“Silver stocks are probably the best opportunity for 2024. Because if gold stocks are unloved, silver stocks are just hated,” says pro mining investor David Erfle in this MSE episode. He also provides his current commentary on the gold price and how he is managing his junior gold stock portfolio.
David Erfle is a self-taught mining sector investor. He stumbled upon the mining space in 2003 as he was looking to invest into a growing sector of the market. After researching the gains made from the 2001 bottom in the tiny gold and silver complex, he became fascinated with this niche market. So much so that in 2005 he decided to sell his home and invest the entire proceeds from the sale into junior mining companies. When his account had tripled by September, 2007, he decided to quit his job as the Telecommunications Equipment Buyer at UCLA and make investing in this sector his full-time job. David founded the Junior Miner Junky subscription-based newsletter in April, 2017 and writes a weekly column for precious metals news service Kitco.com, whose website attracts nearly a million visits every day.
David’s website: https://juniorminerjunky.com/
Sign up for our free newsletter and receive interview transcripts, stock profiles and investment ideas: http://eepurl.com/cHxJ39
The content found on MiningStockEducation.com is for informational purposes only and is not to be considered personal legal or investment advice or a recommendation to buy or sell securities or any other product. It is based on opinions, SEC filings, current events, press releases and interviews but is not infallible. It may contain errors and MiningStockEducation.com offers no inferred or explicit warranty as to the accuracy of the information presented. If personal advice is needed, consult a qualified legal, tax or investment professional. Do not base any investment decision on the information contained on MiningStockEducation.com or our videos. We may hold equity positions in and/or be compensated by some of the companies featured on this site and therefore are biased and hold an obvious conflict of interest. MiningStockEducation.com may provide website addresses or links to websites and we disclaim any responsibility for the content of any such other websites. The information you find on MiningStockEducation.com is to be used at your own risk. By reading MiningStockEducation.com, you agree to hold MiningStockEducation.com, its owner, associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.
#goldstocks #miningstocks #silverstocks
You are listening to Mining stock education where you’ll learn from the top leaders in the natural resource sector and uncover quality mining investment opportunities basically you look at the silver price I mean I think silver stocks are are probably the best opportunity for for for 2024 because if
Gold stocks are are unloved silver stocks are are relative are just hated you are listening to MSE I’m Bill Powers and in today’s show you’re going to hear from a 20 year veteran of the Junior Gold stock market David fley welcome back onto the show your website is
Junior Miner junky withth y.com you’ve been at this a while it’s been over a month since we last spoke uh before we talk about the gold price in 2024 did you make any changes in your portfolio in December yeah I mean you know we had that great interview with with haa uh D
Of uh AO you know that was that was a big win for for myself and my subscribers it was a it was a a jmj top 10 company and I had I had hopes that it would be acquired before then and you know of course we talked about how we
Were we were hoping that they they would be able to spin out those properties to to so ha could do it again but it it it sounds like it would have been a deal breaker and he wanted to take a break for a while and I kind of don’t really
Blame him the way the market is so um you know we we took that win and and we sold it the the next day and um we place the proceeds into two other Juniors on my watch list so what I do is I have uh a jmj watch list of 20 companies that
Are that are prev vetted by myself and I I know them very well and i’ I’ve had conversations with the management teams and the two companies that I got into after uh I I sold the the Asino shares um I had U meetings with both management
Teams at Bieber Creek and then I had follow-up meetings with them and um they’re both stocks I think that have huge potential and you know they’re they’re great entry points because um fortunately you know when um Asino did uh had did make that deal it was you
Know at the end of tax loss selling so um it was a great time to to uh shift the the the money into a couple Juniors so basically sold one Junior for for really nice gains and and and had you know placed the the the the capital uh
The investment capital and the gains into uh two other companies so um you know now the the the jmj portfolio has 20 solid Juniors going into into 2024 I also had some cash left over to average down on a few that I was that I was down
On you know um that’s that’s what’s great about this bare Market is you get into these I’ve been getting into these uh the these these companies that I’m holding have been averaging down uh on them and you know when when I first took initial positions I thought I thought to
Myself wow I’m getting these things really cheap and they just continue to go lower and you know as the gold price continues to try to make a floor at $2,000 or get above $2,000 at first now it’s trying to make a floor at 2,000 yet
Uh you know uh people don’t want to know about gold stocks it’s amazing you you going into 2024 we had the Dow NASDAQ the S&P all close at or near their all-time highs and you had uh investor sentiment was off the charts bullish um yet you had the gold price doing the
Same thing and investor sentiment in Gold stocks is off the charts bearish while the gold stocks in relation to the gold price have never been cheaper so that’s an opportunity and um you know it’s been frustrating but at the same time it’s it’s very exciting because um
