Precious Metals Investing: Stay Focused and Stay Long

Source: Michael Ballanger for Streetwise Reports   06/03/2021

Sector expert Michael Ballanger extolls the virtues of a pair of newsletter writers, and discusses how moving to communications to the internet has impacted trading, including in the precious metals market.

The first investment newsletter that I ever read was sent to me by one of our brokerage clients back in 1979 and it was called “Dow Theory Letters,” written by the man that inspired me to do what I do today, the legendary and late Richard Russell.

Notwithstanding a few unbelievable market calls, such as the top of the Great Bull Market in 1966 and the end of the 1973–1974 bear market within days, it was his storytelling that captivated me. As a bombardier during WWII, he related the terror of riding through anti-aircraft barrages with wax in each ear while trying to identify targets in the bomber’s viewmaster, and while I longed for his sage market guidance, it was the stories that kept me a dutiful subscriber until his passing in 2015.

Russell had a great many friends and colleagues in the investment industry and often praised them for particularly important market calls, or even passing observations or opinions, but one thing that I never observed was a Richard Russell ridicule or even mild criticism of his competitors. He carried honor into battle as a badge and it was one of the reasons why the last big testimonial dinner for him a few years before his passing was a “standing room only” affair. There has not been an investment newsletter that even slightly compares with “Dow Theory Letters,” and the wisdom it bestowed upon the unsophisticated investor, and the humility with which it was delivered.

Another newsletter personality that remains a friend to this day is Robert (Bob) Bishop, formerly the publisher of the Gold Mining Stock Report from 1983 to 2007. While I always admired Bob’s writing prowess, he had an uncanny knack of zeroing in on the really big exploration stories. In fact, his voluminous encyclopedic report in 1991 entitled “Diamonds in North America” was the finest piece of educational data that I have ever read and that still stands today.

There was nary a writer on the planet who had a clue about what was going on in the summer of 1991, and what investors have to understand is that Bob’s report triggered a CA$200 million staking rush way up in the frozen tundra, followed by massive financings for the junior diamond explorers. While the success of Dia Met Minerals in its move from the pennies to over $80/share helped bring in new subscribers, Bob deserved to receive royalties from the promoters, fund managers and investment bankers who pocketed millions of dollars in fees and capital gains.

Now, if you thought that his foray into Diamonds-101 as a crash course was a one-off, once-in-a-lifetime blessing bestowed by the two goddesses of junior mining (Mother Nature and Lady Luck), it was only a few years later, in 1993, that Bob repeated the performance by being the first writer to talk about a possible nickel discovery in northeast Labrador, by way of a Robert Friedland company called “Diamondfields Resources,” which actually turned out to be an even bigger win than Dia Met (pennies to $170/share pre-split).

I recall having lunch with Bob in Toronto around 2007, in the early days after he retired from the business, and I was raving on and on about the statistical improbability of having nailed not one but two major, world-class discoveries in one career, let alone the half-decade time frame. The ever-humble Bishop interjected, correcting me by saying “You forgot about Arequipa”—sold to Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) for CA$1.1 billion in 1996—another Gold Mining Stock Report recommendation that made his subscribers fortunes.

As the years have rolled by and mimeographed newsletters arriving my regular mail were replaced with whirring fax machines in the wee hours of the morning, the arrival of the internet age allowed greater access to investment information in terms of both reduced costs and increased availability. Today, in 2021, it is the macrocosm of internet access and proactive social media marketing that has altered the landscape for the newsletter community. With Zoom-type technology, everyone with a nice smile and the gift of gab is now racing to get us to press the “Like” button so they can get paid by the advertisers.

The newsletter writers of the 1990s and 2000s have shuttered their laptop keyboards for make-up trays and teleprompters, so it is not unusual to see the same topic discussed twenty-five times in various interviews over a two-day period. It is like a game of musical chairs as everyone rushes to interview “my friend <Insert Newsletter Guy here>,” at which the amount of fawning and bowing and promoting of the “guest expert’s acumen” and investment advisory service becomes somewhat counterintuitive.

Well, we all better get used to it because the world is moving like a laser beam on steroids these days, and between cryptocurrency volatility, stock market overvaluation and the Great Inflation Debate, any narrative driving millennials and GenXers to buy stocks can change literally overnight. We saw Bitcoin go from hero to zero with one Elon Musk tweet, proving without argument that the old days of extensive “due diligence” (a thoroughly abused phrase these days), like Bishop’s “Diamonds in North America,” would take up far too much valuable time for the Millennials and GenXers to show any serious interest. Rather, a text message or a tweet from “someone they know” about a “good stock to buy” sends millions of shares of volume racing through the virtual universe, only to arrive on the asking side of the quote, swamping anything and everything in its path, resulting in short-selling hedge fund managers being carried out on stretchers.

I have a few friends in the newsletter community, and as I cannot seem to get the corporate finance bug out of my system, I invite them to join me from time to time in one of my endeavors. The forgotten concept of reciprocity works well with us older guys, because it was Brien Lundin’s tip on Great Bear Resources Ltd. (GBR:TSX.V; GTBDF:OTCQX) in late 2018 that prompted me to add it to my portfolio in 2019 at CA$2.20/share (Brien’s subscribers owned it from under CA$0.50). The move it made after the Dixie discovery in the Red Lake camp, to over $15/share, was breathtaking, and the way this “geriatric protocol” works is that I give full credit to the idea generator with a two-word punctuation mark called a “thank you.” Imagine that.

The price of gold last week made an assault on the formidable US$1,910–1,920 resistance, but was summarily rejected, leaving gold barely above the magical US$1,900 level on the week. Silver also had an assault of the $28.50 resistance zone, and too was soundly repelled. I exited my long gold futures position on a $1,901 stop-loss after reloading back at the March lows around $1,678/share. All in all it was another great trade but, sadly, leaves me once again flat, and nervous.

Well, I am not really “flat,” because my largest personal holding, Getchell Gold Corp. (GTCH:CSE; GGLDF:OTCQB), is trading within $0.08 of a 52-week and all-time high, and is ahead 85.29% year-to-date.

I have been obscenely vociferous in my constant (and I am sure very annoying) trumpeting of the merits of Getchell, but after all I discussed earlier regarding newsletter writers, the one attribute that I have hopefully learned from the Russells and Bishops of the world is that when you have done all of your homework and results are coming in and are exceptional, you must stay focused; follow the strength of your convictions; and stay long.

I see gold, silver and copper all trading sideways for a bit longer before all moving to new highs, so line up your favorite developer in the crosshairs and pick your price. The upcoming move is going to be life-altering, and you must be “egregiously long” before the Chatanooga choo-choo leaves the station.

Originally published Friday, May 28, 2021.

Follow Michael Ballanger on Twitter @MiningJunkie. He is the Editor and Publisher of The GGM Advisory Service and can be contacted at miningjunkie216@outlook.com for subscription information.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

Disclosure:
1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Getchell Gold. My company has a financial relationship with the following companies referred to in this article: Getchell Gold. I determined which companies would be included in this article based on my research and understanding of the sector. Additional disclosures are below.
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Michael Ballanger Disclaimer: This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.