For me, 2019 was a year characterized by extreme highs and lows. In May, I had moments where I wondered why I am an investor in the junior mining sector and why I bother caring about some of these companies. Less than a month later I was reminded why I bother with all of this as gold shot skyward and my portfolio followed suit. By the end of August, the depths of despair from a few months earlier were a distant memory, as a “everything is working” euphoria took hold of the precious metals and mining sectors.
In 2019 I learned the monumental importance of share structure; some of my biggest gains in 2019 came from companies with very tight share structures and high insider ownership. On the other hand, bloated share structures or companies that place shares in the “wrong hands” can quickly backfire and result in poor share price performance regardless of the quality of a company’s projects.
In terms of importance, in a close second to share structure is the quality of a company’s management team. Look no further than Minera Alamos (TSX-V:MAI) and Great Bear Resources (TSX-V:GBR) to see two excellently managed junior miners that have rewarded shareholders handsomely.
I also learned how important it is to have a couple of big winners (I knew this of course, but it was powerfully reinforced), and to let your winners ride. Virtually my entire performance from the last two years can be credited to outsized gains in a few stocks (AMX from $.17 to $.60, MAI from $.11 to $.24, and WHN from $.14 to $1.30) - without those 100%+ gains i’d be struggling to keep my head above water as an investor in this sector. Simply put, in order to make up for the low success rate and high degree of risk in the junior mining sector it is critical to manage to have some big winners and let them run as far as you possibly can (there is no magic formula for knowing when to sell….it’s a matter of bankroll management and a healthy dose of luck).
In 2020 I am looking forward to having a couple of ten-baggers (900%+ gains).... In all seriousness, I am more optimistic than i’ve been in years and for whatever reason it feels like multiple powerful forces are aligning and preparing to intersect at some point over the coming months. While gold has long term resistance up between US$1550 and US$1600, I would not be surprised to see gold blow through this layer of resistance early in the new year. If this should occur I envision the fuse being lit for a once in a lifetime rally in the precious metals mining sector.
20 Year Logarithmic Scale Gold Chart
You could say that i’m bullish on gold and mining shares heading into 2020. However, I live by the axiom “strong opinions, weakly held”, so if a once in a lifetime rally does not materialize in 2020 I won’t be terribly disappointed. After all, i’ve been an investor in the junior mining sector for more than a decade so i’m used to being bitterly disappointed….
I have learned to stay humble and remain grateful for the little things in life. The market is a game, a gift, and a limitless challenge all wrapped into a complex enigma of human emotions and economics . May I continue to learn and become a better investor/trader in 2020, while simultaneously helping others to learn, and maybe we can all make some money in the process.
With all of that out of way, some of CEO.ca’s best and brightest sent me their contributions to this year end post and I trust that you will not be disappointed if you choose to spend a few minutes of your Christmas reading what they have to say….
CEO.ca Contributors
"What I learned: 2019 was the year I learned to put some healthy distance between my share price and my evaluation of my own performance. After trading down after securing a strategic investment from Teck I had to just shake my head and acknowledge that sometimes the market is just stupid. Tune out the noise and get to work. Science eventually wins.
looking forward: Maybe it's my imagination, but the market is starting to show some green shoots as we head into 2020. I'm pretty resistant to temptation, but even I'm getting FOMO on some stocks I've been tracking. I may regret saying this, but I feel like 2020 is going to be a good year." ~ @Brandon (Brandon Macdonald, Fireweed Zinc)
“In 2019, I learned the US is well past over the edge of the cliff and the End of Empire is here. We have interesting times ahead and anyone who has not stocked their bunker is basically fucked.” ~ @fingerprint42 (Bob Moriarty, 321gold)
“In terms of 2019 - the old adage in mining about management, management, management could never have run truer for me - i have been lucky to have been surrounded with fantastic people both at GBR and MAI - it makes every day a rewarding experience and a learning one. Secondly, that opportunities present themselves everywhere and my biggest mistake was not opening up an Interactive Brokers account to tackle Aussie stocks and did not take advantage of Adriatic's impressive discovery and run. On a lighter side, I also found that at 48 and British you can never hide from your genes as my major dental surgery toward the end of the year pointed out. Finally, on a personal side it's important to realize that what we love to do in this industry is only done with the support of shareholders (always focus on them first and foremost) and the support of family for the time spent away and long hours and stress that can come with the job.
