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First, let me tell you that I am a happy and contented boy this evening. You know this PM game. Heck, even Le Fly asks me at times how I deal with the convulsions of this lightly traded, lightly regarded sector. Sometimes it’s not very easy, as you all know.
But the irony remains. Despite the tremendous, gut-wrenching, teeth swallowing, soul-crushing volatility of this sector, it’s the only one to be in a bull phase over the last ten years. True, we got a serious “blip” when the whole market folded in late 2008, but that was truly a liquidity-driven event, separate from the fundamentals of the space. What’s more, that down-draft was the trading opportunity of a lifetime. I still own a good portion of the SLW I picked up under $3.00, and that was just one of the gems I found abandoned on the ground in January-February 2009. You know the story of the Jacksonians from May of that year, when I first started blogging. Those positions are up hundreds of percent, and I had bought them months before.
Enough idle boasting about the past. We’re talking about good feelings today, but we’ve endured scars together too. We’ve undergone a dreadful PM pullback, one that cost me over 15% of my portfolio value, even with cash-outs. But I’ve been waiting, very patiently, because I had no doubt this bull was not over by any means. And today I think we can say that at least in the near term, “the coast is clear” for further miner purchasing. And I plan to make up for lost time as well.
First, let’s see the good news on our friend Baby $HUI:
Given that many of my “in-house” miners– Jacksonians and high flyers like EXK and AG have rocketed up on an RSI basis in the past few days, I think it may not be the best time to buy tomorrow. This is true as well of my PM Stock of the Decade— XG, or Extorre Gold Mines. which was spun off from parent company Exeter Resources (XRA) at the barely substantial price of $2. Yes, $2, back in late March of 2010. Look at this beautiful company today, a scant 16 months later…
Look at the charts of the strongest Jacksonians and you will not even see the equal of XG. It was the one precious metal stock in my entire portfolio that did not see a pullback of any substance over the last three months. That in itself is significant, I believe.
In the meantime, do not be a horse’s ass and buy this tomorrow. Clearly, it’s overbought, probably because it never got oversold, like it’s poor compadres. I have indicated above the place where I’d like to add. And yes, I already have a shitte tonne, but there’s always room for pie, right?
Most stuff is overbought here, but on the radar for tomorrow are some small jumpers — MGH, BRD, AUQ, NXG, CGU, AZK. I also added to my GPL and AXU hordes today.
Best to you all.
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“I already have a shitte tonne, but there’s always room for pie, right?” You’re starting to rival M. Fly Senator.
Call me the Lone Ranger because I am loaded with Silver calls.
I bought some xg back when you brought it up. I also bought some sndxf for a buck not long ago that I saw mentioned here as kind of a lotto play. They have done well so far. Thanks for sharing all your hard work and research.
That’s the small royalty guy, right? I like royalty companies like RGLD and SLW, but I am more reluctant to rec the five letter names (ie, “pink sheets”) due to their lack of liquidity.
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Ah, but have you looked at the management team? CEO Nolan Watson, the former CFO of SLW, and Executive Vice President David Awram, the former Director of Investor Relations for SLW, are what got me to roll the dice.
Agreud, worth a roll of the dice, but remember to roll only what you can lose.
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Criminy, how did I miss that pick? If only I could borrow Senor Fly’s Time Machine……
I like your work Sir. How do you choose your buys in miners….is it more on chart patters/TA or did you mix in some fundamental analysis?
I look at management and location first. I like mines in free countries, if possible, as political risk is huge with mines, as they are the farthest thing from portable. Canada and the States, then Mexico and some South American countries. Africa is generally a problem, although Burkhina Faso is okay (this week).
Management must have a good track record, like the boys at SLW.
Last I look at the quality of assets and what the roll out is going to look like. Generally, with these smaller ones, it will tell me what their chances of being bought out are looking like.
I always look at the charts as well, as that will tell me information not publicly available, and give me my entry and exit points.
