Portfolio Update: It’s Beet Red These Days! (November 15, 2017)

by FI Fighter on November 15, 2017

in Mining Stocks

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Here comes the pain again! Man, it really must be that time of year again, because like clockwork (or so it has seemed the last two years) my portfolio is taking an absolute thrashing again…

For the most part, I’ve refrained from posting too many of these “cost basis updates” because as readers may be fully aware, mining stocks are volatile as hell, so fixating on things like price action/cost basis can be extremely misleading (and deadly) during the good times!

Yup, these numbers are more appropriate for display when almost everything is BEET RED!

Today was just one of them days…

As of November 15, 2017.

*WARNING* The following graphic is quite UGLY!

Please note: All share prices have been converted to USD. In the case of an OTC holding (e.g. Orca Gold; CANWF), the native listing share price is used (i.e. ORG.V) instead since it is the better and more “accurate” representation of real price discovery… Realized gains are used to compute ‘Total Gain/Loss’ but are NOT displayed if I no longer still hold the stock (e.g. Ivanhoe Mines; IVPAF)…

As of November 15, 2017.

Lots of RED (bad)…  and YELLOW (even more bad) starting to pop up now…

But that’s just how the cookie crumbles sometimes and you’ve really just got to take things with stride… It really takes an iron stomach to dabble in this game… and mining stocks definitely are NOT suitable for everyone!

 

During these dark moments, I usually ask myself:

 

Have the fundamentals for the underlying company in decline improved or gotten worse?

 

Imagine for a moment that you weren’t being bombarded with price charts thrown in your face 24/7… Would the most recent string of company press releases give you pause for concern? A good reason to sell ASAP? Or, on the contrary, is the company actually making really good progress and advancing their project(s) forward?

That should give you “clues” and a decent starting point in trying to figure out whether it is an appropriate time to freak out or not… Perhaps, buy even more shares?

Let’s use Erdene Resources (ERD.TO/ERDCF) as an example…

From Erdene Resources.

And let’s open up one of their most recent press releases…

From Erdene Resources.

What’s this? An increase in the 2017 drill program from 24,000m to 33,000m? Would a company really be ramping things up aggressively if they were hitting nothing but “dusters”?

Does the above news flow jive with the following chart?

I certainly don’t think so… but that’s for each individual investor to decide…

For myself, if the news releases suggest it’s pretty much “business as usual” (or better) and the only thing that has changed materially for the company is the share price (which is almost ALWAYS sentiment driven), then I ask myself:

 

At current prices, does the Risk/Reward justify me adding more shares and being a buyer or not?

 

If yes, then the sell-off event may be a wonderful buying opportunity indeed…

 

Yes, I understand that it’s absolutely no fun to be catching falling knives, and there are no guarantees that what is priced “very low” today can’t keep trending lower even more tomorrow…

But remember, the old axiom is:

 

Buy low and sell high.

 

Easier said than done, I know… but with mining stocks, it’s very important to try and execute that strategy as much as possible. When everything looks PEACHY (fundamentals, technicals, sentiment, etc.), it’s really counter-intuitive, but in actuality (reality), a damn good time to start thinking about selling!

 

When the expectation all around you is that prices will only keep getting smashed lower (just cuz… for no rhyme or reason), it’s typically a good time to start paying attention and putting together a watchlist of high quality merchandise…

 

Blood in the streets, total despair, BEET RED positions, etc… means you’re operating in a buyer’s market where you get to be extra selective and extra picky (as a buyer, what more could you ask for?)!

 

Buying low… that’s a good thing, provided you’re patient and can wait for sentiment to improve… Ironically enough, the spot price of gold and silver aren’t even doing all that badly! Compared to late 2015/early 2016, these prices are actually quite robust!

But you would never know that by the way many of these mining stocks have been trading…

 

Again, that’s just the way the game goes… Sometimes, the mining stocks get oversold relative to the actual metals prices (like right now), and sometimes it’s the other way around… In the summer of 2016 (with the benefit of hindsight), we can now see crystal clear that many of these mining stocks got priced way, way, way ahead of the metals…

 

In any case, gold and silver are cyclical… As it pertains to seasonality, though, these precious metals mining stocks have been crashing and burning this time of year like clockwork since I first got involved in the sector in 2015!

There’s really nothing new going on here…

Reminisce one time… Back in late 2015.

From January 19, 2016.

Depths of Despair 1_19_16

 

Anyway, I’m going to try and take things in stride…

 

With all that said, the recent weakness in precious metals mining stocks is a good reminder of the importance of diversification… Right now, I’m very glad/grateful that I own a whole bunch of clean energy stocks (which have performed much better than precious metals in recent months), and even some cryptos…

 

Timing the markets isn’t easy at all!

 

But with gold and silver mining stocks, we are now very close to operating back in the Depths of Despair, if we haven’t gotten there already…

 

Making big gains in precious metals is damn tough, and oftentimes it feels like a never-ending uphill battle… From experience, I do know this to be true:

 

When you buy when nobody else gives a shit and sell when everybody finally does, you’re going to do quite well. The exact timing of when the turnaround will occur is anyone’s guess, but in order to execute this “buy low and sell high” type of strategy, you’ve got to be able to “buy right and sit tight.”

 

Patience is a virtue… that NOT many investors have… We live in the Age of Instant Gratification… To succeed with precious metals mining stocks, you’ve got to be able to watch paint dry and not go crazy…

 

Happy Hunting!

 

Photo Credit: Free Digital Photos

{ 6 comments… read them below or add one }

1 KevinSNo Gravatar November 15, 2017 at 3:17 pm

this post is defo a trip down ur late 2015 memory lane post…god what a sector!

Reply

2 FI FighterNo Gravatar November 17, 2017 at 8:20 am

Kevin,

LOL, yeah tell me about it! Pain, pain, go away…

All the best!

Reply

3 Income SurferNo Gravatar November 15, 2017 at 4:48 pm

Wild times in the big city buddy. Still, it should console you that you’ve nearly tripled the value of your portfolio over the last 2.5 years or so. I love lumpy returns…..and who cares about losing 20% or something after you’ve had a move like that. I’ve been adding in the PM space over the last few days.
-Bryan

Reply

4 FI FighterNo Gravatar November 17, 2017 at 8:22 am

Bryan,

Yeah, all thing considered it’s been a profitable trade and I have no regrets. Sure, I made a ton of stupid mistakes, but that’s all part of the process and learning…

Thanks for all the support throughout the years.

Now is a great time to get interested in the PM space; it’s hated.

Cheers!

Reply

5 JohnNo Gravatar November 15, 2017 at 9:23 pm

Even with beet red you have $700K gain!

Reply

6 FI FighterNo Gravatar November 17, 2017 at 8:22 am

John,

Will gladly take it! Baby steps, progress is progress…

Take care!

Reply

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