Sovereign's early 2020 picks

5 posts / 0 new
Last post
#1 Thu, Jan 2, 2020 - 10:24pm
Sovereign
Offline
Joined: Oct 12, 2019
115
800

Sovereign's early 2020 picks

My Top picks.

Primary Theme; 2020 starts us in the late 2nd or early 3rd inning of the PM bull. 2nd quarter of attention-grabbing mining results due to higher metals prices will bring in Generalist momentum capital, Massive Short interest in Comex will draw further attention and money into the miners. However portfolio positions do not require higher gold and silver prices to advance and miners will continue their advances based more on generalist interest after an initial spurt of the S&P/Dow complex pauses heavily overbought. Repo is likely from Deutsche Bank death and derivatives blowback around the world. Not much being said about the Fed Repos going to important foreign banks. Deutsche Death to be announced later this year. US economy will continue to deteriorate.

Top sector pick: Royalty Streamers are a huge plus in my book right now. They have been quietly picking up revenue streams via NSR and Streaming agreements and do not incur the risks of the mining operations themselves.

Watch Ross Beatty. He's not done making Equinox a 1-million+ ounce gold producer by 2023. The man is having a blast putting deals together. Expect more acquistions along the way.

All listings in alphabetical order.

PM Royalty Stocks:

Ely Gold Royalties, ELYGF, EMX Royalty Corp, EMX, Metalla Royalty and Streaming LTD, MTAFD, and Sandstorm Gold, SAND

Midcaps Miners

Equinox Gold Corp, EQX, Pretium Resources, PVG, Silver Standard Resources, SSRM

Silver Focus:

First Majestic, AG, Mag Resources, MAG, Silvercrest Metals, SILV

Small Miners (for 2-5 year time horizon)

Excellon Resources, EXLLF, Gold Mining, GLDLF, K92 Mining, KNTNF, Liberty Gold, LGDTF, Pure Gold, LRTNF, Sabina Gold and Silver, SGSVF, Wallbridge Mining, WLBMF

Situations:

Kirkland Lake, KL, New Gold, NGD, US Gold, USAU,

Watchlist: 22 others at this time including potential takeovers, continuing Due Diligence.

Daily Trader as conditions indicate:

Direxion Daily Junior Gold Miners 3X Shares, JNUG. I do not short Use of deep in the money covered calls to take positions in good prospects with less capital investments. Also holding several warrant issues for multiple year optionality.

Edited by: Sovereign on Jan 2, 2020 - 10:30pm
Fri, Jan 3, 2020 - 11:52am
YukonCornelius
Offline
-
Clearwater, FL
Joined: Jul 6, 2011
371
2164

Great list!

Thanks!

Tue, Jan 7, 2020 - 2:26pm
Hypnotized Housewife
Offline
Joined: Apr 23, 2013
93
716

Thanks Sovereign! Agree, great list

What does the term “situations” mean with regard to your holdings? I haven’t come across that before and am curious what you mean. Thanks

Tue, Jan 7, 2020 - 6:28pm Hypnotized Housewife
Sovereign
Offline
Joined: Oct 12, 2019
115
800

On Situations and other considerations:

A "Situation" holding is a holding predicated on a non-fundamental, non-standard criteria that warrants it's acquisition for a short period to take advantage of an anomaly in it's history. It is a holding that would not pass my standard screening for/as a long term holding.

Generally my portfolio is a very-high risk portion of my overall holdings. Most of these stocks will not be acquired unless I have good evidence that, on a time horizon from 2 to 5 years, or more, they will be very significantly higher than today. As a result, they will be much lower priced to maximize gains over the long term. Based on Jesse Livermore's admonition to "Buy Right, and sit tight," I hold for a very long term. As Turd points out, Eric Sprott is not a trader, rather he invests for the long term. Most 10-baggers or better will take a much longer time to pay off than a trader has patience for. Most of my positions have been in the portfolio for at least 12 to 18 months now, purchased in what Marin Katusa refers to as the 'echo' period. Remember, ours is a very cyclical business, and we are very early in the cycle, but even now, we will, to a degree, be 'chasing' price if we waited this long to enter our positions.

So, a situation is a anomalous 'short term' opportunity for a 'quick strike" holding of up to a year or two at the most. KL was bought at 39 and change after it was slaughtered by the first responders over the proposed acquisition of Detour. For my portfolio, KL is too high-priced to make the long-term list because the probability of it being a 10-bagger is smaller, given it's already in the 40-50 range and, even if it does get to $400-$500, it will tie up a massive amount of capital for too long a time, which can be better leveraged elsewhere. So KL was bought to take advantage of an overreaction to it's acquistion with a target of $48.50. NGD (New Gold) leverages the massive writeoff they took last year of their Rainy River mis-steps that dropped their stock to well under a dollar, thus creating a significant Market Cap / NAV discount. There is no reason at this point to think they can't get back to the $2.50 - $3.00 after a couple quarters more of improving operations. It's target is $2.50 or post Q2-2020 if it fails. USAU, USGold is a company that has massive potential underground in a Carlin area which has the potential to be a 10-bagger if they can find the high-grade. See Dave Kranzler's Mining Stock Journal for the details. The discovery will cause the stock to rise and the exist will be made at that time. It's not a core holding because it fails a few of my long-term screening criteria.

Again, do realize, I sit on a pile of Phyzz which gives me the flexibilty to swing for the fences with these penny-stock picks and if the whole collection dies, I'm not reduced to penury. But every one of these holding has done extremely well since the gold/silver prices came out of their coma last summer and I don't think our bull has yet even finished it's morning coffee.

Rick Rule, who I admire enormously, points out that most all of the stocks that turn into double-digit baggers will, in the course of their rise to that level, retrace, sometimes up to 50%+ on their way to their eventual highs, and he points out that most people will miss the big gains because they can't stand the retracements. My rule is, DO NOT EXIT ANY of these little ones as a nervous trader would. If you know the management and you know the story and the situation, and you know the market environment, then you know if a retrace is merely an anomalous failure in the price-discovery mechanism that is our lovely, manipulated, schizoid markets today, and the selloff or retrace is simply an opportunity to hold, or add to the position.

The only exception I am really concerned about is that if the global situation threatens to make gold/silver go no-bid/no-offer, (Global reset, War, or the German move to prohibit anonymous purchase of phyz in amounts greater that E2000 comes to America) you want to take profits and rotate into phyz before that happens. Remember, if you are in the US, your miner profits take two or three business days to clear and go through that risky phase of being subject to counterparty performance by being held in dollars on their way to you where you can then strip the counterparty risk off their asset value in converting them to phyzz. And the long term holdings also allow me to get a holding out of street name in the brokerage and into safer venues. This isn't practical if you are compelled to trade in out of these positions.

Just a bit of my own $.02.

Tue, Jan 7, 2020 - 8:49pm Sovereign
Hypnotized Housewife
Offline
Joined: Apr 23, 2013
93
716

Wow

That was a great explanation and I learned a lot from it. Thanks and I’m glad I asked the question.

Please keep us abreast on this thread with your updated list and observations. I’ll definitely be checking back here when I’m in the forum.