Erik Wetterling – Tuning Out Macro Noise To Instead Focus On Micro Company Fundamentals

Erik Wetterling, Founder and Editor of the Hedgeless Horseman website, joins us to review his strategy with value investing in junior miners. He prefers tuning out much of the macroeconomic noise, that may be affecting the gold or silver prices, to focus instead on the micro fundamental value-creation with the junior mining companies.  As a contrarian value investor in the precious metals mining stocks, Eric mentions that it is less about trying to time markets or following the metal price gyrations. Instead, he is more focused on acquiring good fundamental value in company projects at a deep discount due to lack of investor of interest or negative sentiment in the sector.   He invests as if it were a bear market, so that he can be pleasantly surprised when the metals and miners do shift into bullish runs higher. 


Erik outlines why he is constructive on the projects and work being done by the teams at Eloro Resources (TSX.V: ELO), Goliath Resources (TSX.V: GOT), and Defiance Silver (TSX.V: DEF).



Click here to visit Erik’s site – The Hedgeless Horseman.

    Apr 01, 2022 01:19 PM

    One of my favorite stocks is Core Assets, they had a news release today where their warrants were all exercised. This stock is a favorite of Dr. Q and Crescat Capital. It is early days but the stars are lining up, follow the money! DT

      Apr 01, 2022 01:20 PM

      Hi DT. We’ve talked to Nick Rodway and will likely be bringing Core Assets on the show at one point to unpack their work program for 2022.

        Apr 02, 2022 02:25 AM

        Hi Ex, I will be looking forward 👀 to that interview! DT

    Apr 01, 2022 01:11 PM

    Pleasantly surprised by the close of HUI this afternoon. Especially with gold down $25+! NEM broke out of it’s BBs; up 4.19%. Up even more after hours. Beginning to think a shift of funds is taking place. JMO

      Apr 01, 2022 01:21 PM

      Agreed Silverdollar. The strength in the mining stocks has been encouraging lately, and Newmont break up to new all-time highs, eclipsing it’s move in the late 80’s on a nominal value, is encouraging, even it is hasn’t done so on a real value versus gold.

    Apr 01, 2022 01:04 PM

    GDX vs GSCI Commodity Index (I’ve been waiting for this turn vs commodities):

      Apr 01, 2022 01:24 PM

      Good chart Matthew, and yes, nice to GDX start the turn back up versus the commodity complex. As we’ve discussed on here many times, things are set up for the PM miners to finally have their moment to shine over the next 1-2 years, after a really nice move in most commodities over the last 1 1/2 years. I also expect that GDX will continue to gain ground on the general equity markets as 2022 and 2023 unfold.

    Apr 01, 2022 01:19 PM

    Dollar Index : Support Held : New Month

      Apr 01, 2022 01:56 PM

      A stutter step or the elevator down for the Dollar? Not only defiance from Russia, China but Saudi Arabia, India and others also.

        Apr 01, 2022 01:08 PM

        Those who are interested in gold and commodities need to understand that in real terms, the dollar has been nothing but a weakling as it has lost tremendous purchasing power in a very short time. That weakness will not end anytime soon even if it continues higher relative to other currencies. All money substitutes from all over the world are going to lose an additional huge amount of value in the years to come.

          Apr 01, 2022 01:26 PM

          Exactly Matthew. As noted earlier this week, it’s hard to give much credence to either the “strength” or “weakness” in the DXY, when it is simply a measure in relation to other equally troublesome fiat currencies that are all being devalued simultaneously, and all being eroded by inflationary pressures.

          What people should be considering is not how strong the dollar is in relation to other currencies, but rather what is happening to their purchasing power with a dollar. Is that purchasing power getting stronger or weaker?

          That answer is easy to illustrate when measured against real money (gold). Gold has been going up for years in value versus every currency in the planet… or conversely all currencies are losing purchasing power over time, mostly due to the expansion of money supply which is the source of inflation.

            Apr 02, 2022 02:05 AM

            The USD- Russian Ruble cross is very telling where the value of the USD is heading.

    Apr 01, 2022 01:09 PM

    Oil is going lower and that’s good news for our miners.

      Apr 01, 2022 01:16 PM

      There’s fork support around 98.60 on Monday that rises to about 98.50 by next Friday. I will be surprised if it holds past Monday.

      Apr 01, 2022 01:22 PM

      Exactly, oil strength has been holding the miners back.

      Apr 01, 2022 01:34 PM

      That’s a good point on Oil prices coming down taking some of the pressure off the operating producers, as it is a key cost input, and was responsible for some of the margin compressions we saw last year. Granted, oil and diesel costs are still not very low, and neither are wages which are rising, and many other cost inputs from chemicals for floatation processing to cement to steel etc… are still very elevated. Still fuel prices coming down is a good thing for most companies and consumers.

      Also, the higher metals prices with Gold in the $1900s (versus the high $1700’s to mid-$1800s of last year) and Silver up in the $24-$25 range (versus $22-$23 range it was in for part of last year) is expanding the margins of PM producers again. In addition it should make the economic calculations on development project far more attractive when using anything close to where metals prices have been the last year or two, where we are still seeing studies using $1500 gold or $1600 gold, or $20 silver. We are not going back to those prices anytime soon, so really those studies need to highlight sensitivity studies to at least $1800 gold and $22-$24 Silver, and then it will become obvious how undervalued those projects are at todays valuations in the developers.

      If the metals prices eventually break out later in the year then it will be a question of if the miners are actually reflecting properly their margin expansions. They did good in 2019 and 2020, but really didn’t keep up with how improved the situation was for them with the rising metals prices. There is still plenty of room for producers and for developers to get re-rated much higher than where they are currently just based on where metals prices are today, but it may initially take Gold popping up above the $2089 peak from 2 years back and Silver popping decisively above $30 to really get more positive upside momentum going in the larger universe of PM mining stocks.

    Apr 03, 2022 03:11 AM

    The price of oil brings up the issue of whether “those” participating in the paper price setting markets actually consider “ cost of goods sold” like producers in non commodity markets must do.
    Or do “those” that participate in the paper price setting markets for commodities basically consider the costs of producing say an ounce of silver someone else’s problem and irrelevant in their counterfeit market.
    I think we know the answer and it is that price setting procedures need to abandon counterfeit price setting procedures that benefit financial institutions and speculators, and return to a system where “producers of a product” set price according to Economics 101 …that being “what it costs to produce a product with a reasonable profit within a competitive market.”
    Then the cost of petroleum products, electricity, labor etc is all relevant again …. and not some business organizations personal problem separate from an artificial insiders gaming platform.