Sunday, April 26, 2020

The Golden Missile

Back in 2008 or so when I started this blog, the financial world was a mess. The banking system as we knew it should have been destroyed back then. I followed the money right here and discovered that the Federal Reserve made loans of 16 trillion worldwide with non existent money that was nothing more tangible than electronic zeroes. President Obama gave all of those banking criminals a pass. With a wink and a nudge, every one kicked the can.

I simply could not commit money to equity markets under those circumstances.

I am ashamed to say that I missed the entire bull market move from Mar '09 to Mar. 2020. I missed a couple of very obvious things and mostly just dabbled in mining stocks during those 11 years. I managed to break about even having taken a significant 10, 000 dollar loss on a South Dakota gold mine.

So mostly I've just bought some gold, platinum, and silver and watched it languish for 11 years while the paper investors I knew laughed at me.

Three very significant things happened this year. I've got a friend, Pat, who reads this blog and who trades quite a bit. Pat frequently texts me his crazy ideas and I look them up. Some are crazy and some are very good. One of his texts made me a cool 6 grand for which I owe him a meat and cheese tray this Christmas. So Pat renewed my interest in trading just before the corona virus crash. I made a fair amount on the short side but got beat up as Trump and the Federal Reserve started announcing trillion dollar bailouts and trying to jawjack markets higher.

The second significant thing was that after 11 years of huge gains- my state retirement fund authorized a 3% cost of living raise. This shocked me. For 10 years our state system has been giving us some nominal 1% cost of living adjustment. The last time our state handed out a significant payout (a 13th month full check no less!) the market crashed within months. Our state retirement system is the quintessential market timing mechanism. When they doled out a 3% cost of living payout this year- I knew the bull market was over. It's like the shoe shine guy giving you stock tips- at that moment you know that every dollar in America is invested. That's my state retirement system. When they finally feel so guilty that they give you 3% instead of the nominal 1%- it's time to get out of equity markets.

So as the markets crashed in March with the impending corona virus shutdown- I was positioning myself in the mayday markets- gold, silver, and mining stocks which were going up.

Then the 3rd significant thing happened. An old friend called me  out of the blue after 5 years and started asking for investment advice. This is a guy who listens, applies what he likes, and will actually invest significant money.

So I told him that the set up has never been better. Ever. The world is awash in make believe money, with literally trillions upon trillions of debt being added which will never be repaid. Mining costs have never been lower. Gas and oil are dirt cheap. There is a worldwide shortage of gold. The world needs safe havens and safe currencies. It has neither.

I think after all of these years, it's time. When Bank of America calls for 3000 dollar gold, I sit up and take notice.

So a few ideas if ya wanna climb aboard the gold missile. I've screened these for best projections and the least risk. You still have to do your own due diligence.

Since the lows of March- my favorite two gold miners have made over 100%. They are still trading at sub 20 p/e's with no debt, huge cash, and they are acting quite strong even when gold is down a little.

Kirkland Lake Gold (KL) Still think it has huge upside. Currently around 42. No debt, increasing production, new drilling identified excellent new targets. I have a few hundred shares.

B2Gold (BTG) Three main properties, all excellent gold producers. Only knock on this company is the huge float. My biggest position.

Newmont (NEM) Hitting on all cylinders. Not currently invested here.

Kinross (KGC) Remade old company also hitting on all cylinders and making new highs.

Irving Resources (IRVRF) is my favorite junior. Not mining but they have a identified a lot of gold. Trading sideways but could become a prime takeout target.

I use a few ETF's. GOAU has doubled. NUGT, JNUG, GDX. I do use some etfs to short the sector but currently not employing any of those tactics.

Best of luck out there. Maybe it's time.