We know that um the biggest booms in the mining sector have come from busts in in equities and this 13-year bull market in in stocks is is in the bust phase and there size all around and you know and basically the FED came out and said as
Much pretty much in their last meeting they’re you know they surprised everybody and uh put out a a a basically a rate cut uh timeline on their do plot and that surprised a lot of people and it’s of course it’s it of course it’s surprised me as well and um you know I
Mean what do they see you know they see that uh I I think they see that that the US economy is going into recession probably um either late in in the first half of the year or early second half of the year they know that you know they
Their interest rate po their interest rate hiking policy the most aggressive interest rate hiking policy in 22 years you know the effects of that aren’t felt on the market until 12 to 18 months later I mean we had the same thing kind of happened in at the end of the um dot
Bubble at the turn of the century um you know the the the doc bubble started to roll over and then the very first I think it was the first trading day of 2001 January 3rd 2001 greenpan came out with an emergency meeting with a 50 basis point emergency rate cut and guess
What that that started a 10year bull market in in the mining sector and I think that this had there’s a setup right now is is is very is is is very similar to to that happening again I I really believe that that could that could happen again once once the you
Know because because the FED is let’s face it the FED is reactive not proactive right I mean they don’t cut rates expecting something bad to happen they cut rates after something bad has happened so you know once they do that that’s that will signify that uh you know that the generalist investors say
Hey I better get defensive here and this as you know this this sector is so tiny it doesn’t take much for them to start piling into these things for them to really take off and that’s what’s happened in the past so many times you know I’ve been in the sector 20 years
And I’ve exp experienced it myself and I expect to experience it Again David with that bullish of an outlook for 2024 for gold when you see a geopolitical event and gold spikes 80 90 bucks in a day on a geopolitical event would you ever consider just taking those profits uh
And some of your miners then or do you consider like a a burst like that which historically you know we see retraced and fall back down prior to the the crisis event do you think it’s different this year that a crisis it could be like turbocharging that keeps going or do you
Expect those pullbacks how would you play that well it depends on when it happens and what what uh what portion of the cycle the mining sector’s in when it happens because I think we’re at the at the bottom of of a mining cycle right
Now and you know if if you take in the comparison sake um the late 70s right you had a gold price run from a little over $100 to $400 in five years and then the last I think it was just the last month or so of 1979 the gold price went from
$400 to parabolically Peak at 8850 in January of 1980 when Russia rolled into Afghanistan that was a that was a geopolitical trigger of a blowoff top now in the situation we have now is you know we’ve got what we’ve got two billion citizens of the of the world are
Going to be going to the polls uh in 2024 beginning with Taiwan here in a couple weeks and we know what’s what what’s at stake in Taiwan as far as China is concerned so um you know and at the same time we’ve got a gold price that has been building a a three
And a half year floor below 2,000 well 13 year you know 2000’s been a has been resistance for 13 years but it’s been building a floor below 2,000 for the past three and a half years and if you take an in inflation adjusted high in the gold price that’s
Around $3,000 which we’re not even close to yet so you know if you take a look at the mining sector it’s completely bombed out I mean there’s you know nobody cares about gold stocks I mean at all so I mean um I don’t see a risk of having a
Geopolitical event right now causing a blowoff top in the gold price or gold stocks especially in Gold stocks that are that are trading and like I said they’re at all-time lows in relation to a gold price that’s about to break out and so would you be levered up a little
More on Silver at this point too if you think Gold’s going to run silver usually runs with it yeah and I mentioned that uh you know in my in my very long- winded uh piece at the end of the year basically you look at the silver price I
Mean I think silver stocks are are probably the best opportunity for for for 2024 because if gold stocks are are unloved silver stocks are are relative are just hated nobody wants to be in in silver stocks so first of all there’s only a hand full of all of them that are
Worth being in but it’s silver stocks that give you the the biggest leverage when whenever there’s a huge up leg in in the gold price and then the silver price eventually follows and um if you take a look at the silver price I mean it’s at less than
$25 it’s less than half of what its 1980 high was and if you adjust adjust its $501 1980 high for inflation you know it should be around $150 and $200 even maybe I don’t even know what the inflation jused high for silver is but I know it’s a lot higher
Than $50 and yet you’ve got a gold price that’s two and a half times its 1980 Peak and if you take a look at Silver jior uh the barometer is the SJ um ETF that recently hit in relation to the silver price the the 2016 bombed out low
So if you take a look at the GDX and the and the gdxj these are mining indexes right they’ve been in a bull market believe it or not since the beginning of 2016 they’ve made higher highs and higher lows but the juniors are bit a whole different animal they complete
