I just put out a piece on buying and selling mining stocks for the rookie, and as I hit “publish”, an hour later I’m doing a drop ceiling in my basement and click through YouTube and see Palisades released a video with John Feneck. This dude is gold, and perhaps I wanted to be like him in a parallel universe without all of the traveling he had to do.
This write up is taking notes for you, and so I have notes jotted down when I buy again. This week could be brutal, but I wanted to have something there for some of the stink bids I might throw out there.
For this, I had to go back and listen a second time. Wow!
- Jan 2016 he bought a lot when sector was unloved. When you see “give up price” action selling market orders into a bid, it might be a great value time. CEO’s at the time said, “hold your nose” and buy moment.
- Not a lot of bankruptcy candidates at the moment since everyone cashed up last summer, so not as nervous as 2016 buys where many of these companies could have gone bankrupt.
- BTG – he bought a position at $3.64 and made 20% in a month and sold. This is something I have learned recently – when I have big wins quickly, I take the win and “grind” it out. I have maybe 5-6% of my portfolio as the long term hold waiting for the 5-10x. Most of the rest are trade types and medium holds with tranches where I’m looking for that 20% in short time with the tranche and get out.
- Things keep melting higher and financial analysts didn’t seem involved in the mining sector – 2 showed up at a recent conference. Mining stocks still way under the radar of most firms. Translate – still good value here for when the rest wake up.
- Portfolio managers are greedy right now trying to beat indexes – only way is to play Tesla-type of stocks, not mining stocks at the moment.
- Companies are having problems getting drill rigs out. Results are being delayed 4-8 weeks which has slowed results. Lots of drill results expected in the next 4-8 weeks.
- Can’t believe $800 margins after AISC for companies like NEM aren’t attractive enough. They seem to be chasing the lithiums of the world at the moment
- Non Farm Payrolls come out the first Friday of every month, and this month it is Fri Nov 5th – so be very cautious around this. Probably “un-wise” to load up with dovish Fed Nov 3rd. GDX/GDXJ do well when a miss happens. Last 2 months not good.
- Fed admitted CPI hotter than expected and will last longer than expected. This, coupled with possibly 3 months of missed data, is not an environment to raise rates and is good for gold.
- Hot oil price could be running with hot CPI – stagflation.
- Bigger funds have all of the same top 20 holdings. In an 08 type of situation, these big funds sell and this doesn’t look pretty for the big firms.
- Tax loss selling. Usually mid Oct through mid December is a not good time to put on big positions due to tax loss selling. You want to “leg into” positions. Could be less than detrimental if the fed “plays ball” Nov 3rd. IF the Fed is Hawkish, tax loss selling can be worse than expected. As I noted in my article, many of my miner newsletter people were doing some tax loss selling over the summer, as did I.
- Gets away from names in GDX/GDXJ. If you had GDX from 2016 to now and held, you made no money. Names rotate. Buy juniors where you can make a much better return with 10-20 smaller names
- When to buy GDX/GDXJ is at times when charts paint a strong picture. Can make a great move at times. Skeptical of being in “all in move” now, where it could be choppy by the end of the year
- Because of choppiness, if you want to nibble at positions, set limit order (buy) away from the action. Some may panic sell a market order into your bid.
- The companies in the bottom of the GDX/GDXJ could be extremely volatile as they move in and out of them. He played one that moved in and out and made some loot. New Gold (NGD) was the prime example of this with GDXJ. They don’t rebalance the shares in one day, you can see it over several days. When the selling was over after the rebalance, he got back in at low prices.
- He does not do “good to cancel” orders as a March 2020 could have you buy on a market smash down. Unless it’s a $.20 stock and he puts a stink bid out for $.15
- His stink bid would not be $.15, but $.1501. I’ve seem this many times with the 01 at the end and never knew what this was. The big boys as he says, may have to buy on the penny and cannot buy on the fraction of a penny, so if his bid is at $.1501, he gets filled before the big houses on crazy sell offs.
- On illiquid stocks, he might put out a market order to buy just because it’s so hard to buy. Maybe someone needs to sell to get cash and he gets filled.
- He LIKES a stock like AG that is heavily shorted. He doesn’t like the tax situation with AG, but structurally he thought it was a good buy and the stock was beat up – and the hedge fund and their buddies had no idea what they were doing. He sold at $18-19 and got flack when it went to $24, but then it eventually dropped to $10. Do NOT be overly greedy (yeah, I left a 5x on the table with AG options during silver squeeze and lost it)
- Use multiple limit orders on the buy side – something near the action, something 5-10% off the action, and something a little crazy at maybe 20% below the action. If a big seller comes in to dump, he can get filled at all of the prices and not just the one near the action. A way of layering your purchases in case there’s a large sell order.
- He does this unless perhaps he sees a hot sector like Newfoundland where it might be harder to get some of the buy orders filled.
- He uses Schwab for checking out his layering in the bid ask quotes (depth). He says you can call your broker on how to get this information. Might be good to see where the bids/asks are with how much at each.
- Exit strategy: Don’t be greedy – if you are up 50%, he pulls the rip cord. IS there a fundamental change to the thesis? CEO getting defensive COULD be a bad sign of something going on.
- Evaluating energy equities: heavy cash right now, he sees oil going way up and doesn’t want to chase oil. Or lithium. Would rather get behind stuff like copper that builds its base and digests moves up. Holding off on chasing. Bottom fishing at the moment with fuel cells. Can make 13-14% in a day if smart about it. CPER (ETF that tracks copper) COPX (large names in sector). No real ETF for the sector for juniors.
October 31, 2021 at 11:04 am
I don’t think people reading & doing this stuff live and enjoy life as much as they ought to 🙂
October 31, 2021 at 1:00 pm
Nate, this is a master summary I have to say. Listened casually yesterday but didn’t pick up all of the detail.
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