"While there are plenty of reasons to be cautious, I believe that 2019 just might be the year that precious metals investors have been waiting for since at least 2012. Valuations are cheap, pessimism is high, and many gold & silver producers have gotten leaner during the last several years, putting them in a position to finally deliver returns to their shareholders. Could 2019 be the year in which precious metals producers finally deliver leveraged returns to shareholders in a rising metals price environment? My bet is yes.
As it turned out, the GDX was up nearly 50% in 2019 while gold was up a more modest ~20%.
In December 2019 I wrote:
"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."
Prescient words, but little did I know what was about to unfold in 2020. More importantly, the magnitude and the precise timing of what exactly what was about to unfold.
I will leave my lessons from 2020 and hopes for 2021 for the end of this post. Let's hear from some of the CEO.ca community first.
@mikeymike426: My 2020 lesson learned is "Stick with what you know!" I took a leap of faith this year and invested in a sector I wasn't entirely familiar with and wound up taking a loss while all the mining plays I followed surged. I'm looking forward to the continuation of interest and money which has been flowing into the mining sector and hope that 2021 brings better fortunes for those who had a rough year in 2020. I'm also hopeful that the new year comes with a real solution to the pandemic so we can all get back to a more normal lifestyle.
@CautiousNow: In 2020 some of the key learnings were: Remaining calm and not panicking and taking big losses in March. The benefits of riding winners longer than I previously would have done and in turning the page and moving on from obvious non-performers.
2021: I’ll be placing greater emphasis on the defensive side of the portfolio through an increase in positioning on low cost junior gold producers with expansion upside; potential tier one under-valued copper and zinc stories; and maintaining a significant cash position to seize opportunities that arise.
@Cole119: In 2020 I learned that trading is stressful, a stress that can slowly accumulate without us noticing. This happens in both good times or bad and it translates to every area of life, eventually having severe consequences on our health. Exercise and listening to positive podcasts are just a couple of ways to combat it, but finding a way is a must.
I am excited for a new year filled with many unknowns that will be better handled with a clear mindset and of course seeing in person my investment community friends.
@Excelsior: 1) This rollercoaster year of 2020 taught me that the best laid plans are simply the set of one's sails, but not the actual destination. The winds of change can howl and wail suddenly, and one needs to stay nimble to incorporate this new information, and then adapt the set of their sails and make a new plan accordingly.
2) In 2021 prosperity in wealth, health, the mind, and the soul will come from looking at things unclouded by judgment in the present moment; being conscious of what is authentically unfolding, and then taking spontaneous right action from a place of confidence, love, and sincerity. The past does not equal the future.
@Fischlaender: Ride the bull but get off while you can still control the jump off its back.
In the past bull years I managed sometimes to double my entire trading account or maybe even make 150%. In the bad years I was usually getting by or losing 10 sometimes even 20%. This year I decided to strictly stick with the shotgun approach in my trading account and had at all times minimum 20, sometimes up to 50 companies in my trading portfolio. And I stuck rigorously with my initial trade setup "I want to have 10-15% in this one, then I exit, no matter what" based on what I thought the underlying value/momentum could be. So I had probably 500 trades int that range, by far the most. 100 went as a loss, pulling my stops. Lots of those stocks went on to run higher, but I had my gains pocketed. I had maybe 100 trades with more than 20% and 12 with a double or more. The doubles were all stocks that I had thoroughly investigated and firmly believed in the underlying value. On the way to 100 I always took my entry off the table in between 30 - 50% in the plus and reinvested in new play.
Overall, with this methodology I managed to exit 2020 with a 800% plus in my trading account. I know there won't be many years like this, but I will stick with this methodology until proven otherwise.
And our personal outlook and hope is this: When we finally can return to our old lives maybe in mid-2021, what used to be normal back in pre-Covid days (hugging the family, dining out, travelling, theater, sports, bars etc.) will then suddenly look like utter luxury. I hope we can savor that feeling for a while to realize just how lucky we are (or have been so far).
@TheCowSaysMoo: Although lately it is more prevalent, I’ve never been one to tear down others for having a different point of view. Personally, I believe it's a waste of time and would have the same effect as telling your teenage daughter to “stay away from that boy”.
This year I have worked on being more open to other’s perspectives and on more than one occasion it has helped me make more educated trading (as well as life) decisions.
I’m looking forward to what learning experiences I will have in the coming year.
Tim Termuende (CEO, Eagle Plains Resources): In 2020 I learned to plot a course and stick to it. Build up a team of people that share a common vision and treat everyone with respect. Leave room and time for everyone to have fun, take pride and enjoy what they are doing and who they are doing it with. Keep in mind that crisis equals opportunity.
In 2021, continue to stay the course and seize opportunities that may arise. Remember that we are in a bubbly market and to “make hay while the sun shines”.
