- [We had some technical challenges with Dave’s audio, and cleaned it up as good as possible, but felt the content was so relevant that it was important to get it out to KER listeners]
In this Daily Editorial, we are joined by Dave Erfle, Founder and Editor of Junior Miner Junky, to discuss some fundamental and technical investing insights around the recent pop higher in the precious metals sector. Gold, silver, and the PM stocks have been moving up the last 2 weeks, and copper has been trading up at all-time highs the last few trading sessions. Dave reviews the macroeconomic factors moving the larger markets but balances out the longer-range trends with some more near-term technical levels he is watching. He also provides some fundamental insights into some of the stocks held in the JMJ portfolio, and how he is managing this current environment.
Key discussion points include:
- Macro Market Movers and Geopolitics: He discusses the soaring oil and gas prices and global food scarcity due to the war in the Middle East and continued closure of the Strait of Hormuz as factors creating uncertainty in the markets. However, Dave points out that none of the fundamental drivers behind gold’s ascent have changed, from sovereign debt to central bank buying, and lack of open interest in the COT.
- Technical Outlook on Gold and Silver: The precious metals have been stuck in rangebound trading and a consolidation for the last 7 weeks, and he feels it would be healthy to see things consolidate a bit longer, to build the energy to really move higher. Dave would like to see gold break out above $4,900 and for silver to break decisively above $90 to get more confident that this consolidation phase has run its course.
- The Gold Miners Bullish Percentage Index: Dave has pointed out the last few weeks that when the (BPGDM) got down to an 11 reading in late April that this demonstrated how oversold the gold miners were getting, and so a rally higher seemed quite probable. Now that this has played out, he is looking for more traction and technical confirmation signals in the mining stocks.
- Key Moving Averages for GDX and GDXJ: The key technical level Dave is watching on the precious metals ETF charts is the 18-week moving average; which has recently acted as overhead resistance. Pricing in GDX, GDXJ, SIL, SILJ have just recently moved above this level, but his preference would be to see pricing come down to test it the 18-week SMA as support that holds to signal that the next leg higher is on stronger footing.
- Precious Metals Stocks Breaking Out Of March Consolidation Patterns: Dave points to precious metals stocks that have had strong fundamental newsflow as seeing corresponding outperformance, based on their company catalysts. He flagged the strong performance over the last couple months coming out of the March consolidations in JMJ portfolio stocks like AbraSilver Resource Corp. (TSX: ABRA) (OTCQX: ABBRF), Amex Exploration Inc. (TSXV: AMX) (FSE: MX0) (OTCQX: AMXEF), Maple Gold Mines Ltd. (TSXV: MGM) (OTCQX: MGMLF), Thesis Gold & Silver Inc. (TSXV: TAU) (OTCQX: THSGF).
- Bull Market Playbook and Portfolio Strategies: Dave outlines his systematic rules-based approach to trimming partial positions in portfolio positions that have moved up multiplefold to redeploy those gains into new positions; flagging the rebalancing approach in Montage Gold Corp. (TSX: MAU, OTCQX: MAUTF) as an example.
- Direct and Indirect Copper Exposure: Dave has indirect exposure to copper exploration in some of the aforementioned precious metals companies like AbraSilver Resource and Thesis Gold & Silver, but also pointed out the big win he and his subscribers just realized in direct copper exploration success through Arizona Sonoran Copper Company Inc. (TSX:ASCU | OTCQX:ASCUF); which is currently being acquired by Hudbay Minerals Inc. (TSX: HBM, NYSE: HBM). He is monitoring a few copper developer names on his watchlist for accretive entry points which he will communicate with his subscribers.
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Investment disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. Investing in equities and commodities involves risk, including the possible loss of principal. Do your own research and consult a licensed financial advisor before making any investment decisions. Guests and hosts may own shares in companies mentioned, and companies profiled may be sponsors of the KE Report.