For 2020 - My biggest hope for 2020 is that we are seeing the dawn of a new multi year precious metals market that should help pass the time before Copper really gets going. I think investors have suffered long enough and it's now time to make hay while the sun shines. I continue to be excited about GBR's work in defining the shear scale of the Dixie property and what that could mean for our shareholders. My day job will transform as MAI begins life as a gold producer. From a career perspective I cannot stress how both of these are incredibly exciting to me notwithstanding the challenges that such work involves. Nothing should be easy in this business and when it's challenging it becomes that much more rewarding. Mining Twitter has transformed in 2019 and i think will only get better in 2020 - i have learned so much from those that share their wisdom that has augmented some great voices here at CEO.ca. Finally, on a personal note i hope to take a holiday but I am not holding my breathe on that hope and aspiration and ranked against the others above it definitely the least likely :)” ~ @TheGalvanizer (Doug Ramshaw, Minera Alamos)
"2019 taught me not to underestimate the swing from bear to bull. Earlier in the year, we had reached, what appeared to be, "rock bottom" in prices and sentiment. And now we seem to be in the beginning stages of a bull market. I am excited to see more positive momentum for miners and metals for 2020 while also inviting more investors into the junior resource space." ~ Trevor Hall, Clear Creek Digital
“A key learning in 2019 is that my selling discipline was a weakness. I now consciously think about what I can sell each day, preferably before the market opens. My guideline is to sell some of my position when I see the following: A. Heavy promotion B. Rapid unjustified price gain C. A liquidity window is open which may not persist D. Negative news or other information comes out E. News is late and I can't determine why F. Financing risk is increasing. G. Seasonal factors warrant reducing risk. H. Goldfinger is selling :)
What I look forward to in 2020: I anticipate a big rip is coming in commodity prices. Major markets will likely have a negative bias but hopefully will not crash. Speculative capital will start to flow into outperforming commodity markets. I plan to raise my cash position to the highest it has been in years if we get a big move in the junior mining plays.” ~ @martin
“Don't let other people influence you too much. If a case doesn't make sense to you, even though it seems to make a lot of sense for others, you probably should stay out. One can't "transfer" conviction and if you don't really know why you bought a stock, you will never know if/when you should sell it. Furthermore, you will probably not have the fortitude to do the "right" thing during volatile price movements. This is the main reason why I personally put in a lot of time and effort to explain why I am bullish on my favorite stocks. If it makes sense for other people, then they will also hopefully develop internal conviction and won't make extremely emotional decisions. It's also helps protect myself by high-lighting arguments that can be challenged which can give valuable feedback. People. I'm not a geologist nor a mining engineer so there will obviously be a lot of potential traps that I won't see coming. So many things can go wrong and I feel the best way to protect myself is to simply make sure that companies that I invest in are run buy good and competent people with skin in the game. I will never know more than insiders of a company, so if management is very competent, then the project said management have chosen to work on ought to have relatively few insurmountable problems etc. Good management solves problems and bad management creates problems. Lastly, I would say that time increases the likelihood of a positive returns for a company with good management, while time is your enemy when a company is run by bad management. In short: If you are a relatively passive HODLer, then people becomes extremely important.
Stop getting too excited when your favorite cases revalue higher because this also means that a "no brainer" probably got a bit less of no brainer. Unless one has already bought a full position in a company, one should root for lower prices and thus a higher margin of safety.
... On that note I think that my investing strategy has more and more gravitated towards trying to find these "no brainers" and when I do, I go big. There simply aren't that many around and it's very hard to stay up to date with a bunch of companies even though diversification is the typical rule for capital preservation... In short; I rather have a concentrated portfolio of what I perceive to be no brainers than owning 10-20 possibly mediocre companies where I have a hard time to be up to date with developments and that can result in medium/low conviction followed by rash decisions.
Realistic goals. This is something that I have tried to really hammer into my conscious and subconscious. It's so easy to get tempted by "what ifs"... What if I buy a large chunk of grass root exploration company X and they hit it out of the park? Such what ifs makes me greedy. Don't get me wrong, I would love to be all in a stock that becomes a ten bagger in a few months after an amazing drill hole or two. BUT, I think people constantly overestimate the odds of success, which makes such what if scenarios pretty deadly for a portfolio. Instead, I nowadays constantly try to remind myself that I should look for companies that I think have a pretty low chance of going down a lot, while also having a relatively good chance of either revaluing (intrinsically cheap) or creating 50% of intrinsic value over the next 12 months. In other words, I'm trying not to get lured into the "get rich quick" mentality and instead focus on "getting rich" in time.
What I look forward to in 2020:
First of all I expect commodities to do well overall. Especially gold and silver. Thus I will start the new year with being pretty much only invested in primarily gold stocks. Thankfully, I think that 2020 could be the best year yet for my favorite gold stocks so I haven't felt a need to shuffle my portfolio even though 2019 was a good year for most. This will however test my discipline since I find it a bit boring to not have a lot of companies to evaluate for a potential spot in my concentrated portfolio. In other words: I find it difficult to sit on my hands even though it can be the hands down superior (in)action.” ~ @HHorseman
“I learned it’s high time I am more surgical with my entry points. I am always happy to take on a starter position in a stock that intrigued me as I find it helps get me in the game. But I sometimes ignore the chart in doing so and much more often than not I find I could have entered at a better price had I waited. And sometimes I know it and just do it anyway. So I’m going to track entries in 2020 and write down my thoughts as I do it. Why am I buying here? What is my plan? Then I’m going to try to review the plan as time passes.
