An Idiot's Guide to Investing in Junior Resource Stocks
About this time two years ago I was sitting in a friend’s chalet in Switzerland waiting for Barbara to fly over. It takes dynamite to move Barbara so I sat around for a long time. I got bored. And since the chalet was the same place I had written The Art of Peace a year before, I figured I should give another book a go. That was the origin of Nobody Knows Anything.
It was written more out of boredom than brilliance even though it still sells well. According to Amazon, they have sold 200 books this month. The book took me eleven days to write. The average book on Amazon only sells 50 books total ever.
For the longest time people have suggested I write a book about investing in junior resource stocks. The topic is one that has been rocks and shoals for many a poor writer. Lots of books abound, few sell well. I’m made major progress on the book; I’ve come up with a title. I’m going to call it An Idiot’s Guide to Investing in Junior Resource Stocks.
Don’t be offended by the title. I’m the idiot, not you. I have been investing in junior resource companies since gold hit a bottom in August of 1999. If there is a mistake I have not made, please feel free to point it out. I believe I have made just about all of them. So I’m ok sharing my stupidity with you in the hopes it saves you time and money.
The resource market is about as active as maple syrup in January right now. I’m bored again so perhaps this time I will write the bloody thing in pieces rather than pound on my computer for another eleven days.
You will know you are near a bottom in resource stocks when you can’t give them away. When everyone wants to buy them, you are near a top.
My experience is that most writers make investing look way too complicated. At any given time you can find fifty different explanations for everything that happens.
But can you make money out of those complex solutions? After all that’s what it should be about. You want to remove yourself from the herd and the 95% of people who will always lose money. You want to be in the 5% who make money. At least I do and I hope my readers do.
Investing is simply but not necessarily easy. You need to find out what the mob is doing and do the opposite. If you can figure out what is popular you should sell. Figure out what is hated the most and buy. It really is no more complex than that.
I looked around at our sponsors to determine who was the most boring right now and I discovered White Gold. (WGO-V) As of May 24th, the stock traded on only one day out of the last seven and that was for a blazing 23,950 shares.
Another rule for investing in junior resource shares is to buy low and sell high. I know that sounds too simple, I thought the same thing the first time I heard it. But it really is that simple. I have had people ask me, “How can you tell if it’s cheap?” That’s pretty easy, you can always look at a chart. I have pulled up the Stockwatch chart for White Gold.
A year ago White Gold was selling for $2.30, today $.80. Nothing has really changed but the shares are down 65%. Now we don’t know if WGO will go much lower, it might. But you can see clearly that it was $2.30 then and $.80 now and it’s cheap relative to what it was a year ago.
The company has 1.24 million ounces of gold in a 43-101 resource. How low can it go? At $.61 a share that made ounces of gold in the ground worth about $30 an ounce USD when deals were being done for $175 an ounce.
Buy low, sell high. Look at a chart and see what it tells you. Don’t look for the most complex answer, find the simple one.
But what about the location and the management and the projects?
What about them?
Some of the biggest piece of crap stocks run by the biggest idiots will make the largest moves higher in a bull market. I don’t suggest looking for idiots to invest in, there are far too many of them to go around. But some idiot will be running a company that will go from $.05 to $2.00 in a roaring bull and you can retire.
Shawn Ryan vended his Yukon projects into White Gold. They include a total of 390,000 ha in the Yukon, about 40% of the district. His prospecting and soil work helped find the White Gold project, the Coffee deposit and the QV property. That’s over 7.5 million ounces of gold.
Kinross owns 19.9% of White Gold Corp. Agnico Eagle owns a similar 19.9%. You don’t need to be an expert if you are smart enough to know who the experts are. The majors are consuming their young. They must replace the ounces of gold they are producing. Right now they are not.
Kinross and Agnico Eagle have staffs of trained people who do nothing but look at juniors to invest in. You don’t need to become a pro. See who the best companies are investing and follow them.
White Gold has started a $9 million dollar exploration program for 2018 planning on drilling over 100 RAB drill holes and a 22,000-soil sample survey.
Everything in life deviates from the mean and eventually regresses to the mean. Resource shares are the unloved red-headed-stepchild right now. Investors are throwing their money at Tesla and 'Bitcon.' If you insist on losing money rapidly, don’t invest in Tesla and Bitcon. It will take far too long for them to collapse, perhaps a year or so. Take your money out of the bank in 100-dollar bills, buy some gasoline and start a fire in your front yard. It gets rid of your cash a lot faster.
White gold is an advertiser. I own shares. I like them a lot. With $9 million, Kinross and Agnico Eagle behind them, they ought to be able to find something.
And sentiment says we are near a bottom in gold and probably all resource stocks.
Do your own due diligence, it’s your money, not mine.
White Gold Corp