Precious Metals Mining Stocks – More Pain to Come? (November 23, 2016)

by FI Fighter on November 23, 2016

in Precious Metals Updates

gold-10

It happened… The spot price of gold broke below $1,200/oz! Wow, it really is starting to feel like late 2015 all over again…

screen-shot-2016-11-23-at-9-37-41-pm

As I discussed in the last update, “The trend ain’t yo friend right now…

That is, unless you just so happen to adore good deals… If so, you can EASILY find them in precious metals and the mining stocks… Cheap merchandise is readily available yet again… And right now (similar to last year), there’s hardly any buyers remaining!

Point blank — Retail investors LOVE to chase price action alone (hmm, strange… all of a sudden I’m no longer getting any text messages regarding precious metals mining stocks), and almost nobody likes to look at their portfolio when it’s bloody beet red… Forget about going out shopping for more assets!

In other words, human psychology and emotions are such that it will lead people to buy and sell at precisely the most inopportune times — It is emotionally satisfying (for whatever the reason) to buy at (near) all-time highs when risks are at their most elevated levels, and to sell into extreme weakness at (near) record lows when risks are at a nadir.

Be cognizant and recognize that our innate emotions will typically steer us towards the losing strategy of buying high and selling low! If not that, the retail investor will usually elect to sit on the sidelines… paralyzed by fear at precisely the time when the best deals are most plentiful!

Here is Investing 101 for you (which everyone knows and hardly anyone actually practices):

“Buy low and sell high!”

Of course, I can only speak for myself, but as an investor who has chased assets both up and down, my track record CLEARLY shows that the best gains that I have ever scored in my investing career occur when I’m buying into immense fear!

Having prior data (personal results) in my back pocket greatly explains why I won’t touch shares of the S&P 500, Dow Jones, or Nasdaq with a 1,000 ft. pole… not today… At all-time record highs!?! Are you kidding me?!?

No way, Jose…

So, with that said, most definitely I’m tuned into the precious metals mining stocks right now and extremely eager to add more bargains! When cheap becomes stupid cheap, I start buying hand over fist!

The caveat I would add is this — Don’t fire all your ammo all at once! Nobody can perfectly time market tops and bottoms… But you don’t need to in order to succeed massively with your investment returns (buying stupid cheap Trumps all in the medium/long-term)… Hence, my own personal strategy is to simply buy in tranches… Therefore, if I’m “too early” with my entry points (that ALWAYS tends to happen in a severe downtrend!), I allow myself sufficient and enough opportunities to reduce my cost basis (meaningfully) later on…

Without question, it does take some serious conviction to dollar-cost average (DCA) all the way down, catching falling knives throughout the entire process… until the tide turns…

But for all the investors who were worried that they might have “missed the gold/silver train for good” back in July, August, well, what more could you possibly ask for?!?

Here’s your second chance at redemption…

Fundamentally speaking, NOTHING has changed post-election… except for market sentiment (which is usually almost ALWAYS wrong and fickle in the short-term)…

Gold and silver are getting thrashed right now, at a time when most other commodities are soaring… Does that make sense to you (this is a trend that I’m not convinced will be long-lasting!)?

Check out these charts below!

Copper:

spot-copper-60d-large

Lead:

spot-lead-60d-large

Zinc:

spot-zinc-60d-large

Nickel:

spot-nickel-60d-large

There you go… The markets have spoken, and they strongly believes that economic growth (and demand) is set to take off in the future!

Also, most everyone is convinced that inflation will pick up rapidly… which explains doesn’t explain much at all as to why gold and silver (which in theory should act as inflation hedges) are selling off like they’re about to go obsolete… I guess that is unless everyone out there seriously believes that real + nominal rates will be able to rise quickly enough to continue to outpace inflation by a healthy margin… With all the debt in the current system, yeah, good luck with that…

Anyway, when it comes to silver, it’s often considered a hybrid — part money (like gold), and part industrial metal…

I’ve long believed that if/when push comes to shove, silver is going to ride, side, and die with gold… NOT the other base metals…

This certainly looks to be the case at this time…

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To my untrained eye, the 60 day silver chart sure looks to resemble that more of the 60 day gold chart than the other commodities (copper, lead, zinc, nickel) shown above…

Does it really make any sense for the price of silver to be in rapid decline when the consensus out there is that the next economic boom (which would no doubt consume a ton of raw materials) is just around the corner?

 

Why is silver being left out in the cold?

 

As for gold… Well, that’s pretty obvious — Gold is a useless pet rock!

