Steve Thomas: Finding Upside Leverage to Gold
Tom welcomes a returning guest to the show Steve Thomas. Steve is the author of the Gold Mining Bull Portfolio on Seeking Alpha.
Steve discusses the slow decline in gold and how sentiment had reached a new low when Bitcoin tested its all-time high. These times are buying opportunities.
Gold tends to bounce off its 200-day moving average as it did back in March. Steve likes to watch the MACD and the CCI (Commodity Chanel Indicator), which currently show that momentum is coming back in gold’s favor. More likely than not, we have seen the bottom.
Steve points out that in December, there is often tax-loss selling for equities. Seasonally it’s not great for gold, but that makes it an excellent time to buy gold stocks.
Even after all the negativity, gold remains up twenty percent this year. It’s doing that despite very low jewelry demand and while central bank purchases of gold have declined. Next year both of these factors should improve.
He discusses the size requirements for companies to be listed in the GDX and GDXJ. GDXJ does not have any junior mining companies with a sub-500 million market cap. Therefore, if you’re careful, you can easily outperform these basic indexes if you are selective on the stocks you choose.
He likes to track insider activity and ownership of companies. You want to see management to have skin in the game. Insiders are typically good timers of the markets, and he gives some tips for when to exit a position.
Steve lists some specific companies that he believes are good opportunities. This year would probably have been better for M&A, but due to Covid, a lot of plans have been delayed.
He expects gold to continue to go up by 10% per year on average as it has done since 2000. That would take us over 3000 an ounce within five years.
Time Stamp References:
0:00 – Introduction
0:54 – Gold Update
2:10 – Chart Technicals
3:52 – CCI, RSI & Chart
5:44 – December Seasonality
6:50 – Gold Demand
8:50 – Strategies for Miners
12:20 – M&A Targets
14:41 – Insider Buying
17:47 – Taking Profits
19:00 – Stock Picks
23:42 – Developer Pick
29:06 – Explorer Pick
31:03 – 2021 Outlook
32:44 – Leverage with Miners
Talking Points From This Episode
- Golds Performance and Sentiment
- Seasonality of Gold
- Juniors and Management
- Three Mining Equity Picks
Kirkland Lake Gold (KL)
Kore Mining (Kore.V)
Labrador Gold Corp (NKOSF)
Steve Thomas is a private investor with 10+ years of experience investing in commodities and hard assets, mainly gold & silver miners, royalty and streaming companies, pure exploration companies, as well as oil and gas producers and MLPs.