June 18th, 2017
Can you say inflation? Bitcoin can’t. Wouldn’t know how that works. It’s the perfect hedge against something totally man-made, inflation. You get inflation because you deal with central bankers who make paper money whenever they feel like it. What a system! – Evander Smart, cryptocoinsnews.com (Nov. 2014)
Half the year has gone by since my last J-perps update. We’ve watched crypto-currencies temporarily “supplant” precious metals as the “ultimate” store of value. We’ve watched the FANGS, FANMAGS, FUCKAS, and whatever other combination of giant tech first-initials sort of move front and center of the markets.
And through it all, the J-perp portfolio is still more than a double since its inception exactly 2 years ago. Hell, even the Watchlist, which has some atrocious performance, has almost matched the performance of the S&P 500.
You’ll notice the portfolio changes put into place since my last update, but with a couple of changes to the changes. I didn’t have the heart to remove ATAC Resources. I think it will continue to underperform other junior explorers, but the land package continues to intrigue me despite the eventual CapEx that will be needed. It’s a good thing I kept it too because it was a huge tailwind for the Watchlist’s performance as it went from a negative return of (31%) to a positive return of 27% over the last 6 months, a 58% swing.
I’ve demoted New Gold from the J-perp to the Watchlist and added a new junior explorer in Almaden Minerals. The rationale is that despite New Gold’s growth profile, the market is upset with the poor cash management, on-take of debt, and slow mine development. Aside from that, I had 3 producers in the J-perp with a fourth coming online this year in Pretivm. I wanted a little more pure exploration exposure and Almaden offers an enticing resource, great experience with the Poliquins, and a relatively safe jurisdiction.
As for the Watchlist, not only did we add Alexco and Excellon as pure silver plays but I’ve also added White Gold Corp., yet another Yukon-play.
The quick rationale: Where – Yukon; safe jurisdiction with a focus on mineral developments, Who – Two names in particular; Shawn Ryan who almost single-handedly created the new Yukon land rush for gold explorers and Rob Carpenter who developed Kaminak’s Coffee optioned from Shawn Ryan and then handed the reins over to Eira when it was time to liquidate plus Agnico and Kinross collectively own 40%, and finally the What – amazing land package in the White Gold district surrounded by proven resources where they own 40% of the prospective land in the district of their namesake.
Observe White Gold’s land package in the Yukon. They own everything outlined except Goldcorp(purple) and Western Copper(aqua).
Just this past week, White Gold Corp. was able to buy Kinross Gold’s White Gold Project(black grids over gold) for $45M USD via cash and shares. This is the same White Gold Project for which Kinross paid $135M USD in their purchase of Underworld Resources back in 2010. Kinross basically admitted 7 years after the fact that they bought Underworld at the top, and they have to outsource exploration of the area because they’re idiots. The only face they’re saving is holding the stake in White Gold Corp. to take advantage of the upside if the gold bull takes off. So now we know we can trust White Gold Corp. management to intelligently purchase value with responsible issuance of shares and cash management.
Overall, junior resource plays continue to provide strong performance even in what has been a dull market for several months now. If you’re looking to diversify your portfolio with some precious resource plays, the J-perp continue to outperform virtually all opponents. This is even during the GDXJ rebalancing which has created a very difficult environment for this super small niche of the investing world.
Please remember, the J-perp portfolio is an experiment in extreme sentiment that could prove to be very interesting over the next 12 to 36 months. If you haven’t already, have a read of my original article for the why and how on J-perps.
Junior Precious Resource Players (“J-perp”):
J-perp Alternative Investment Options: