Erik Wetterling – Finding Opportunities With The Disconnect In Junior Miners From The Rest Of The Precious Metals Sector
Erik Wetterling, Founder and Editor of the Hedgeless Horseman website, joins us to discuss the large disconnect being seen in junior miners from the rest of the precious metals sector, which has largely been trending higher most of the year. As a contrarian value investor in the gold and silver junior mining stocks, Eric mentions that this is one of the most extreme mismatches in valuations versus potential upside that he’s seen or expects to see again.
Next we reviewed the tendency investors will have, after a protracted corrective period, to take profits too early after seeing some of these miners finally start to move higher, and balanced that out with the personal journey all investors are on and that some may just want exit positions after reaching parity again. Erik expands on why he feels it is far to early to be considering an exit strategy, when there is so much upside still left in the sector if it gold was to break higher out of the cup and handle pattern, and that some of the larger miners have only now started to break meaningfully higher. Erik’s basic premise it buy companies where he feels they have a substantial undervaluation at present, and to hold them for 1-3 years until the valuation is more properly factored in.
Thanks for sharing those Fertilizer stocks Wolfster. Yes, we have seen more interest in the sector lately here on the blog, and also from our guests we’ve interviewed. Mike Larson mentioned them in yesterday’s interview, as did Jesse Felder, Ed Moya, and Joel Elconin last week. Of course, I’ve got to tip my hat to Matt Geiger that was discussing them long before the Ukraine geopolitical tensions with Russia started.
Back in the last mini-Fert cycle a few years back, I was in (EPO) Encanto and (GSP) Gensource that you mentioned, and was also positioned in Mosaic Company (MOS), Intrepid Potash (IPI), Nutrien (NTR) and ICL Group (ICL) [formerly called Israel Chemicals LTD]. In reviewing their charts, they’ve all ripped much higher and been multi-baggers over the last year. Darn, that was a missed opportunity. The one I traded the most and held onto the most was Mosaic, but it didn’t even occur to me to get back into lately, and just didn’t cross my mind until just now.
Yes, Arianne Phosphate (DAN) has been all the rage this year and is a hot stock over at ceo.ca and on Twitter. Another one that ripped higher people have been discussing is Verde Agritech (NPK).
I though Encanto was deader than a door nail! Although their web site was never much it has disappeared! They even stopped trading for 8+ months –
That just highlights the cyclical nature of the commodities space, as many were deader than a doornail 1-2 years ago. I went down a list of some of the other Fertilizer stocks on an old watchlist and had to scratch off a half dozen names that were completely out of business. Such is the lifecycle of extractive industries.
I’ve been watching DAN for sometime. Also a couple of Aussies with big phosphate deposits(AEV, CXM).
Thanks for sharing those company ideas Terry. I’ve never heard of Avenira Ltd and Centrex Ltd, but there are a lot of Aussie stocks that just aren’t on North American investors radars, so always nice when people highlight some names that may be flying under the radar for investors.
speaking of the Aussie stocks… here’s an interesting read summarizing the nice moves in a number of different commodities ASX listed companies.
Monsters of Rock: Gold, Nickel and Coal Producers Lead ASX Resources Investors Into A Good Weekend As Prices Rise
Josh Chiat – Stockhead – 2 hours ago
“However, it’s clear that a number of mining, energy and agricultural commodities have faced a significant increase in price volatility on perceived and actual supply disruptions following Russia’s invasion of Ukraine.”
“Margin calls have surged in turn, forcing traders to reduce activity. Liquidity is further reduced, leading to a vicious cycle of more price volatility.”
Gold miners were also in positive territory after prices rose to US$1960/oz on geopolitical instability.
Newcrest Mining (ASX:NCM) was up 3.46% to $26.90 a share, 10.25% above its closing price on December 31.
Northern Star (ASX:NST) shares gained 2.08% while AngloGold Ashanti (ASX:AGG) stock rose 2.34%.
Coal miners and Lithium stocks were also in strong positive territory among the mid caps with Sayona (ASX:SYA), Coronado (ASX:CRN), Allkem (ASX:AKE) and gold and lithium junior Firefinch (ASX:FFX) all in strong positive territory as the overall materials sector lifted 1.29%.
Hey Terry….yeah I’m late to the party as always but DAN does sound interesting…..it was a pick of Gwens along with kodiak and FOR as her 3 picks for potential 10x bagger in an interview I heard recently. Seems like fate to me that I had just done some dd on it and then while listening to her interview to hear what she had to say about my fav copper play kodiak she also mentioned DAN…….will probably not get any DAN tho as I don’t want to chase it and it will be like a repeat of NPK
Thought I had come across a hidden gem as I found a Toronto based fert play that had recently done a .025 pp as I found myself in a rabbit hole while doing random searches on fert early this morning……too bad it’s already .09 now having gone up 38.5% yesterday alone. 🙄…….SOP is the symbol for anyone who likes to play momo plays
Wolfster – if you see this… Just an observation, but I’ve noticed recently that the Pot stocks have been getting better traction. Yesterday my (POTX) and (MJ) ETF positions had nice moves and they’ve had a few other green days in the recent past. They’ve been so beaten down, and while you mentioned a week or so back you felt I was a bit early, just reporting back there has been some stirrings of life again and green shoots recently that have been encouraging. Interested to get your thoughts on the recent moves as someone that has followed this sector for a while.
Yes Ex I’ve noticed it…..I did comment recently but you may have missed it….. I was looking at getting back into imcc as it got to what I thought was really cheap as it neared $2 Canadian…of course it turned just above my buy level and actually got back near $3 before consolidating those gains on a nice pullback of almost 50%…..still watching but have most funds in the resources right now and looking to use profits to get back into other sectors
Sounds like a good plan Wolfster. Yes, I’ve not gotten back in individual names yet like IMCC, and have just been playing the Cannabis space using the sector ETFs, but after a long corrective period where gravity brought many valuations back down to Earth, the pot stocks look pretty oversold to me at present, and there may be some good bottom fishing opportunities to review. Cheers!
Thanks for posting on Ferts. New word We learned tonight and I like it. I was into these years ago but no one cared. Now that the World is starting to get hungry or blown out of their homes by narcissistic psychopaths, their fields burned or frozen or flooded or ravaged with war … we need a whole bunch of ferts to maximize production for starving masses. Simultaneously we should put weed killer on some dictating nut cases.
So we should be looking at Bayer, Dupont, Dow. Is that your recommendation Lakedweller?
I really have no idea. I have been out of touch with the sector for probably 10 years. I never was a main street investor in the last 30 years. Companies like Dow make a lot of chemicals for a lot of stuff, so I am not sure how much fertilizer plays into their price. Since there is a lot of intervention in the General Markets, I don’t know how much having a legitimate product plays there either. I was investing in various potash and single fert products and gave up because there was no movement. The climate change issue was also frustrating the question. I am not sure at this point if starving can be identified as separate from climate change. If the two become synonymous, then ferts are doomed to languish until the right people starve. So …. I am of no value, although I have thought ferts were good investments for a long time in my parallel universe.
Lakedweller2, I think you right that some of the chemical conglomerates also are in involved in the fertilizer space, just like some are involved in Lithium, or other strategic metals and minerals, but it’s hard to invest in them for any one commodity as they are so spread out.
Another idea is that Altius Minerals has a few Potash royalties on the Nutrien company that I had mentioned above.
Is Eric Wetterling a shareholder in KER? He might as well, be, Is he being compensated by KER? why is he on the show every week?
I like Eric. I appreciate his thoughts and contributions and believe they have merit. I am glad he and others are here. Cory and Shad do an exceptional job of bringing a wide variety of opinions, analysis and individual companies to us on a daily basis and I don’t think anyone is compensated for appearing. And here is the real kicker …it is all free. Probably the best source of information anywhere and all you have to do is put in their address. 5 Stars.
Yes, agree with everything you say about Erik and the show.
Thanks for the kind words guys. Yes we work hard to bring on a variety of guests and no we don’t pay them to appear. The guests come on because they like our show and are hoping some of audience will follow their work or consider subscribing to their services.
We have some people on a weekly rotation like Ed Moya, Joel Elconin, Dave Erfle, Jordan Roy-Byrne, Erik Wetterling, Craig Hemke and Marc Chandler, which is their preference, and they’ve been on the same days of the week (barring schedule changes for a couple years). Some guests are on a 2 week rotation like TG Watkins, John Rubino, Brien Lundin, Brian Leni, Sean Brodrick, Dana Lyons, Marc Chandler, and Steve Penny, and again they are on the same days of the week barring occassional schedule changes.
The rest of the guests are monthly (like Jesse Felder, Jayant Bhandari, Jeff Christian, Rick Bensignor, Josef Schachter, Mike Larson, Dan Steffens, Doc Postma, Doc Jones, Goldfinger) and then the balance of the guests are periodically to sporadically based on their schedules (like Peter Boockvar, Dan Oliver, John Feneck, Rick Rule, Joe Mazumdar, Axel Merk, Matt Geiger, Christopher Aaron, Justin Huhn, Dave Kranzler, Dave Lotan, Steve Todoruk, and others that are just very occassional or that I’m probably forgetting at this hour).
The rest of the time slots are filled with company interviews which is what drives the site revenue and allows us to provide all the free content to our 20,000 listeners per month, and send out the weekend show to 25 traditional radio stations and a potential audience of 1 million listeners. Some daily editorials also get higlighted at Kitco in their Commentaries section throughout the week.
