Erik Wetterling – Shifting Some Focus From Alpha To Beta Mining Stocks In This Low Sentiment Environment

Shad Marquitz
September 8, 2022

Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins us to review the recent shift in his focus from Alpha mining stocks with  “probable growth” to the Beta mining stocks with more optionality when sentiment shifts back higher.   As a value investor in junior gold and silver mining stocks, he has been comfortable the last 2 years patiently holding and adding to the Alpha companies with competent management teams and a defined strategy to grow value in their project, waiting for the investing thesis to play out. However, when investing in the Beta companies, Erik points out that it is more about market timing and getting them during bottoming period and sentiment lows, and getting back out of them at sentiment swings to the upside.


We discussed the recent change in market perception and doubling in valuation in Headwater Gold (CSE: HWG) (OTCQB: HWAUF) when news broke that the major producer Newcrest Mining (TSX: NCM) (OTC: NCMGF) had signed an earn-in agreement on 4 different projects.   Erik pointed out that when these micro-cap beta stocks move, and even small amounts of capital rush in, that it can be sudden and substantial gains,  as they are already so beaten down on very low volumes and minimal investor interest.    Erik believes this is symptomatic of many of the very beat down earlier stage microcap beta stocks.


Next we discussed that really the whole sector is beaten down, so even quality alpha stocks he has been positioning in have pulled back substantially from where the valuation already seemed cheap.  He discussed the example of I-80 Gold (TSX: IAU) (NYSE: IAUX), where the company has a solid growth plan, so he feels conviction it will move much higher with the sector bailing out positioning that is currently underwater.   We wrap up discussing the optionality of some of the more advanced explorers and developers, with ounces already defined in the ground as other potential beta stocks, and that while their upside moves may not be as dramatic as the micro-cap stocks, in many cases the risk reward set up is more compelling when considering the time, money invested, and results already banked. 



Click here to visit Erik’s site.

    Sep 08, 2022 08:10 PM

    Great fun as always. I own both projects mentioned and will be entering counseling any day now.

      Sep 08, 2022 08:23 PM

      Yes, Erik is always fun to interview because he calls it like he sees it, and doesn’t sugarcoat his answers.

      Personally, I have a growing position in I-80 Gold that he mentioned, as a growth-oriented producer, but had never heard of Headwater Gold, nor did I realize that Newcrest had just conducted an earn-in agreement with them on those 4 projects.

        Sep 08, 2022 08:36 PM

        When Erik mentioned that just somebody sneezing could move some of the micro-cappers, it made me chuckle.

          Sep 08, 2022 08:12 PM

          Sneezing about sums it up when they have been pounded into the dust…

            Sep 08, 2022 08:09 PM


        Sep 08, 2022 08:42 PM

        I bought Headwater about one year ago, all of their 4 projects are in The US. They were selling for about 22 cents then. I read that news release where Newcrest bought in. It might be time to give them another look. DT

    Sep 08, 2022 08:26 PM

    Hey EX………. Can you check and see if BIG OWL is ok………… thanks Jerry

      Sep 08, 2022 08:35 PM

      Will do.

        Sep 08, 2022 08:36 PM

        Thanks……….. appreciate it…….

    Sep 08, 2022 08:25 PM

    Bought into Gungnir today and my wife read up on Sweden and Odin had spear made of Uru, which is a metal. She wants to know what kind of metal is Uru. As if you have nothing else to do …

      Sep 09, 2022 09:39 AM

      Hi Lakedweller2,

      I remember looking at Gungnir some 2-3 years ago but haven’t been back to it since. Yes, the viking reference is pretty cool and it sounds pretty cool to boot ;). I googled for “Uru” but mostly landed on pages connected to the Marvel universe where Thor and Odin are characters as well. Not sure what the actual (real) mythology says about the origins of the metal. I think it was made by dwarves at least :P.

      All the best

        Sep 09, 2022 09:45 AM

        Thanks Eric. My Wife tried the Google route and no success either. I figured Uru was iron as not sure if Odin had access to Titanium or stuff like that. Thanks for the response and I am still thinking about Dwarves making weapons for the Gods. I do like i-80 though.

    Sep 08, 2022 08:20 PM

    A good chart posted by Erik Wetterling over at

    @HHorseman – “A reminder of how many swings one must suffer even if one is aboard what ends up being a 10-20 bagger:” (Great Bear)

      Sep 08, 2022 08:41 PM

      That chart seems like the conflict I lived through owning Great Bear from .42 cents. Every drill result was positive. Chris Taylor always was upfront on progress. Yet, if you went to the ceo site it was like a hate crime. I probably posted less than 5 times as every time was met like there was an alternative universe going on. As a result, I invested less than I would have but still did well including the Royalty stock.

      I say this because I see similar action in Emerita. I have pretty much stopped reading it although holding a good amount of shares. What I have learned is, if there is a lot of hostility that is not warranted, you may be on to something good. It has made me believe in professional trolls as well as a disproportional abundance of personality and character disorders in the general public. I don’t know why when a company looks like it has promise, dissension must follow. But, I don’t know why there has to be paper fraud exchanges setting price or people like Larry Summers who write papers saying precious metals must be suppressed to secure the future of a phony fiat currency. It is all criminal, and all unethical, immoral and sick. But, that is just me.

