2020, a unique year by any measure.
I traded way more than anticipated. I trimmed some of the stronger names in early February, before the worst hit and bought back some senior gold producers & beaten down quality juniors on the way up. But I also sold some around the absolute lows, fearing this crisis would delay their projects half a year? A full year? Forever?
In numbers this means I cratered -45% of what my PF was worth 01/01/20. Ouch.
By mid-August this turned to +50% (or a triple from the March low). After some lower trending months (commodities & specific trades), I’m now back at a +50% YTD performance.
While this is a widely used ‘KPI’, I rather review my stocks separately and based on milestones achieved. In the end, it’s the long running return that counts, not that nice Christmas squeeze.
While I’m positioned to take advantage of the coming silver bull, it’s just one of the passing events of the next 10-20-30 years. Maybe a big one at that, the big one, but I don’t depend on it to happen. Meaning I want to set myself up to profit from several commodities, several angles and over a longer period of time. “Play the trend, move on to the next one” if you will.
With the beefed-up silver exposure, my current allocation split-up is around 35% Gold, 30% Silver, 35% BM’s.
2020 wisdom
Cut the noise
One of the most quoted “wisdoms” for me personally. Cut.the.noise.
Noise in the context of junior mining speculating meaning:
- Fake news, anonymous opinions on news, political discussions, etc.
- Any type of classic “Fear mongering”
- Inflated ego’s
Find the market voices that fit your world view. Obviously, past success isn’t a guarantee for future performance. A tricky & personal balance needs to be found. Lurking around the corner are “tunnel vision” and “confirmation bias”, be aware. Always challenge the argumentation as to build your own convictions. Flexibility in a fast-moving world is key. Follow your convictions while not ignoring your gut feelings.
Printer goes BRRR
Good for Gold & commodities. End of story.
Charting is hot & trendy
Why use words when you can use a picture? In age of shortening attention spans, a simple chart, a line here, an arrow there can create a whole story in just one scroll on social media. While I’m very focused on fundamentals, over the years I picked up the importance of (at least!) checking some chart technical details (volume, support & resistance (fib) levels, gaps, etc.) . I can advise setting up a simple TradingView account (If you are ready to upgrade to a subscription version, use this link to get a discount).
Share and thou shall receive
I’m proud I can say I answered each and every personal message or question in 2020. I received way more intel from others than I can compensate for. Win-win anyone?
10 donations received in 2020 (for the beer tab), thank you very much!
Know your fellow shareholders
- As above tweet alludes to, some stocks only move when the big money on the sideline gets their way in. Often it isn’t easy to buy a significant position on the open market for larger investors (think $100k-$500k+). A perfect sized financing would include these potential buyers (before they wander off), while leaving some appetite to expand that position on the open market.
- Seeing a stock creep up on low volume: there is no clear seller = Buying pressure
- Significant insider ownership and/or buying
- High volume on good news with stock not moving = Liquidity event. Not decisive but one to note.
- Size, participants and terms of financing. It should roughly cover the next field program &/or next 12 months. I’d look at a minimum of USD1Mil to cover costs. Check the discount and non/half/full warrant (depending on market conditions)
- A next step is to see which funds are actual in the company, it’s is a commodity focused one or a PE group that stumbled into a position or a Major with a toe between the door or…
Pay for execution not patience
While we try to anticipate coming catalyst (aka predictions), I’ve learned if often pays to just wait and see the news before making any decisions. I’m happy to pay a small premium if results are good & at the same time, I have limited my opportunity cost time wise.
I value fast moving teams that get sh$*t done.
Make the numbers
Basically, you need to know the potential reward to assess the risk/reward ratio. Don’t take high risks for small returns (paraphrasing Rick Rule here).
Timing is not important to choose the right project or company, but it is very important to earn money
Timing. And Technical signals. Complimentary to fundamentals. I needed to learn that.
The right investment network helps to leverage your talent
Listen, read, talk, ask. You will improve your skills & knowledge. End of story.
If you are worried on a specific, contact management directly
So easy, not often done. I learned this before but worth a re-pete in this crazy year.
Check out “2019 Lessons Learned” for past & more concrete learning points
My condense watch list
With my final 2021 overall PF performance is coming in around +50%, it’s striking I could have done better just hodling any of my watch list baskets.
Important note: Of course some have only been added after a notable event in 2020, so it is a skewed list to say the least. I never owned all of these, for each I did consider owning them at one point & I have at least a basic understanding of each story here. The extended watch list is +120.
Observation: While the core is still heavily Gold & Copper orientated, Zinc, Nickel & especially Silver have been gradually added to the mix this year. For all things silver, I refer to https://www.goldventures.org/
Observation: I’m stubborn. While I know crap will fly higher when the bull hits, I stick to buying ‘Quality’ (solid team, low G&A, money in the ground, potentially economic asset (for real) at conservative long-term prices, etc.).
Check my previous article on the ‘leverage versus Margin’ discussion
High margin mines, will make more profits
Low margin mines, will make BOATLOADS more profits
While I want to maximize making money, I also don’t want to part from it. So there is a limit of risk/reward I’m comfortable with. High Risk/High losses is often neglected when portraying the potential future. In conclusion: My buys would be just fine with $1800 gold, $20 Silver, $3 Copper on a longer term.
Note: This is a very flexible list, yet to make it to the ‘left column’ isn’t as easy. For each junior here on ‘the left’ I’ve spoken directly to mgmt. as part of DD, it’s mandatory to set yourself a $ limit as which point you feel you need to do that (aka not for senior producers or small allocations). In 2020 that changed quite a bit with plenty of online available interviews of all sorts. Still, a personal conversation is something different.
Cheers, Piet
If you liked my content this year, please consider beefing up my allocation towards preserving the local Belgian beer culture… by me consuming them. You can help the cause with a small donation here: http://paypal.me/petepandapayup
