Erik Wetterling – Trading The End-Of-Year Volatility In The Junior Mining Resource Stocks

Shad Marquitz
December 22, 2022

Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins us to review how he is trading the gold, silver, and base metals junior exploration stocks in light of  the end-of-year volatility.   We discuss that in addition to the conclusion of tax loss selling, and the rebalancing of the GDXJ, which sent some stocks up or down in dramatic fashion lately, that this time of year with lower volumes can be quite turbulent in the daily pricing moves in many stocks.   These big moves in either direction can vastly change the potential risk-reward setups in many stocks depending on where investors get positioned or average their cost basis from.


We also highlight 2 stocks, Snowline Gold (SGD) and Eskay Mining (ESK),  that have seen some noticeable volatility lately, both in anticipation of key news, and then after key news was released to the market.   Erik points out some of the thoughts he has around their valuations before and after the news, with regards to changing investors sentiment and expectations, and within the larger context of where they could be heading over the next 1-2 years.*


*In full disclosure, the companies mentioned by Erik, in this interview include personal positions in his portfolio, and they also may be site sponsors on The Hedgeless Horseman website.   




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

    Dec 22, 2022 22:13 PM

    (SGD) Snowline Gold Intersects 338.0 M Of 1.3 Grams Per Tonne Gold Including 207.0 M Of 1.8 Grams Per Tonne Gold at Its Bulk Tonnage Valley Discovery, Rogue Project, Yukon

    December 22, 2022

    Dec 22, 2022 22:21 PM

    Precious Metals Briefing: Gold – In Search of a Bottom – Florian Grummes, Midas Touch Consulting

    121 Mining Investment TV – Dec 21, 2022

    • Examining the strength of precious metals, the equities and physical metal in a new financial paradigm
    • How to position against the macro risks of Fed rate hikes, China market slowdown and high inflation – where should investors turn?
    • Investment strategies to diversify and preserve wealth
    • How to find value in junior exploration and development stocks M&A outlook; capital discipline vs resource replacement

    Dec 22, 2022 22:19 PM

    I remember when Novo Resources first started getting attention around 4 years ago and the stock flew to $8 in 4 months and now it is 27.5 cents, these markets are fickled. That is why selling is so important. With a couple more mediocre drill results especially in The Yukon, where it is go big or go home, Snowline could easily retrace to $1 or $1.50. Sometimes investors rush into an area play and then the screw turns and there off chasing the next hotspot. Then the bashers move in and you are left wondering have I overstayed this stock in this market. The air around these plays is always fogged with uncertainty. DT

      Dec 22, 2022 22:48 PM

      Good points DT. I think Novo got caught up in the reduction of shares during the GDXJ rebalancing from comments I saw over at As for Snowline Gold, they are in a more remote part of the Yukon, very close to where Fireweed Metals is exploring, and so projects in those infrastructure challenged areas, do need to “go big or go home” to make sure the economics work with higher prices of extraction and labor and the seasonal nature of the area.

      In addition to all of that, and to your point, and the points raised in the interview today with Erik, resource investors are notoriously fickle and skittish and scatter as the first sign of any potential doubt.

      Like Rick Rule often muses, most mining stock investors have trouble even holding their stocks over a long weekend… much less giving the companies they claim they have a 2-3 year time horizon on anywhere close to that amount of time to see if the thesis does in fact play out.

      Personally, as more active short-term swing-trader, and medium-term position trader, this is the advantage to buying and selling in tranches around a core position. If a stock has just run too far too fast, then I’m fine trimming off 15%-40% to book some profits if it’s really gone screaming higher, while keeping a core position in place in case the move just keeps accelerating higher. Then if that same stock corrects down by 20%+ then I’ll happily by that same position back at a better price point than I sold it for when taking profits. Conversely, it is also true when I’m building up position-sizing in a particular stock, that I may do it in 2-3 trances or may add in many more 5-7 tranches, to average into a good overall cost basis in the full position. I’ve never understood why so many investors feel they need to buy the whole position or sell the whole position all in one lump.

      Regardless, I thought Erik made a great point by mentioning that Volatility is the currency of choice for resource stock investors. It is that very volatility that allows for scaling into positions, fading out of positions, or just swing trading the whipsaw pricing environment to scalp base-hits. Gotta love it!

    Dec 22, 2022 22:45 PM

    I won’t invest in a junior unless I think it will at least double. Snowline currently has a MC of roughly 400M. Should I buy? Do I think the MC is heading to 800M? Nope.