 

Duh!

 

Which is why I’m getting pretty amped up and eager to go hunting for more gold shares!

 

Oh, and let’s not forget about adding some silver stocks too… Silver, the other heavily oversold and unloved industrial monetary metal.

 

No fear at the bottom… If the markets will giveth, then I will (gladly) taketh!

 

Happy Hunting!

{ 14 comments… read them below or add one }

1 Srini November 23, 2016 at 6:50 am

Jay,
Not seeing the carnage i was hoping to see in miners at the opening. – Give me (more) Red…….

My stomach is not aching. so more pain to come???
cheers
Srini

Reply

2 FI Fighter November 29, 2016 at 1:15 am

Srini,

Yeah, same here, I was expecting some bit more drastic moves… But we’ll see where we go from here… If there’s more pain, I’m buying just like I know you are 🙂

Exciting times!

Reply

3 Roadmap2Retire November 23, 2016 at 10:52 am

Hahaa why is silver being destroyed? Like you, I thought it was only gold that was a pet rock 🙂

I am tempted to nibble more here and buy as gold has fallen below $1200. Keeping my eyes peeled for some good opportunities here.

Happy hunting!
R2R

Reply

4 FI Fighter November 29, 2016 at 1:16 am

Sabeel,

Haha, both precious metals are being annihilated right now! Time to start paying attention and getting a watchlist ready for some good buys…

It feels like the holiday shopping season, no doubt!

Happy hunting!

Reply

5 Tom V November 23, 2016 at 4:14 pm

Sell the rumor, buy the news! Check the silver spread in the Asian market
Didthesystemcollapse.com

Reply

6 FI Fighter November 29, 2016 at 1:16 am

Tom,

Yeah I noticed that! Any arbitrage won’t last, so it will be interesting to see how far this delta can widen before something crazy happens.

Take care!

Reply

7 Jan November 23, 2016 at 8:11 pm

Jay, what are your thoughts about all the talk that India might ban gold (?!).
Do you have any idea what is going on with this?
Thanks for your articles.

Reply

8 FI Fighter November 29, 2016 at 1:18 am

Jan,

An Indian ban on gold would be devastating to the gold price… Not sure if it will actually happen, but the rumors are swirling and it might just be the “nail in the coffin” for the precious metals to help accelerate the bottoming out process…

In any case, I think it would just be a short-term blow, and it might very well provide a wonderful buying opportunity… Long-term, I can’t see how this doesn’t discourage people from trusting governments who have historically demonstrated that the only thing that they know how to do is destroy the value of paper currencies… If I was in India, Egypt, Turkey, etc.. I’d seriously be asking myself, “Why not gold?” if I had the means to buy/own some.

Interesting times ahead…

All the best!

Reply

9 Jay G November 24, 2016 at 12:21 am

Saw something interesting – Looks like someone bought 507,000 shares of Orca Gold OTC listing today, 14x the average volume. Entire sector is tanking and the one stock I want most is up 14%!

Reply

10 FI Fighter November 29, 2016 at 1:20 am

Jay,

Haha, yeah that was totally INSANE! I actually had a bid in at $0.35/share that didn’t trigger b/c of that chaos…

I have no idea who pushed the price up, but by day’s end, we were essentially back where we started from… Talk about massively overpaying in the short-term… But long-term, I really like Orca Gold a lot.

Best wishes!

Reply

11 BSR November 24, 2016 at 7:19 am

I sold off my gold stock about 2 months ago. Made 200% gain and moved on. It seems to me another chance is about to come for a good trade. I will for now wait and see. If a cash flow positive gold mining company’s stock price becomes favorable again, I will jump back on.

BSR

Reply

12 FI Fighter November 29, 2016 at 1:20 am

BSR,

Excellent timing on your part, and congrats on the big gains! That’s an outstanding return in a very short period of time…

Hope you get another wonderful buying opportunity in the future!

Cheers!

Reply

13 No Nonsense Landlord November 25, 2016 at 6:44 am

It’s hard to tell where precious metals are headed. Inflation? Deflation?

I do like my index stocks. No home runs, but steady. I can hold without worrying about a capital gains hit. With high flyers, like precious metals, you need to be more nimble.

Reply

14 FI Fighter November 29, 2016 at 1:22 am

Eric,

Yeah, nobody knows for sure if it’ll be inflation or deflation, although right now it looks like inflation is what the markets are pricing in with president-elect Trump set to take over…

We’ll see soon enough!

Take care!

Reply

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