I’m excited for the prospects for my largest positions. I want to see how Adriatic Metals plays out as there are several potential catalysts coming. I want to see Minera Alamos switch into production. I think this is the year Great Bear’s scale becomes apparent to the general market so it will have room for the next leg up. I bought Fireweed Zinc throughout the fall - and I want them to dilute and drill hard this summer. I think Boundary could be the area that makes this stock run back north of a dollar by the fall. As always I have some more speculative plays in my portfolio that I’m intrigued by but the math says some will go up and a couple might prove to be dogs. The thrill is in the chase for many of us.” ~ @SASKEXPRESS
“Tax loss season is like a garage sale. This year I learned to have lots of dry powder to take advantage of it. Next year I look forward to see how many were good picks and how many were just buying other people’s junk.” ~ @Thecowsaysmoo
“In 2019, I learned that things don’t always turn out the way you planned; that life is fragile, and it can change in an instant. I lost my business partner, and one of my closest friends to a car accident. Through that, I learned that you can get through the hard times, and keep looking for better ones, as long as you have people who love you.
For 2020, I’m looking forward to charting a new course, and hopefully seeing a true bull market in mining for the first time in almost a decade. 😉” ~ @fl (Fraser Laschinger, Canadian Orebodies)
“What has 2019 taught me?
1) An interesting exploration project by itself, without an experienced board of directors and management team, with deep pockets and access to institutional equity capital is un-investable
2) The extractive industries (energy, forestry, agriculture and mining) from coast to coast are under assault by provincial and especially the federal government.
3) My “blue chip” holdings all have a minimum of 30% foreign exposure, and I have shifted my speculative positions to foreign based operations and projects.
4) Trudeau has publicly stated he will keep a low profile in his second term. This is because the RCMP cannot guarantee his safety, from which I infer there are a growing number of desperate Canadians suffering from economic hardship.
What do I expect for 2020?
1) Continued re alignment of global supply chains and manufacturing will support modest growth and should be at least supportive for the commodity, high tech and energy sectors, however, I expect Canada will not participate and be left behind as the Trudeau regime pursues a transition to a green command style economy to fulfill its Paris Accord commitments.
2) Although anecdotal, a foreign banker told me he has seen a lot of Canadian money exit Canada since 2015 and his phone is ringing off the hook since October 21st. I expect the exodus of capital from Canada to increase and small to medium size business to not re invest in their businesses.
3) Mainstream media has finally reported that 43% of Canadian families have $200 or less disposable income at the end of each month. The cost of essentials continues to increase, namely food and utilities (electricity and water), along with municipal, provincial and federal fees and taxes, I therefore don’t see a consumer driven economy, and only increased bankruptcies, foreclosures and higher unemployment. Already, banks have begun tightening for these very reasons.
4) Minister of Finance Morneau, in his mid term report, stated the deficit is $10 billion higher than forecast, and expects the deficit will be a further $10 billion. Slightly over 50% of the working population now works for some level of government from county, municipal, town, city, province and federal. This is unsustainable as are the growing deficits as capital flight erodes the tax base.
5) As earth enters a Grand Solar Minimum, I expect continued cooling, which will negatively impact global agricultural production for a few decades, at best resulting in higher food costs, and at worst, starvation. This will negatively impact geopolitical stability from a growing refugee problem. Europe has just demanded the west take 100 million refugees.” ~ @Teevee
“Lessons learned in 2019: A undervalued World Class Discovery in a metal which will see some serious shortages five years from now can go down another 50% (from 0,2 NAV to 0.1 NAV)
#2 A profitable and debt free Palladium producer with a PE=4 is virtually non bid. Proves markets aren't efficient at all. Thx for all cheap shares. PDM was bought out a few months later.
2020: We might see a huge recovery rally in many metals and indices, after a break out from a down-trend during the last 8-10 years. Don't be surprised to see a gain over around 100% in the TSX-V in the next 12-18 months. My favorite black swan in sudden dollar devaluation. This might catapult precious metals even more. And, yes Platinum is a screaming buy now, even without this event.” ~ @Discoveries (Willem Middelkoop, Commodity Discovery Fund)
“Reviewing last year’s article, I think the biggest lesson learned by most is how markets can remain irrational longer than we can stay solvent. 2017 was tough, 2018 tougher, but I know of a few posters who have left the scene this year, throwing in the towel entirely.
The other lessons were how important it is to network, make connections in the space. My biggest wins this year came from investing in companies brought to my attention by people I have come to know.
And lastly, stack the leverage in your favour wherever possible by taking part in financings with warrants.” ~ @Vaughan
Stay thirsty my friends and get some rest over the holidays, 2020 is shaping up to be busy and action packed with no shortage of opportunities across financial markets...
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.
