The spot price of gold has been hanging in there and holding up quite well lately, all things considered. With that said, the mining stocks have actually been doing quite the opposite, and are showing very little, if any strength in them…
And you know how the saying goes, right?
The miners lead the way…
So, if the miners are weak, chances are pretty good that we should expect to see the spot price of the underlying commodity (in this case gold), come falling back to reality, sooner or later… Obviously, there are no guarantees, but the lack of interest in mining shares sure doesn’t inspire any confidence right now in this gold “rally”.
Anyway, it really makes no difference to me as I’m not so much into swing trading as I am into Buy and Hold Rentals, so my timeframe is a bit longer (3-5 years or so) than that of your typical trader.
As such, when there are good deals ripe for the picking, well, I just try and load up as best I can.
Here’s my current watchlist.
As of April 12, 2017.
I mentioned awhile back that my plans for 2017 were to err on the side of caution and to take a more “conservative” approach with my investments. I guess everything is all relative, but there really is such a thing in the mining space (believe it or not).
Long story short — I’m doing my best to focus primarily on companies with proven assets in the ground. So, think more along the lines of mid-tier producers and developers, as opposed to really early stage exploration plays…
In my own situation, I’m willing to concede the MASSIVE HOME RUNS, in hopes of hitting just a few more doubles, and maybe even some triples, every now and then, with fewer punchouts.
A slightly higher batting average with less pop, that’s plenty good enough for me!
Teranga Gold (TGZ.TO/TGCDF) is a proven mid-tier gold producer, and a current large holding of mine. Not long ago, shares were trading at over C$1.00/share, so anytime we encroach the C$0.80/share (and lower) mark, I start to get very interested.
Teranga’s operating costs are somewhat higher than other West African producers, so I guess you could argue that they provide more leverage to the spot price of gold than many other producers out there… In periods when the gold price is weak, Teranga suffers a lot as their profit margins get compressed greatly… But should we get the next leg up in precious metals, I’m confident that this stock will do well and probably outperform many of its peers.
At ~C$450 million market cap, shares certainly aren’t expensive by any means for a ~200,000 ounces/year producer, located in the safe jurisdiction of Senegal.
Lots of exploration potential in Burkina Faso and Ivory Coast as well with this company, so I’m a buyer at these levels.
Klondex Mines (KLDX) is another proven mid-tier gold producer, and it used to be a rather large holding of mine. I liquidated out of all my remaining shares a few months back, selling out at $5.60/share.
“Buy low and sell high.”
Well, shares of KLDX are now sitting at $3.80/share, so that’s a pretty good reason why it’s back on my radar again.
I will provide a separate update, but I did add shares of KLDX most recently, and again today at exactly $3.80/share.
I now own 3,000 shares of KLDX.
With gold mines located in the safe jurisdictions of Nevada and Manitoba (Canada) and with growing resources/reserves/production, there’s a lot to like here… I’m not a fan of the company when it trades in excess of $1 billion market cap, but around ~$700 million market cap, I’m very much interested in buying more shares!
Cordoba Minerals (CDB.V/CDBMF) is an early stage explorer, so it’s much more a spec play than the producers listed above… Still, anytime I can average down on my cost basis, I gotta like that… I probably won’t end up buying more shares of Cordoba (again, trying to be more conservative!), but it’s one I’m watching, in any case… If shares of CDB.V dip below C$1.00/share (and NOT on BAD news), I’ll be tempted to reload one more time!
I discussed Cordoba Minerals in more details here.
Orca Gold (ORG.V/CANWF) is one of my favorite juniors in the gold space. I feel like the upside is immense, and the downside minimal since it’s only trading at ~C$45 million market cap.
My thoughts on Orca Gold can be found here.
Endeavour Silver (EXK) has been in the news a lot lately, albeit for the wrong reasons (lots of crummy production numbers each quarter, lately). Nevertheless, I think it provides good value at these prices, and the growth potential (3 new mines under development) is solid, especially if silver rebounds and gets over the $20/oz mark.
I’m watching EXK in the event shares fall close to ~$3.00/share, because if that happens, I’ll be looking at adding more shares to my portfolio again.
EXK is currently a Core Holding in my portfolio.
Just a short list and update for readers, but these are the stocks I’m currently tracking with most interest: Teranga Gold, Klondex Mines, Cordoba Minerals, Orca Gold, and Endeavour Silver.
I recently bought some shares of KLDX, and picked up another tranche earlier today.
I’ll be on the bid to get some more TGZ.TO shares, probably tomorrow… Not sure why I’m sharing this with you all prematurely, but whatever, the stock is so depressed I doubt it will move too much in the next 24 hours…
And if these mining shares continue to tank, well, I’ve got a few others on the watchlist I’ll be following as well in: CDB.V, ORG.V, and EXK.