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Stay Focused on the New Miner Bull and Tune Out the Noise

In my nearly fifteen years of following the precious metal miner sector I have witnessed countless failed and completely outlandish predictions by so-called gold gurus and gold bashers alike. Since the precious metals are driven by both greed and fear there are plenty of these charlatans to choose from whether bullish or bearish. Gold has been labeled everything from a “pet rock” to “the ultimate currency” along with near term predictions everywhere from $200 an oz to even “infinity” an oz!

As a precious metal miner investor it has served me well to tune out the noise and just listen to what the market is telling me. The fact that the GLD exchange traded fund (ETF) has added 50% more physical gold inventory in the past 6 months is one of the best reasons to remain bullish here. You should also ask yourself the following questions, which, I believe, are the major factors for a new gold bull market. Is gold making lower lows or higher highs? Are there negative real interest rates in place now and for the foreseeable future? Is there loss of faith in government taking place around the world? I mean, Donald Trump for president? Brexit? Hello!

Since the beginning of the year, gold has been making higher highs and higher lows and I believe the answer is “yes” to the aforementioned questions as well. If you agree with this, then you also agree that we have entered into a new bull market in the miners. I have been on record here in my weekly posts since March of this year as this being a once-in-a-lifetime buying opportunity in quality miners, developers, and explorers. My view is still one of accumulation on weakness until 40-42 GDX and 350-375 HUI has been reached. My plan is to take the investment capital out of my positions when these targets are hit while holding the gains until this miner cycle matures.

In order to stay focused on the goal of getting the best price for my miner positions, I find it best to disregard the outlandishly bullish prognosticators. If you get caught up in the hype then you may end up chasing strength as opposed to buying weakness and getting a better price.

I believe we have three separate categories of bears at this point of the new gold bull market:

  1. The “pet rock” Wall Street crowd that will always distain gold until they are forced to participate.
  2. The “Gold Guru” that has missed the low and is still waiting to get in while making continuous failed top calls based on CoT readings or “too far too fast” theories, all the while, issuing continuously failed major top calls.
  3. The traders who sold in March after nailing the bottom while waiting for the 25-30% correction to “get back in”, all the while, having to cover continuous new short positions.

If you are bullish like me then you must tune out the noise on both sides, stay focused, buy weakness, and hold for long-term gains. When accumulating I focus on the daily charts (of the sector) over a six-month period. Once fully invested in a position, I focus on the monthly charts over a period of 10 years. This should help you stay the course until this new miner bull matures as well as target the best entry points. Have faith in yourself and your own due diligence as opposed to getting caught up in the hype of either side.

By David Erfle Contributor to Kitco News
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David Erfle is a 52 year old self-taught mining sector investor. He stumbled upon the mining sector in 2003 as he was looking to invest into a growing sector of the market. After researching the gains made from the 2001 bottom in the tiny gold and silver sector he became fascinated with this niche market. So much so that in 2005 he decided to sell his home and invest the entire proceeds from the sale into junior mining companies. When his account had tripled by September, 2007, he decided to quit his job as the Telecommunications Equipment Buyer at UCLA and make investing in this sector his full time job. He personally survived two bear markets, witnessed incredible sector changes and had to alter his investment philosophy numerous times in order to adapt to changing market conditions."

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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