They they continue to get sold off creating this opportunity you know a lot of people get frustrated and they give up and they sell for for tax loss and they don’t come back well this is the environment that you make money in in this sector I mean you
Have to be a buyer in environments like this to make money in this sector if you wait till it takes off and you start chasing things then it’s more difficult to hold you know once there’s Corrections because you’ve already bought after they’ve taken off so you know it’s really difficult to do but
That’s the way you make money in this seor and that’s the way I’ve made money in the sector for the past 20 years I have to you have to go through these bare markets you have to literally grit and bear it because this and and buy these fishing lines and accumulate these
Stocks when nobody wants them because you’re going to be selling the rhinal horns later for two three four times your money you know you take some off the table let the rest ride and you got a free position so I I honestly believe that’s coming here in 2024 I just don’t
Know when but I I I tell you what it’s probably going to coincide with the stock market starting to sell off and it’ll coincide with with the stock market starting to sell off and investment Capital finally coming into gold stocks because it’s investment it’s investment the demand that really drives
The prices of gold and silver and especially the the gold and silver equities da there’s a familiar proverb that says it’s better to be taught to fish than to be given a fish and so in your newsletter you teach people how to research and go through the decision-making process before you come
To a inclusion you’re not just giving them the pick but you’re bringing them through that thought process I bring that up to say when you mentioned you sold osino and you went into two other stocks those two stocks were kind of primed because you had already met with
Management you said they were on your watch list so my question is when you go through that initial due diligence they make it to your watch list do you do any more due diligence before you pull the trigger to buy those kind of unexpectedly because you didn’t expect
To sell osino when you did what is your secondary uh due diligence at that point or did you not even need to call management at that point because you were on top of it yeah I didn’t because like I said I was ex I was expecting uh a mid- tier to come along
And purchase a Ceno so I had I had groomed these two companies before like I said I I spoke with both management teams at Beaver Creek which was in midep and um I did have followup uh meetings with them but I was convinced that these were the two stocks that were
The best two stocks on my watch list to get into um if I was if we were fortunate enough to get a an Asino buyout before the end of the year and it happened right before the end of the year so you know I mean that’s that’s what you do I
Mean you you you have to constantly be doing due diligence not only on what you own but what you want to own I mean I’ve watched stocks for years before I took positions and then ended up getting you know five 10 times gains on them you know there’s there’s one stock that I
That I I I really liked when they ipoed it was trading at $25 and um I started accumulating it when it got down below $ five so you know you follow along with management you follow along with companies you follow along with their Pro with their with their uh progress or
Lack of progress and they fall off I’ve had companies fall off my watch list because you know uh they they’re not they weren’t doing things that I would do if I were them or they didn’t they didn’t get the proper management team to come in and H the ship because that’s
That’s the big one right there you know you have to get the proper management team that’s got the track record of success they’ got that access to Capital because right now you know you’ve got all this you still got all this time to basically put your put your mining minor
CEO hat on and say okay if I was going to go out and look for a company to add to my stable of of Mines which company would I be buying because that’s what you want to look at right right now you don’t want to mess with anything small
You don’t want to mess with anything that that doesn’t have you know that’s not inside of a district scale siiz land package that that doesn’t have blue sky potential or even you don’t want to invest in a company that’s over drilling a project either because you want them
To to to to to to spend enough Capital to show proof of concept that they’ve that they’ve got something that a major wants you don’t want them over drilling it to what a major is going to eventually do it’s say look we spent all this money
You know and and it’s it’s really hurt our shareholders because we’ve we’ve had too much delution in drilling this property here it is will you buy it from us no you want to have a smart management team that knows how when to raise money how much to raise from whom
The right the right shareholders in the stock and drilling out enough to where they’re showing a proof of concept to a major to eventually buy that stock and gold standard Ventures from the previous cycle would be an example right of a stock that was overdrilled exactly
Exactly and I and I got into that one late and I actually got into it a little early even though I thought it was late and the funny story on that one was it got bought out a little less than our entry cost from Ora Mining and Ora
Mining at the time was was a bit was was was overvalued but but they’re very good operators good mind builders so I I told my subscribers I was going to hold on to it until it got up to my entry point I didn’t want to lose money on it that’s
