Hi all, Not sure if this is the right place for this, apologies if not. I'm weighing up my options in regards to my stock portfolio (currently fairly weighted towards resources, PM miners in particular). I should start by saying I am no expert, and am only in the early days of my investing career. The following is my simplistic, and quite possibly straight out incorrect, take on what may happen in the short to medium term with PM's, miners, and equities in general; With the Fed hinting more and more towards tapering their QE program, it's hard to see much upside potential for PM's in the short to medium term. Yes, it could still be 12 months away (hard to imagine longer), but just the constant threat of tapering it back seems to be enough to keep a lid on PM's at the moment. Once the tapering actually does begin, it seems to me there's a strong chance of PM's falling further. $800 seems unlikely, but $1000-$1100 could be within the realms of possibility. This will obviously have a big effect on the miners. Additionally, I think there'll be a general exodus from equities as well. I also think that this is when we'll see the bottom for PM's - sometime shortly after the tapering of the QE, once a bit of a flight from equities etc has occurred, and a further drop in the price of gold and silver, then a lot of that cash flowing into what will hopefully be perceived as bargain prices for PMs. No matter which way it plays out, now (or over the coming months) seems like a good time to have some powder dry and ready. I have none. So my options as I see them, are; a) liquidate the majority of my holdings over the next few weeks/months (hoping for a brief rally in the mean time) and realize my losses, and thus have cash free to reinvest, whether that be in miners, PM's themselves, or some undervalued equities; or b) continue to sit tight and hope for things to turn around/assume my interpretation is incorrect. Feel free to shoot me down, just wanted to see if anyone else has a similar take?
So let me get this straight Your two options are 1.Sell (basically) everything Or 2. Sell nothing I really dont think that mentality is either strategic or wise. Maybe go find yourself a broker, or a financial advisor and get some advice. Sounds like you have come to the place we all get to at some stages which is "red fever". The symptoms are All or nothing, never or tomorrow thinking 0.5% vision (daily micromoves) Ichy buy/sell finger that goes off without any maths or looking at macro history A deep fear of making money too slow If you have 2 or more of these symptoms contact your financial advisor before you do anything else
c) Follow your plan d) If you didn't have a plan, then cut your losses, make a plan, and include in that plan consideration and contingencies for not being right, before reinvesting. e) Don't contact a financial advisor - they have only self interest (fees) at stake, and have no stake in your losses.
You say 'dont contact a financial advisor' I think thats bad advice Would you be willing to amend that to 'research and find a financial advisor who shares your outlook and values, because many dont share in your losses' I think the problem is that people dont ask their investment advisor any questions. When you seek advice seek education - not 'do it for me' services.
OK e) Research and find a financial advisor who shares your outlook and values, because many dont share in your losses. (If by some absolute miracle you manage to find one that fit's this description, then please direct me to the source of the drugs you are on.)
More so the fact that the above interpretation seems likely to me i.e. limited upside at the moment, reasonable likelihood PM's (and therefore, miners) will drop further once QE is actually tapered off, before they recover. And depending on the magnitude of the drop re: PM's, could put a lot of producers in an untenable and unsustainable position. So the option of selling and getting in at a lower price (or getting out before PM's potentially drop below the total cash cost of production) seems like the way to play it. The problem is I don't have a whole lot of conviction with my interpretation..maybe a financial adviser IS the way to go! I just think that if, say, the fed indicated they'd be tapering QE back from September, there'll be a sizable drop in PM prices, and miners. Hence thinking it wouldn't be a bad time to limit exposure in the short term, to be safe.
Sounds like you have made up your mind... good for you. Just be sure you don't subconsciously want financial advice so you have someone else to blame next time.
Sounds like you're sacred your investments are going to go down in value and you're looking for a reason to justify it. If thats the case, maybe get out and keep your money untill you're sure about what and why your buying something. Thats not advice, coz im not a financial advisor
Personally I cannot see the Fed tapering at all. I smell only increased stimulus in the coming years. I'm holding onto my miners like an eagle cluches a reptile in its talons.
If you are trying to achieve about market average returns ie 7% or so, then miners is not where you want to be. Dividend paying stocks have been on the march the last year because of falling interest rates for term deposits, bonds etc. Would I chase the high dividend paying stocks eg banks? If I was starting out, no way. It depends on your age and expectations. If you are 25 and have a relatively small amount to invest, lets say $10k, then I'd be into small caps and even consider gearing that up. At 25 its about capital accumulation with higher risk ie aiming for 20%+ returns pa. If you are 50 years old and retirement is 10 years away, you would reduce your risk of capital loss. So, if you are 25, look at the small cap stocks especially in technology, alternative energy, leisure & hospitality. If you are 50, then I'd recommend of your share portfolio (which shouldnt be more than 60% of your total net assets) I'd put 25% into banks/high dividend payers, 25% into defensive (eg healthcare) 25% into the biggest miners eg BHP and 25% into mid-cap stocks eg Transurban etc.
Good luck finding an advisor that is pro precious metals.....don't be surprised if they only suggest about 10% of your total portfolio as precious metals... As for all your eggs in the one basket.....it's fine as long as you keep a good eye on that basket.....people do it all the time, dropping 400-500 thousand on one investment property. If you have the cash then there is nothing wrong with 50,000 in one mining stock, as long as it has a good foundation. It is still only one tenth of a house purchase. I tend to agree with you with regards to the bottom in gold close to the thousand mark. I also had the dilemma with my holdings of silver and dumping at 33 bucks to wait for the bottom and I am glad I did. If you believe that the potential gain will be enough to justify your decision then go for it. Remember to include capital gains tax calculations etc. pulling out now will allow you to watch which miners can cope with a 1000 gold price. Best scenario for this would be a drawn out fall as this would show clearly the best gold stocks.
J-Money - aside from which way you foresee the wind blowing on the macro scale, what about the actual individual stocks that you hold? Not many here have scored all that well lately on predicting the big movements, certainly not me, but some stocks might be worth holding, others might not. Is there any problem with getting to the meat and mentioning some individual stocks that you are thinking of letting go? As for professional investment advisers - where would you find one anyway who would incorporate precious metals into his calculations, let alone juniour miners, or predictions on the course and effects of QE in the States?
Nobody probably but remmeber they are 'advisors' not dictators. You tell them you want 20% allocation to PMs 25% allocation to big growth stocks 25% allocation to big income stocks 20% to midcaps 5% to Juniors 5% Cash I mean you pick the %gs - if you leave it all up to him, he'll probably try and sell you an etf portfolio Make the guy (or girl) work for their money
Thanks for the comments all. I currently hold NST, BDR, and CCU in the way of producers. I'm comfortable with NST and BDR, although I still think they'll take a pounding just like everyone else if gold drops $100-$150. Even CCU I think will come good, given enough time and a silver price no lower than it is now... Most of my hesitation comes from my short to mid term expectation of PM prices, and the leveraged effect this would have on miners if it eventuates. Still bullish on PM's in the mid to long term, but feel like there'll be another capitulation before we see any sustained recovery in prices.
I'm in NST and BDR is in my top 5 candidates. I suspect CCU is rubbish but it's just a feeling in my bones and not worth much. I've lost money in a lot of companies that CCU superficially reminds me of. My attititude is that I'm willing to ride with the gold companies I have now and even add a little. My other goldie is DRM. But I don't know if the gold price is heading lower either. So that doesn't address the problem of having no ready cash to use if prices do go significantly lower. Back to "decisions decisions" I guess.