        Sep 08, 2022 08:53 PM

        Hi Lakedweller2 – Those were some good thoughts and reflections on the dangers of falling in too heavy with the sentiment on chat forums, not just on, or stockhouse, or twitter, or youtube, but even here on the KER. Often times, when everyone is jacked up about a hot and trending stock it is far too late and the people climbing onto the trend are going to be intermediate (or sometimes) longer term bagholders, and conversely, when people are piling on with negative comments and hate (unless truly warranted… and sometimes there is bad news or bad management in mining companies), most of the time the whiners are the losers, and good contrarian indicators to be accumulating.

        With Great Bear, I was in twice for swing trades, and dodged a few of the many pullbacks, then it raced away from me and got too “pricey” at the time, and then it corrected hard after putting out consistently good drill results, and I noticed the daggers came out and investors were blaming Chris or the company, when they were, in fact, executing quite well. That was the contrarian signal I’d been waiting for to get back in, and started accumulating for the longer term hold.

        Each time after that we’d see a pullback in Great Bear, then I’d add a little be more to the position, actually averaging up in the stock, but on the corrective moves. We had Chris on the show over and over again, and would sometimes laugh before calls that the markets were just too fatigued from all the great drill results they kept putting out, and thus had to sell the good news. There was a pattern of success though, and so I realized I needed to keep accumulating the quality, despite all the bellyaching and whining on many chat sites.

        People were reacting to the periodic downward movement of the share price and thus blaming managment (typical retail mistake), but remained oblivious to the actual good work the company kept doing, or the larger pattern which was still in an uptrend… which is an accumulation dream.

        There are many companies in that same position today, that continually put out good news, but due to the low sentiment sector-wide, the share prices have sold off hard. As a result, there is a lot of whining and gnashing of teeth and finger pointing blame at the companies, management teams, or IR teams… instead of recognizing the fantastic accumulation periods we are seeing. In a year or two people are going to look back at 2022 and realize they should have been deploying cash into the weakness, not selling out near lows to cry in their soup.

        This is the way it always has been and always will be though with regards to human emotions, and recency bias. In corrective moves, people extrapolate it out to keep lasting forever, and assume the worst about companies/management (even when the companies are delivering on strategies and milestones as outlined). They throw in the towel at exactly the wrong times, and remain bearish far too long, missing the turns and the powerful short-covering rallies. Then during good times, people assume the companies and management teams walk on water and can do no wrong (even if there are red flags and areas of concern), because in the joyous sentiment with prices going up, they refuse to sell when it is way overbought and way too frothy in valuation. Instead they get into group-think with calls for moonshots and rocketship emojis. That is the time to sell them your stocks and politely bow out of the irrational exuberance.

        People then love to parrot to one another the old adage to “buy low and sell high,” all the time…. but most traders suck at this. The truth is that most people’s emotions prevent them from executing on this simple trading philosophy, because it is hard to buy a stock or sector that is disliked and washed out. It is also hard for people to sell a stock that has been ripping higher and higher. As we’ve stated on here for years, the reality is that most investors like to cry low and buy high instead.

        When we are at short term bottoms (like last year’s tax loss selling in late December, or more recently in early July) there are very few investors willing to buy, and it always feels lonely. I told half dozen people both times that I was deploying cash to accumulate the deals, and was met with a range of disinterest all the way to warning me about being careful. They never acknowledged after things played out that those were the ideal times to have accumulated before the ensuing rallies to follow. They never reached back out and said good job on “buying low,” and never admitted that they had missed the boat once again.

        Then when the rallies really get ripping, and after double-digit or often triple digit gains in a stock or sector…. suddenly then they feel comfortable on an emotional level buying the flavor of the day, typically marking the top of that move when all the indicators are far too overbought, so they become the next round of bagholders… then they blame the company, the sector, or the person that recommended the stock instead of their own terrible trading discipline. This is not just in the PMs, but we saw this same pattern in the Tech stocks, in the Cryptos, in NFTs, in Clean Energy stocks, in Oil stocks, in Meme Stocks, in Stay-At-Home stocks, in Reopening Stocks… People don’t change, and neither does the madness of crowds. Rinse and repeat.

          Sep 09, 2022 09:16 AM

          Thanks for that response. Some similar feelings although yours way more developed. Good stuff all the way around.

            Sep 09, 2022 09:48 AM

            Lake…………… EX like Matthew ………. have been spot on for years.(jmo)…….. BOTH have done their DD..(jmo).
            ……. been here from the beginning……. a lot of water has gone under the bridge….. heard a lot in 20 yrs(?)…. I think both have great insight in the PMs.. NOT INVESTMENT ADVICE…….. 🙂

            Sep 09, 2022 09:35 AM


            Sep 09, 2022 09:34 PM

            Thanks for the kind words guys, and it is nice sharing ideas and reading everyone else’s input here at the KER. Hopefully by all sharing insights together, we are all better informed with a slight edge and better principle philosophies guiding our actions. Cheers!