@fingerprint42: Covid-19 gave every government in the world the opportunity the show just how useless they are when confronted with a real issue. It’s a bad flu. You don’t want to catch it. We know at least two ways to prevent it but Fauci and the CDC refuse to allow treatment other than from big Pharma. Very soon we will understand how dangerous all of the RNA vaccines really are.
@tommy: This time last year I felt underinvested watching global stocks tick up slightly every day. I started buying the Covid crash early. As fear spread I sold most of what I bought, which taught me I’m not the dispassionate investing legend I thought I was. I bought a little at the lows. The vengeance of the recovery was not something I expected and the rest of the year we were geniuses. Took some money off the table early Nov before another giant rally. The lesson is always humility and the rich get richer. In 2021 I am optimistic to get lucky and for caloric deficits.
@SASKEXPRESS: I was reminded in 2020 that there are deposit types that I do best with. I tend to do well when my gut is saying "they have something here, you mostly understand the deposit, the stock is early stage and cheap, you should load up."
If I could do better, it would be to marry the above with timing metals sectors when primed to run. This is tough.
I sleep best while concentrating on the former.
In 2021, I simply look forward to a core holding graduating to miner and large drill campaigns from core holdings that I think have upside. I have a few pure spec plays but as always, I keep exposure small there and watch them very closely.
@Juan_Valdez: Looking back at the past 12 months, it certainly was a crazy year. So many highs, so many lows, and so many lessons learned while we navigated our way through a global pandemic. Some of the more important things the past year has taught me is that no matter how bleak one's current situation is, things will always get better. Looking back to March and seeing the carnage in my portfolio and the negative returns I probably hadn't experienced since the financial crisis, only to skip ahead 9 months later and be enjoying all-time highs. Was quite a roller coaster! This year also taught me to appreciate what you have, focus on the positives, and always be grateful. Finally, and just as important, a lesson my 5-year-old son always reminds me of every day(and one I sometimes forget), to always be kind.
@Chiel: We go back to February, covid fear just became the new big thing and markets started crashing. Me and my business partner were discussing future outlook and I told him, listen look at history. All major events start this way, we first have a leg down a little recovery and then the big drop. I’d be smart to protect your assets, go cash and be on the sidelines and see how this plays out.
He sold, the market crashed and he was very thankful for the conversation we had.
Now me thinking I was smarter than the market because I’m mostly in precious metal stocks, did not sell. Feeling the pain day in, day out as we keep falling down and left feeling stupid. Luckily having gone through it before I held on and rode the recovery all the way as well ending a crazy year were my portfolio went from -50% ytd to over +100% ytd.
Now the lesson: don’t think you or your portfolio is special. When the shit hits the fan, everything goes down.
This not being the first time, made me realize I’m probably better managing other peoples money than my own. Strangely. Which made me think it’s probably because I am not greedy with other peoples money. So for 2021 I am going to try and be more objective, less greedy and thus better manage risks and manage my own money as if it was not mine.
My Lessons From 2020 And Thoughts On 2021
In 2020, I was reminded of many things more than I would say I learned new things. I was reminded of how market sentiment can turn in an instant. I was also reminded of how governments and central banks will stop at nothing to save the golden goose and kick the can further down the road. I was also reminded that markets and market sectors are cyclical, and at any given moment there are multiple cycles in play on various time frames.
In 2020, I learned that most of what exists on the internet is actually not truth, and the crowd will often rush to judgement based upon preconceived biases and/or fears. Never before has it been more important for an investor and human being to be discerning in ones sources of information. It is also exceedingly important that we practice objectivity as we process new information, while keeping an open mind for new possibilities. In 2020, I practiced being a skeptical optimist and I'd say it served me fairly well.
In 2020, I learned to value my health as the most precious natural resource of all. And I was also regularly reminded to be kind, compassionate, and grateful for every breath I take.
As we enter 2021, I am less sure than I was entering 2020. I am confident that the long term secular tailwinds favor precious metals and natural resources, however, I am less sure of the forthcoming shorter term permutations. I believe that 2021 will see a much greater dispersion of investment returns across market sectors and asset classes than what we saw in 2020. In the junior mining sector I believe we will see more of a "stock picker's market" in which quality will rise to the top with extraordinary returns, while the vast majority of the sector will meander in mediocrity or the poor house.
In 2021, I look forward to keeping an open mind while continuing to practice effective bankroll/risk management. I will also remain mindful that risk in markets is usually the greatest when market participants' feel the most certain of future outcomes. As Howard Marks says, the virtuous circle and the vicious circle are both unrealistic exaggerations.
May you all experience great happiness and prosperity in 2021, while practicing gratitude for the smallest things in life.
DISCLAIMER: The work included in this article is based on current events, technical charts, 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.