Hopefully that helps clear up any confusion on the guests that appear. They all come on and share their market insights for free, and just ask if people like their ideas that they check out their sites. The majority offer both free and paid subscriptions, or just want more traffic to their websites. We are incredibly grateful to all our guests that appear each week, to the companies that support and enjoy our show, to all the listeners of the podcast, and to those that comment and contribute here on the blog.
+ another 100
It appears to be the same guy talking “enlightened nonsense” in the comment section of my youtube videos… What does it mean when someone keeps following you while complaining about you being there (where you are actively looking)? hehe
Yeah, sorry you got trolled a bit buddy, but obviously we appreciate hearing from you every week, and that you come on to share your insights and stock picks with us here at the KE Report. Very much appreciated Erik. Ever Upward!
yes, good question. He is very articulate, BUT, i would keep an open mind with the companies discussed.
Still its a shortlist , i guess, but approach with caution , I have picked a load of early stage juniors on my own, without newsletters or anything, and a couple of them have been 10X up
I like Erik too. I’d like to hear from Trader Vic too. Where has he been?
I like both The Hedgeless Horseman and Trader Vic as well. Cory usually sets things up with Vic so you’d need to email him about that one, as I’ve already asked about getting him on twice. Haha!
Erik and I have been friends since he started posting over at ceo.ca in 2017, and we used to have a whole crew of fun resource investors over there that would congregate at our buddy Mining Book Guy’s channel and discuss stocks. We’ve shared ideas off and on for years now. Cory started bringing Erik on the show a few years back, and it is a pleasure to chat with him and provide his thoughts on investing in junior miners each week here on the KE Report.
In fact most of the guests that appear on the show regularly are friendly acquaintances, and they are solid teachers and good human beings.
Well said and keep on doing what you guys are doing!
Shad is a treasure trove. Smart and a much better trader than myself. Also knows 10X more companies and sectors than myself.
Thanks for the kind words amigo. We’ll all keep learning this craft together and sharing great ideas.
Price Quality : https://tinyurl.com/yc794bru
Gas & Oil — Gold & Silver — Market Pulse
Possible turns today: PMs & NatGas.
PMs may just be riding the 18-day moving average.
NatGas rising too. No turn likely today.
Sanctions having a powerful effect?
Maybe part of a contrived ‘reset’.
UNG ‘Hanging Man’?
Looks like a hit on everything that is not the General Markets. Bogus as crap … still the same old Major Economic problems plaguing us for years. Bad guys just want to make them all worse.
Here’s an interesting tidbit to think about:
Stephanie Pomboy: Friend just flagged that AAPL has added $300 billion in market cap since 3/14. That is nearly equal to the $336b market cap of the entire XAU Index of gold & silver miners. The problem of ‘too small’ market cap to be investable is going to solve itself rather quickly I suspect.
Stephanie Pomboy is pretty sharp. She and Grant Williams are a good pair for interesting interviews. But, both have merit in their own right.
I’ve no problem understanding Erik’s method of investment in mining stocks. He’s focusing on picking up dollars on a longer term basis whereas many on these pages like to go for the nickles and dimes. One thing is for sure: He’s going to be paying way less taxes than those who focus on short term profits.
Good listen. Thanks to Erik, Ex. and Cory.
Another way to look at explorers is like a horse race which only ends if the horse (the company) wins or dies. Sound connections? Hold that ticket!
Well summed up Silverdollar. I understand that my perspective might not make sense at all for most. I mean most are short term traders of some sort and I used to be that myself. Furthermore it’s very hard to keep focus on the long term since 95% of twitter commentary etc is about short term expectations etc.
But good for taxes as well as you say! 🙂
Great point Silverdollar on the better tax advantages of value investing and holding for the longer term.
Yes, short-duration trading is not for everyone and takes more time and focus and I’d submit a basis in technical analysis to be done effectively, and for the vast majority of investors, the buy and hold strategy for longer-term tax status treatment is likely the better path. Thanks!
Does anyone on the board know anything about when trading will commence for Coppernico (Spun out from Auyrn) and Kootenay Resources (Spinout from Kootenay Silver)? I know Coopernico was supposed to start trading months ago and has been delayed for whatever reason. I am not sure about Kootenay Resources, but it seems like it has been dormant for a long time.
I also have a problem with Greaat Bear Royalties spinout being recognized for trading by Schwab. I thought there was a 1 year time limit, but they say they are waiting on the company for notification. I see finger pinting but no answers.
Hey Charles, I’m in the same boat with the spincos from Auryn (Coppernico… formerly dubbed Sombrero for one of the key assets there) and Kootenay Silver’s spin out of (Kootenay Resources).
