Good Morning!

Precious Metals are in a correction. 

We have enjoyed a big move over the last 12 months but an even bigger move is ahead of us. 

To capitalize, we must own the right stocks and know how to execute buying and selling with proper portfolio management.

Today I will share with you my 5 most important rules for buying/selling these companies and managing a diversified portfolio focused on juniors.

Note, these rules are intended for individual investors who can manage their own portfolios. They don't apply to big funds or whales.

If I had followed these rules I would have enjoyed bigger gains and smaller losses. 

1) Use a 20%-25% Mental Stop Loss on Buys

A 20% loss on a position of 5% of your portfolio limits your portfolio risk to 1%. 

Cutting losses is a vital piece of wisdom that has been passed down for decades from generation to generation. 

In the junior mining sector, 25% losses can often become 50% losses, which can become 70% losses. 

Many of these companies do not have significant value to fall back on. 

This rule can hurt you if you have a poorly timed entry into a stock during a bull market. You can work around that by buying in tranches and being careful about your entry points.

2) Trim a Position if it Becomes Too Large or Too Extended

Knowing when to sell is one of the most challenging aspects of trading and investing. There is no specific answer, but we have an answer concerning a diversified junior portfolio. 

If a stock becomes too large as a percentage of your diversified portfolio, then you should sell 1/3 to 1/2 of the position. 

This is trimming. It allows you to lock in some profit, reduce risk and still partake in potential additional upside. 

I have done a handful of "trims" this year by selling 1/5 to 1/6 of some positions.

Many variables should be considered when judging how much of the position to trim and when to cut. 

Those variables include the company itself, its fundamental value, how much profit you have, and how much upside potential the company has. 

This rule is especially important for early stage exploration companies because they can make vertical moves and most are not sustained.

Sponsor Companies

GoGold Resources (GGD.to, GLGDF) is currently a small Silver producer with a pipeline of two development projects. Its CEO Brad Langille owns a large position in the company and has a very strong track record.

The company is attractively priced and in position to produce 9M oz Silver-equivalent/year in a few years, with another development project that could take it to 16-17M oz Silver-equivalent.

The stock is acting very well. On December 22, 2024 we called a buy on the stock at C$1.10. It nearly doubled before the current correction.

For more analysis of this company and many more companies, subscribe to TheDailyGold Premium.

3) Sell if Your Reason for Buying Changes or the Fundamentals Change

Many things can go wrong or off course, in mining and exploration. 

As a result, as a speculator or investor, you must remain aligned with your initial vision for your investment. 

Economic studies, resource estimates, permitting delays, or drill results that are underwhelming are potential reasons to sell. 

When a company fails to meet your expectations, the story has changed, and it is time to sell and redirect that capital into better options.

When something goes off course, in most cases, it will take a long time for the company to rectify.

4) Overweight & Underweight Certain Positions

A diversified portfolio of quality junior companies can outperform the sector, but do not make the mistake of weighting each company equally. 

The most significant and largest positions in your portfolio should be the companies you have the most confidence in and generally perform best. 

Riskier and more speculative positions should be underweighted.

5) Buy Value & Potential Based on Current not Future Metals Prices

The initial temptation is that because Gold and Silver are in a bull market, one should evaluate and find the companies with the most upside potential at much higher metals price. 

However, this could immediately expose you to companies with flaws and, therefore, more downside risk. 

If you want to specifically bet on higher metals prices, then do so without investing in a marginal company at the same time. 

Evaluate companies and their assets at current commodity prices to find underpriced and undervalued stocks. 

These companies will have significant upside and leverage to higher metals prices.

In TheDailyGold Premium....

TDG #934 was published Sunday.

We provided a slight update to our Top 10 & Watch List Company Notes and we covered the latest company news.

Here is part of our update summary for TDG #934:

Precious Metals began a correction a few weeks ago, and last week's rebound, after a leg lower, was much stronger than I anticipated. Miners far outpaced the metals, and silver stocks were quite strong. The metals should remain in a correction, and this could limit strength in the miners, even though they are being accumulated, and individual stocks are showing real strength.

What are people saying about TheDailyGold Premium right now?

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I have purchased many newsletters over the past 15 years and yours is hands down the BEST, and for the most reasonable price!! Newsletter writers often either don't understand markets, market timing or charts and/or write way too much such that important conclusions or guidance is basically buried in details that regular people like me (who aren't geologists) can't decipher.... resulting in trying to find the gems of important information buried in mountains of verbiage".- TDG Subscriber

Thank you for reading.

I wish you all the best in 2025 and beyond.