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Thank you. Political risk and miners…I’ve gotten burnt in that regard before.
I think Jake deserves a new cape.
(Slight typo above. XG was parented by XRA, if anyone cares. I only do because i own too much of that dog.)
Jake,
What about Fly’s AXU?
That was another typo — last line above should read AXU, not AUX.
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http://silverstockreport.com/2011/BIS-DATA.html
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/7/7_Embry_-_Maguire_Correct,_Gold_Silver_Shorts_Will_be_Destroyed.html
Any comments on London’s LIFFE and Pound Sterling market. I don’t quite get the “picture” re. bond exchange there and any silver certificates of title underlying these bond rates. I recall Soros breaking England’s gold bank when Brown was in the Exchequer. Gr8 links.
Senator
I was hoping you would let me pick your brain momentarily on NEM. As you are probably aware they are historically unhedged to gold (been watching some deadwood lately I love Hearst calls it “the color”). Year to date there performance has badly lagged the performance of “the color.” I looked at some of my notes and saw that on June 21st there was a big block options trade. It involved buying 10000 September 57.50 calls and simeltaneously selling 10000 September 50 puts for a debit of a nickel. This implies that someone is trying to capture unlimited upside above 57.50 and that someone is willing to take delivery of the stock below 50. This at minimum implies that NEM will hold its low of 50.05. If this trader just wanted to own the stock he would have sold puts below the 50 level. However, he wanted to caputure upside as well. This trader is taking on significant risk for cheap unlimited upside. What is your take on NEM? Do you see potential for a big earnings move or another catalyst to send this stock sharply higher? Or is this move purley technical (a point and figure chart of NEM looks like garbage but it did break a channel I belive)? I would value your opionion on this matter a great deal since as far as I am concerned you are the George Hearst of IBC. Many thanks for the awesome work you do!
P.S. I hope the Giants sign Barrett Rudd.
I hope the Giants nab Rudd too. They are desperate at LB.
As for NEM, they fall into my “too big” category along with ABX, AU and a number of others that I do not talk about here. Part of my thesis is that I want my stocks to be acquired and not an acquiror, if I can help it.
I would rather you be in GDX if you want the lesser volatility provided by a big cap gold. Otherwise, I’d just buy it an hold it and forget about it. It’s not going anywhere, privided it doesn’t get back into the disasterous hedging strategies the large miners got into years back, to their chagrin.
I do own GG, btw, but it’s my only “biggee” in my port. I never touch it, ever.
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Senator
Thanks for your assessment. My interest in Nem stemmed from the options trade and I thought there might be potential for a big move. This trader was hoping for a big price move with little capital outlay. I was considering using some call spreads but if it looks like a turd and smells like a turd… you get the drift. Many thanks.
Let’s just say these big fuckers are not known for their volatility as compared to the smaller ones. However, there may be something brewing which led to the trade you observed. I have no info on that, though.
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Senator
If you have doubts about NEM than so do I. There performance of NEM trails that of “the color” so I am staying away. The trade is probably some cheapskate fund manager who wants to buy the stock for less than what its trading for but doesn’t want to be left behind in case of any upside. This chart on this company looks like slopburger shit also. Thank you for your help. I really appreciate it.
Looking at the $HUI, the 200 day on the daily proved to be resistance and I was a bit disappointed with the miners’ selloff EOD.
The “simple” MA is for simpletons. Use EMA, my son.
On a positive note, XRA was up big today… must’ve heard #6 whining?
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Ha! I’ll whine everyday all day if i can get that slug to giddy up more often like today’s move.
This is one movie I think I am going to have to see!
I’m a big fan.
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Of Thatcher, or Streep?
The Dingo ate my baby! Hey JG, even my little CGR got some love finally and their Madsen news is due to drop soon, but I wanted your take on RBY. I was thinking of picking up some after the beatdown for a swing but I bought QLD instead and sold it today. Would you buy the blood in RBY?
I don’t really trust RBY. I still have a small amount, but not much.
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