start hiking in May/June and then the metals run for the next few months after that, it seemed reasonable to pierce the $30 level on that run. If it plays out before that though in the first half of 2022 that will not bother me in the slightest. Ha!
Started following Doc Jones more closely on ceo……he was still adding more to his cgx holdings towards the close yesterday despite the huge run it’s had over the last 2 weeks. I must say I really appreciate someone who is that transparent about what they are doing…..and so far always right as well.
Doc Jones is a sharp dude, and yes, he’s had a number of winners over this tough year in the precious metals, as well as some big gains in base metals, and Oil/Gas plays.
IB made bearish call on URA, said could fall to $13.25-15.00 in next ~82 days.
BOE, PDN finished today up 5-6%
SPQ(PE) : https://tinyurl.com/2vc9pznu
Thrills & Chills Trading NatGas!
Will PMs Fool Naysayers?
Uranium Sun Setting.
(MUX) McEwen Mining: The Balance Sheet Is Mediocre, But Gold Production Is Increasing
Fun Trading – Seeking Alpha – Dec. 30, 2021
Top gold stories of the year and what to expect in 2022
Mining.com Editor | December 29, 2021
Platinum short term inverse H&S supports PM upward bias.
Dollar close to break down. More later.
There is a low December ‘hidden’ gap in TNX.
Tom O’Brien’s “Triple Gap Play” possible?
PMs would fly. But then what, Doc?
I have no idea why but I am up +78% in Copper Lake. I think I will just watch and see… Bought first shares in May 2021. Having mentioned this should jinx it.
I made a bagger, sold 1/2 Fri., now riding for free and I too will wait n see.
Doc, before I call my bookie I want to ask you if I should bet on Michigan or Georgia?
Are you at the Orange Bowl tonight?
Happy 2022 to all!
Well, I finally parted with the remainder of my Great Bear position today, as I have other depressed miners I want to buy with that money. This sale risks missing the upside from any superior takeover offer that may still come, but also takes away the opportunity of cost of sitting in GBR and not seeing anything material change over the next few months.
There are many beat up miners that have more upside potential in the current risk/reward scenario, that may have a nice move in the seasonably strong month of January for the PMs.