Lots to talk about!

So much has happened since my last update, like a stock market crash and rebound, and the world economy being shut down with the coronavirus as the excuse. So much has happened, in fact, that I won’t attempt to get all caught up in one post, it will take some time to get back into the habit of writing. Suffice to say, my trading has been relatively active and there have been some big portfolio changes as I exited much of my miners on the sell signal my month charts gave me last month (July).

What a ride it has been! With almost 3 decades experience in the markets, I thought I had seen everything, until 2020 rolled around. I have never had to endure the level of drawdowns as I did in March of this year, I can only credit my discipline in following my trading rules for keeping me alive, and seeing me out to the other side after being submerged for weeks without air. Long story short, I was stopped out of 1/3 of my SILJ, and rode the rest all the way to hell and back, fortunately adding back my 1/3 sold earlier, at much better prices. I was expecting a huge year, everything was set up nicely, with nice unrealized gains and chart breakouts to the upside all over the place. Then came the news and the shutdown of the world economy with the coronavirus excuse. I will save me thoughts on the virus for a latter date, today I re-cap my trading through the period.

I managed to stay with my largest position SILJ until around $12/share in late June or early July (see my actual statements in a link on the side), when my system triggered a sell signal on the monthly charts. Since I used the monthly charts to get into the trade, my rule is to use the same timeframe chart for the signal to exit. Unfortunately, as SILJ looked tired and prompted my system to sell, it was not the best timing as just a few weeks later SILJ managed to get up to the $17 area which was my original expectation. So to put it mildly, that hurt a lot because I would have been up nicely on the year at 17 bucks, and in a year that decimated many investors and businesses. Still, the signal is the signal and must be followed, what happened was an extreme outlier and we cannot bet the extreme will happen, because more often than not, the outcome will be more average.

Today we are just below $15 on SILJ and in a mild pullback. I only focus on SILJ now because that was my largest holding and most representative of the portfolios I manage. Currently, now in late August, 2020, my portfolio consists mainly of junior explorers for both gold and silver, as well as PSLV, Sprott Inc’s physical silver etf, and a big position in SLV LEAP options that expire in Jan 2022. Having bought back into the group, but only names that had corrected already or looked ready to start their move up, got me into good positions once again. I will go over the holdings and their charts in later posts, but to give you an idea, I own about 15 or 16 positions now, with names like WLBMF, AUNFF; KOREF, ISVLF, KTN.V, MUX, IRVRF, VLMGF, MFMLF, and MXROF to name several. I have shifted to individual juniors now for two reasons. First, the etfs have many stocks that are already ahead of themselves, so putting money back to work “up here” after a massive run, is best used by getting names that have not yet moved, or if they have had a big bull run, they now have already corrected over 25%, easy to see in a chart like WLBMF below.

Or a stock like ISVLF, which I have just started to acquire near its 50 day moving average (green line on the chart).

Please note that while I have the utmost confidence in my stock picks, I am not married to any one idea or in love with the picks. That is usually a recipe for disaster in trading and investing. More important is to focus on our system and the discipline to follow it. It was more important to stay with my trades than the fact I was in SILJ, for example, because just about anything miner or metal related bounced hard and fast out of the March collapse. Go through my statements and you can see at what prices and when I started re-buying, as well as how I changed my strategy for the next leg of the bull. I have always intended to move into smaller, more speculative explorers as the bull market matured, they have the most risk and most potential to gain as well. They are notorious for being the place to be once the group gets in focus, as people look for more leverage and things that have not yet moved up a lot. Going forward, I will be focusing on metal (physical silver etfs) in case miners get shut down again due to the virus, this would drive the physical much higher and miners lower. I also have moved the miner component down the food chain to the small juniors as names above, they have much more potential upside than a big etf like GDX at this point.

That does not mean I wont enter GDXJ, SILJ, or another miner etf in the future, however if I do it will only be on a big down day where the entire group is down a lot together, getting all the component stocks trending lower together, so I am less likely to be buying some of the miners after a big run higher. In short, it has to be an obvious decline where all etf members are getting knocked lower together, other wise I will just pick and choose various juniors, and some of the better individual miners from the etfs and buy them outright. I refer to stocks like HL, which I have now sold on that monthly signal but waiting to own again, or PAAS, both of which are in the top holdings for SILJ.

I am well off margin and only about 50% invested now. Silver is looking like a particularly good place to be, we were right about the big move higher, and it was so strong, taking out so many long term levels of resistance, that the future looks very bright for the white metal. I will focus on PSLV (with some SLV LEAPS as well), since I see the metal is in clear bull mode, and its protected from many recent new events about the virus and shutdown, in fact it could benefit from shutdowns, though I do not wish for them is any way whatsoever. I am just trying to cover all the bases and potential land mines that have popped up recently. What a fantastic chart, this is the WEEKLY chart of silver futures, blowing through multi-year resistance in just weeks!

To wrap up, the accounts I manage are now 50% invested and waiting for a possible pullback to add to our winners. Everything looks great, silver is a standout, and all has gone well except my gains could have been much larger with just a couple more weeks before my monthly signal triggered, but that is how it goes and it just as easily could have started lower again on my signal to exit. The bigger picture is it kept me in, and from getting hurt too badly it what was the craziest action I have ever seen. Its good to have a system to rely on when you can’t see straight from panic created by news events and a world losing its mind, just stay the course!

I’m waiting for the stochastics on the weekly charts to get oversold, which could take another 2 to 4 weeks, if GDX is on track. It would be ideal if the oversold stochastics coincide with the etf price pulling back to the $38 area (or $39 now that the 50 MA is creeping higher), more or less. It can go lower than that, its just a guess, but a decent enough pullback there for me to start adding to positions again. I’m happy that my recent buys in the junior explorers have me sitting on doubles already, in a few positions, and while the temptation to book profits can be strong, it usually pays to push on winners like these and let compounding take hold to really make the big gains. It seems at the moment lots of people are looking for a big pullback so they are underinvested, which has me thinking the pullback wont be as deep as most would like to see. If miners don’t pullback much over the next 4 weeks, I would then be ok paying up todays prices, because nothing says we have to pullback hard in such a strong uptrend. In trends like this, the risk is being out, sitting on the sidelines with nothing.

As always, check my portfolios in the links to verify my actual trades and gains, with position sizes. Claims mean nothing without transparency and verification.