Preparing Your Portfolio

I’m excited. I think a gold bull market is now truly drawing near. Whether it starts now, next month, or next quarter doesn’t really matter to me – what matters is being prepared.

What does being prepared for a gold bull market mean?

I can think of several things.

First and foremost it means having a portfolio with a plan. I talk about this regularly, so here I’ll boil it down. The key is to spread your bets. You may love explorers or adore takeout plays, but in a new rising gold market you want exposure across the risk spectrum.

 Large producers with controlled costs for basic leverage
 Mid-tier producers with funded, organic growth for leverage-plus
 Single asset operators and developers for takeout potential
 Optionality plays: large resources that don’t make sense until gold prices rise, because these assets gain value disproportionately once they become economic
 Real projects building value: resources in the mine planning process that already made sense but that look better and better with a higher gold price
 Top tier explorers: whether pre-discovery or discovery growth, betting on top tier teams and projects gives the potential for those rare but oh-so valuable high risk, high reward returns

Second, you need an investment thesis for each stock. Are you going to take money off the table at a double? A triple? Are you going to average down if a broad market crash pulls the gold sector down? Are you going to sell explorers before or on good news, or continue to hold?

It’s unlikely you will stick to your plan in its entirety but it is nevertheless essential to have a plan, and one formulated before the madness begins. A level head now will have clarity that an excited or disappointed head will not have when gold really goes or a discovery doesn’t work or or or.

Third, I think it’s important to think about financings. This, however, is a big topic – the amount of money that will be raised once the gold market really starts and what that means for share prices, trade timings, and opportunity – and so I will tackle this topic next week.

———————————————————————————————–