In talking with Ivan and team when we interview Fury and Tier One (also spun out of Auryn when forming Fury), they are working on it. Some of these transactions take a while to get all the capital, compliance document, exchange listing requirements on resources, etc…. Both will happen in due time, and I believe the Coppernico listing is still slated to happen in the relatively near-term.
Thanks. Lakedweller and Ex for your comments.
While waiting for the general smash to subside, I computed the following concrning todays performance of my account:
Stocks opposite of what they were yesterday (if up yesterday, down today or down yesterday and up today) : 52%
Positive 2 days in a row: 24%
Negative 2 days in a row: 24%
Conclusion: Playing golf is more fun
Hey Fellas, I know most of you do your own stock picking on explorers/developers, but have any of you worked with or heard how Sprott Global (Rick Rules old Co.) or Sprott AM, does with retail clients who want to work with them on investing in individual explorer/developer stock selections? Thanks
I have been reading here for a while. Very useful, thanks.
Hi : Putin is now a known war criminal . I hope the econmic sanctions will be keep on for many months or until he resigns or is arrested by his own people . All the teritory stolen from Ukraine should be returned . Putinsfriends Josh Hawley and orange skin Trump should be seen for what they are . Did you notice d j trump now is denouncing his pick for u s senate MO BROOKS with a friend like trump you dont need any enimies . best of health and wealth to you all . I gave 100 to world kitchens a food charity working in ukraine love to you all rsh
Russell, it’s bizarre the way you continue to focus on a former president and his supposed orange skin tone while ignoring news like this:
Quite the news source judging from this list of other headlines dating back for more than a year ago on this blog site you posted Matthew. Some of these posters like Phil Godlewski are deep thinkers. Google his name you’ll be impressed.
Scary stuff. Can see why your a valued contributor to this site with this kind of deep research on so many topics.
And those poor Canadians with a vaccination level of 85% or more are doomed.
And Russel’s bizarre???
Yes, Russell is bizarre and you’re right there with him based on your gullibility and inability to think productively. It’s both pathetic and hilarious if you believe the massive censorship of the last 2 years is really about stopping misinformation. Your blindness is willful if you can’t see that it’s the spreading of the truth that really has these scumbags worried. People are dropping like flies and your head is way up your petrified rear if you STILL don’t know what’s going on (and clearly you don’t).
Dr. Ryan Cole of Idaho saw the crystal clear signs of immune system collapse FIRST HAND IN HIS LABORATORY last summer or spring. In addition, something tells me that you are completely unaware of all the backtracking that has gone on from officialdom in recent weeks and months. There are countless things you can now say on various social media and news sites that would have got you kicked off not so long ago and the reason is that the truth can no longer be contained by the psychopathic hapless midwits whom you trust.
Your hatred of truth and decency isn’t good for anyone, especially you.
I like the way this week turned out. Yesterday’s performance of the gold miners relative to gold provided plenty of doubt but today turned that around.
GDX vs GLD breakout:
The above confirms GDX’s action of the last several weeks:
GDX had enough strength to finish the week above its weekly Bollinger Bands:
Fork resistance just above:
The Canadian dollar looks great and just had its best weekly close in almost 5 months.
GDX:GLD speed line breakout and 8 straight weeks higher:
GDX:GLD breakout on best weekly RSI reading since mid-2019…
So thankful for all these selected stock charts Matthew and your concise raison d’etre that precedes each of them.
Terry, I’m glad if they help.
Silver has a big double bottom in play that I think will propel it to 29+ in the first half of the next quarter (by mid May or so)…
NEM weekly overbought and at resistance…
The close above that lower red line also gives it a big breakout. Let’s see if it sticks.
SILJ poked above its November high 3 weeks ago but only finished a week above that high today (for a legit breakout)…
Next week will probably be a good one and we should watch 42 for GDX if it is. That’s the level of the next important fork resistance and it is also the highest weekly close of 2020 (41.98 to be exact).
The 10 year UST yield is at a 35 month high of 2.48% and will probably reach 3.1% to 3.2% before taking a multi month break.
My recent post somehow disappeared Ex.
I don’t see any posts that haven’t been released from moderation jonysl. I only see that you have the one post up above in response to Matthew on Phil Godlewski.
Make sure your name is spelled correctly, that you are using your normal email address, that there aren’t 2 links, and that you aren’t logging in from a different IP address, as those are some common reasons a post may not show up.
been too busy to get through my dd on all the junior fertilizer plays. I did see that my old fav did a restructuring Encanto……I will list the the few that I like by symbol for those interested into looking at a few potential jrs……I realize a few have moved some considerably but I think this sector still has room to go higher for the rest of the year. DAN EPO GSP WRX KRN …..The one I regret missing on as I did find it after it had such a nice run I didn’t buy and its tripled since then is NPK…..anyway I will try to get more specific if I find the time but thought I’d share these as I know a few people have started looking at them