      Dec 22, 2022 22:09 PM

      A fair point Jetty. Even after the big sell-off today in SGD, it still has a $393 Million market cap. That’s a lot larger than many multi-mine producers or advanced developers that have millions of ounces in the ground already defined. It was the same with ESK earlier in the year, and even several multiples of that with NFG (that had well over a $1.4 Billion market cap not too long ago pre-resource).

      When I see much further advanced and derisked companies, on the clearance sale rack, for just a fraction of where some of these drill plays are valued, it’s hard to chase the drill assays narratives much higher, and far easier to simply bet on companies that I know have gold, silver, or base metals well defined in the vault of the Earth, and that will have big optionality to rising metals prices.

      Of course, I wish all companies all the success that they deserve and can earn in the marketplace, but there are some real fire-sale values out there today in the developers or producers categories, that haven’t run nearly so high. Most of them have ounces in the ground valuations that are bordering on silly at this point in the cycle.

      Also, as we’ve pointed out in prior interviews, think about all the permitting, construction work, and sunk costs it took many producers to get their mines into production, and what it will cost new companies to replicate that in today’s inflationary environment. Companies with economic mines and good operations teams are going to be a highly sought after commodity in their own right, and this is why most of the M&A action we’ve seen over the last few years has been mainly producers merging with or taking over other producers.

      One more point, that we’ve made over and over again for many years is that when we see turns in the market, it is almost always the mid-tier and smaller producers that move first, because they can immediately monetize the higher metals prices and it instantly expands their profit margins. Then the higher prices are factored into development-stage companies project economics and they start getting a bid. Finally, as the bull market picks up steam, it is the smaller explorers that get the bid, and while a select group of the better explorers often have the most extreme moves to the upside, it isn’t a guarantee across all drill plays, and there can be a lag factor. This is why it is a good strategy to have a diversified portfolio across different stages of companies, and different commodity sectors, to capture upside in different areas as they each get their moment in the sun.

    Dec 22, 2022 22:27 PM

    Posted this chart last week. Been an amazing profitable trade short TSLA

    Dec 22, 2022 22:32 PM
    Dec 22, 2022 22:37 PM

    I’m bullish on biotech. Some of the smaller names are breaking out on upside with large volumes. I think just a matter of time XBI bullishly breaks out of that triangle

    Dec 22, 2022 22:14 PM

    Market Strategist Gareth Soloway Reveals His 2023 Outlook & Best Trades

    MiningStockEducation – Dec 7th

    “Professional Trader Gareth Soloway of shares his outlook for 2023 and where he expects to find the best trades. Gareth has over 20 years of trading experience and is the Chief Market Strategist at Since 2007, Gareth has maintained an over 80% success rate on swing trade alerts (verified 300+ trades per year) given to members in Verified Investing Alerts (formally named the Research Center) and a verified 94% success rate on day trades in the Live Day Trading Chat Room. He has given lectures at colleges around the United States, been asked to train hedge fund traders in other countries and taught thousands of investors how to invest and trade profitably, achieving their dreams of financial independence.”

    0:00 Introduction
    0:40 Buy gold and sell equities?
    1:10 S&P down 30% in 2023
    1:55 Gold price target
    3:30 GLD & GDX
    4:49 GDXJ
    6:13 Buy gold & gold miners
    6:31 Bitcoin $9k bottom
    9:16 CBDC
    10:39 VIX
    11:22 Energy trades
    13:17 Commodities you like?
    14:19 Best opportunity to short?

      Dec 23, 2022 23:55 AM

      Hi Ex, Eric Sprott moved almost 8 million shares of a risky junior from his private holdings to The Sprott Foundation which he also controls, I would view that as a favorable move for the junior company, what do you say? DT

        Dec 23, 2022 23:56 PM

        Hi DT. Yes, I’d agree that is a positive sign, because moving it to his Sprott Foundation likely means he sees it as a longer term value creation play.

        Really, for most of the quality mining stocks that have solid teams, real projects that could be economic, and good access to capital; then they should have nice longer term value trajectories over the next 2 years. The rising tide should lift most resource company boats, except the ones taking on water that should probably just sink to the bottom of the ocean.

    Dec 23, 2022 23:47 AM

    SNWGF – Initiating new buy points @
    $1.80 (20%)
    $1.68 (35%)
    $1.55 (45%)
    Let’s wait & see, long duration between next years initial results

    ELORO ( ELRRF) MUCH THE SAME buy points