Precious Metals – It’s Been a Rough Ride to Say the Least (December 17, 2016)

by FI Fighter on December 16, 2016

in Precious Metals Updates

It’s been awhile since I’ve provided an update on this blog, and for that I apologize. In all honesty, I’ve just been too consumed with going out and exploring Hong Kong… For the most part, I’ve been spending very little time at home in my apartment, and have been making a very conscious effort to go out and socialize a lot more…

At some point, I will provide a separate update to detail more of the day-to-day stuff that’s going on with me, but for this post, I’d like to steer the focus back onto precious metals and particularly the mining stocks.

Wow!

What can I say? Other than — The markets ALWAYS have a way of humbling us! Just when you think you’ve got things all figured out, you quickly learn that you indeed know jack shit about anything…

Seriously…

In regards to precious metals and the mining stocks, we’ve witnessed basically a 180 degree turn in the last 2 months, and essentially all the hype and euphoria that was prevalent through the first half of 2016 has disappeared entirely… We are almost back to where we started from just one year ago!

Insane…

No, at this stage of the game, I would say that the fear and despair is nowhere near on par to how bad things were in late 2015, but if this severe negative downtrend keeps on persisting, it won’t be long before we do in fact re-enter back into the Depths of Despair (my absolute favorite time to go bargain hunting!).

You know, I will probably come across as a broken record here, but when it comes to Deep Value investing, my thoughts haven’t changed and they probably never will — When everyone else is a seller, I want to be an aggressive buyer!

Yes, no doubt that I do realize that the US dollar is on an absolute tear right now, with the DXY up at 14 year highs, the USDJPN surging to 118, the 10 year bond yield at 2.6%, etc., etc… So, CLEARLY, the trend ain’t yo friend right now in the precious metals space!

But on the other hand, no, I don’t believe that gold and silver are going obsolete, and no, I quite frankly do not believe that much (if anything at all) has changed since pre-election… In other words, I don’t think Donald Trump is going to be the panacea that cures all that ails the global financial markets…So, with that in mind, I’m just gonna keep buying up these mining stocks, which I feel represent incredible value at this time, especially relative to other asset classes — real estate, stocks, bonds, etc…

The precious metals sector is so darn fluid and dynamic, that you kind of always have to be paying attention because things change so rapidly and on a dime… If readers will recall, back in September, I was really having a tough time finding deals out there… If I was making any moves, it was mostly in the lithium space, and with the benefit of hindsight, I ended up “overpaying” for early-stage exploration gold stories… Chasing up is seldom ever a good idea… Lesson learned (I hope)! That’s a mistake I really don’t want to repeat ever again!

Well, fast forward to today, and right now, I’m finding more deals in the gold and silver mining space than I have capital available!

I guess that’s a good problem to have… Without question, though, I’m not scared at all, and won’t get shaken out of this trade, similar to last year… You could say that I’m stubborn to a fault, but I greatly believe in market cycles and cyclicality… So, when a sector is absolutely beaten up and hated, I dunno what else to feel except for elation…

I like cheap merchandise!

And when you see the following happen, you’re bound to be able to locate some spectacular deals!

 

I have been making some moves, which I will update in a separate post…

 

Human psychology is some pretty crazy stuff… When assets are selling off for pennies on the dollar, we freeze up and have little interest in buying up a storm… But when a raging bull market takes flight, everyone and their grandmother wants to pile on in and overpay for these same goods, irregardless of valuations and/or fundamentals…

 

Just something to keep in mind…

 

I’ve seen this song and dance too many times before to get shaken out now… I swear allegiance to the axiom of, “Buy low and sell high“…

 

Selling out right now would be anathema to my beliefs as to how Investing 101 should work!

 

I believe that the tide will eventually turn again for precious metals and the mining stocks… When it does, yes, most certainly I do expect similar (or better) returns to what we experienced during the first half of 2016…

 

I’m looking at these buying windows as a perfect opportunity to “double up” and “reload” for the next leg up…

 

Catching falling knives? Most certainly, I’ve been pierced before and will continue to get cut up throughout the duration of this landslide… Trust me, you ALWAYS feel like a total moron and village idiot when you are going against the mainstream crowds and losing money! Right now, stocks are en vogue, and precious metals and the mining stocks are in the toilet again…

 

Just my own personal strategy, but what I’m trying to do here is to buy up these mining shares in tranches… Because I’ve been humbled enough times by the markets to know for certain that I have no earthly idea where things will be headed next… If things get far worse, I want to make sure that I can stay solvent!

 

But eventually, I do believe that the short-term pain will be well worth it for the long-term gains!

 

Happy Hunting!

{ 5 comments… read them below or add one }

1 KP December 16, 2016 at 10:29 pm

Human psychology is interesting! I’m starting to realize I need to go opposite of all my previous instincts. Buy low and sell high.

How are you feeling about Birimian Limited? Isn’t there suppose to be results coming out relatively shortly?

Reply

2 FI Fighter December 16, 2016 at 11:08 pm

KP,

Absolutely! It’s tough to go against instincts, but so much about investing is counterintuitive…

In regards to Birimian, a Scoping Study should be out by the end of this year… If not, look for a news release early in 2017.

If BGS pops, I may need to trim some shares so that I can “back the truck up” on some of these gold/silver miners, which have been getting walloped!

All the best!

Reply

3 Alexander Gregory December 17, 2016 at 3:22 pm

i was pretty excited with that 25% pop we got the other day cant wait for the study to see where this thing will be going

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4 Roadmap2Retire December 17, 2016 at 4:37 am

Counter intuitive investing is hard to pull off. We can talk about all we want…people love to throw the “be greedy when others are fearful” phrase left, right and center…but when it comes to following through, most do not execute. I guess thats what makes the market interesting. The deals these days are salivating….I am looking to buy more!

R2R

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5 Joe December 18, 2016 at 10:35 am

At current prices, aren’t you “averaging up” from the prices you paid at the end of last year? Why bother… why not wait for a real blood bath? Not anywhere near enough pain yet.

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