What I did so I ended up getting out of of coold standard Ventures at basically a wash so I mean these things happen you know but you have to you have to have a level head when they do and have have you always have an have to have an exit
Point you know in whatever happens with with with a stock you know you don’t lose your head and say oh I hate this deal I’m selling the stock you know you sit back and okay hey this is what this is what I’m going to do to try to recoup
My money and then sell it and put it into something else Da Back in 2016 when I was cutting my teeth on Junior mining stocks I had explor Co that went three to four times just because silver went from 14 bucks to 21 bucks so the explor
Co move last the Franco Nevadas the new mons they move first we all know that and then eventually the explor co perk up and many of them can go three-fold on no Discovery but just cuz the commodity price is higher I bring that up to say
If gold is going to run this year you’re not heavily weighted in explor right now what’s going to be the trigger for David Earth Le to go more into explor Co yeah I have avoided explor Co for the past couple years you see the last few times
We’ve had this this T this this turn in the market that’s that’s gone from you know overly bearish extreme black bearishness to newly bullish you know we get that pop we get that that switch going on it it it fixs everything right even the the bad companies go even the
Dogs go up right I don’t think that’s going to happen this time um and I’ll tell you why the big reason is is capital is not cheap anymore ever since I’ve been in this sector capital’s been cheap and and it’s not cheap anymore and it’s and they’re not doly it out to just
Anybody anymore you know they’re only the companies that deserve to get financed are getting financed and um a lot of these companies we’ve talked about it before you know they need to they need to go away or they need to merge with other explor codes that have access to Capital that that
Can build their projects um but as far as get getting back into earlier stage explor codes is concerned I’m going to have to be convinced that the market is convinced that gold has a strong $2,000 floor and I think that’s going to happen at some point this year
Uh gold is is consolidating its gains above 2,000 now I think there’s a there’s a good chance that it might dip below 2000 maybe the 1980 2000 Range before finally bottoming I think that’s that’s a very real possibility um so you know you still got plenty of time to accumulate the right
Companies because you want to be in the right companies when that switch gets flipped and do you wait if if it’s a company with a good project but they’re not capitalized of how tough the last few years are do you wait till they’re capitalized or do you buy them in
Advance of maybe a little marketing to get the share price up and that’s a great question I mean you you that’s when you really you have that that one-on-one meeting with them and you say you know what you the market knows you need to raise money you know you need to
Raise money um do you have any options besides delution because that’s what a lot of these companies are looking at they have other options you know they can they could spin out of royalty you know um they they they could do they could uh there’s plenty of other way a
Lot of companies are divesting um uh non-core assets we got we had a few recently that have done that this is what needs to happen you know they’re they’re concentrating on drisking this project but they’ve got these other assets so they’re they’re they’re selling them and they’re you know
They’re maintaining either some shares of the company that’s bought them or they’re maintaining an ansr to still have Expos to that property but this is what they need to do they need to find other ways to raise Capital other than delution and a lot of them are doing
That so you call up the company and you guill them you say look you you’re down to you know less than six months of cash in in the treasury what what what do you plan to do to raise money and then if you if you’ve got if you’ve attracted
Enough investors are you going to have to are you going to have to attach a full warrant are you going to have to attach a half warrant uh is your is your you know hopefully the reason you know I mean the reason why you’re you’re interested in the company in the first
Place is because it’s got an attractive project it’s got an attractive project they can probably raise money without a warrant so you know you ask all these things you see where their share price is if their share price is trading at multi-year lows and they need to raise
Money that’s that’s that’s not good so you know and of course you know if if you’re looking at these companies with with with these great management teams then they shouldn’t be in that position anyway because you know um a good management team has at least never has less than 10 million in the
Bank um and they they usually raise um at a point where it upsets people and that they think they shouldn’t but it always turns out to be a good thing they did that that’s H that happened a lot in 2023 you know coming into into the into
The fourth quarter um a lot of these companies um that they know that they didn’t need money at the time but the but the but uh the financing became available to them and you never turn down financing especially in a bare market so you at the time it upset some
Investors that they that they took so much but it but come toward the end of the year it was a good thing they did yeah David’s website is Junior minor junky withth y.com go over there learn more about his subscription service if you haven’t heard of it already he also
Has a free weekly editorial that he’ll send you on Friday evenings you can sign up for his free list there as well David always appreciate your insights and we’ll touch base with you in about 30 days Thanks a Lot bill always was great talking to you and Happy New Year Everyone