Mining Stocks Update (June 13, 2017)

Hey everyone! It’s been awhile, and I apologize for the lack of updates lately… I’ve been caught up with the NBA playoffs (Go Warriors!) and did a bit of water fasting as well…

Tomorrow, I leave for Puerto Rico and will be spending a few weeks out there on vacation with family…

Here’s an update with mining stocks and my portfolio…

With the Fed Rate hike most likely happening tomorrow, I’m anticipating that the weakness felt across the precious metals mining stocks over the past few months will start to subside and we’ll start heading up sooner or later (hopefully sooner). Also, the whole GDXJ rebalancing fiasco should be finally put to rest and behind us at the conclusion of this week, or perhaps early next week…

So in the medium-term, I’m pretty optimistic…

As readers know, I take more of a macro view and approach towards these stocks, so the short-term noise and price action don’t really deter me all that much… Rather, when the merchandise is cheap, I like to buy up shares aggressively, and I accept upfront that I’ll never be able to perfectly nail any tops/bottoms…

I like to dollar-cost average (DCA) on the way down on the dips…

With that said, I’ve been buying a few different shares as of late, here’s a rundown:

  • Dolly Varden Silver (DV.V/DOLLF)
  • Teranga Gold (TGZ.TO/TGCDF)
  • Klondex Mines (KLDX)
  • Sandspring Resources (SSP.V/SSPXF)

Here’s where the portfolio stands at the conclusion of today’s trading session.

As of market close June 13, 2017.

Precious metals are out of favor right now, so I’ve been digging the discounted shares…

Quite frankly, I’m hoping that the cryptocurrencies are all telling us something… and are a leading indicator to what will happen to these mining stocks sometime in the near future…

Check out this really cool post from the Hedgeless Horsemen with some more comparisons between the two sectors…

Bottom line, commodities (real hard assets) are historically cheap, especially relative to financial products and the broader markets…

Buy low and sell high.

 

I’m gonna keep trying to do that…

 

Yup, I’m still holding onto a good amount of cash, but I’ll be looking to deploy some more of it soon to buy some more beaten down miners…

 

I’m pretty pleased to have initiated a position in Dolly Varden Silver (DOLLF) at ~$0.45/share (sub C$0.60/share). Long-term, I’m very bullish on silver and this company gives me further diversification into the space, alongside my other silver holdings: Alexco Resource (AXU), Bear Creek Mining (BCM.V/BCEKF), Endeavour Silver (EXK), and Fortuna Silver (FSM).

For mid-tiers, I’ve always been a fan of Klondex Mines (KLDX) and Teranga Gold (TGZ.TO/TGCDF).

As TGZ.TO and KLDX have been demonstrating to me quite CLEARLY during this most recent sell off, forget trying to perfectly nail getting in at the bottom… It’s an impossible task. I’ve just been buying the dips and adding to my underlying position in tranches… The last slug of TGZ.TO I bought was at C$3.05/share and for KLDX it was at $3.08/share.

Lastly, with Sandspring Resources (SSP.V/SSPXF), my cost basis is still pretty high, so when shares dipped below ~C$0.40/share, I took it as an opportunity to top up at a much more favorable entry point. I got in around ~C$0.38/share on this latest batch of shares. Please note — This stock is a pure optionality play and we need to see a gold price of probably $1,400/oz before this stock starts to really outperform its developer peers… Right now, it’s trading for beans so I’m content with adding and most importantly — Waiting patiently for the turn up. Investors who want/demand instant gratification really shouldn’t waste their time with a stock like this. At sub $1,300/oz gold, the company’s Toroparu gold project in Guyana is essentially worthless.

It’s always emotional and nerve-racking buying low, but hey, I’ve been burned enough times in the past to know that for me at least, this strategy sure beats chasing the momentum train up… That’s how I usually get slaughtered playing this game…

 

Happy Hunting!

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Kevin
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Kevin

Glad to see you posting! I was starting to get worried you were losing interest in the sector 🙂

Alex
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Alex

Have you heard anything about brimian I haven’t really read much up on it lately.

C
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C

Alex, They released a statement just yesterday/today.

C
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C
Alexander
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Alexander

you think thats negative news i cant really tell

JB
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JB

Out of all of your stocks currently in the port…which one would you say you are most excited about?

thanks,
jb

Sean
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Sean

I’ve been following you for a while and rooting for good things to happen for you but one burning question I have is how you never talk about the real possibility of a lot of these companies becoming insolvent and going bankrupt. You always talk about when gold reaches $1400/oz, which I agree with you it will, but what about the real possibility that 80% of these companies you own going bankrupt before that happens? Bankruptcy and consolidation within a sector is usually what tells the bottom of a major sell off, not some arbitrary economic indicator. All these companies you own should be viewed as call options with an expiration date (bankruptcy), you can’t just hold them forever and wait for gold to turn around.

Investment Hunting
Guest

WARRIORS, WARRIORS ;-). It felt great to beat the Cavs again. I’ve bought 5 mining stocks on the pullback. Hopefully the bottom is near.

Alex
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Alex

Which ones I didn’t know you were into mining stocks

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