Why High-Cost Producers Shine in a Bull Market

Don Durrett, Founder and publisher of the website GoldStockData.com and author of the book "How To Invest In Gold And Silver -- A Complete Guide With A Focus On Mining Stocks" joins me to overview why he believes we've finally arrived at a generational one-time trade for the precious metals equities.

This is an informative wide-ranging discussion on how Don approaches investing in gold and silver stocks, and touches upon what investing criteria will lead to 5-baggers, 10-baggers, and even 25-baggers and 50-baggers, why holding more positions than is typically recommended can actually give value investors an edge and takes the emotion out of investing in this sector, and why nobody can actually pick all the winners in advance within their portfolio.

Key Topics Discussed:

• Don's 2-decade history investing in the precious metals sector, why he wrote his book, and why he developed his research website as a teaching tool for investors.
•  Why Don has always positioned for a one-time generational trade in gold, silver, and the PM equities, and why he believes the period of time for for that trade to unfold has arrived.
• Don's outlook on gold to eclipse $5,000 in this run and for silver to move to over $100.
• Don't outlook on the US bond market starting to fail, and while gold and silver will be the beneficiaries if the US treasury market becomes fragile, and no longer risk-free.
• How to get an edge by diversifying one's portfolio across a larger portfolio, to get better odds at dozens of 5-baggers and 10-baggers, and the potential for a handful of 25-baggers and even 50-baggers
• Don's mining stock portfolio is now 177 stocks, and while he concedes that is too many positions, he points out that for most investors they should really hold a portfolio of 50-80 gold and silver stocks; unless they are an active trader - where 30 positions are more appropriate. 
• Don points out that he rarely will have exposure to a 1% position, with the exception of the 2%+ position size he maintains in the 6 ETFs and 3 mutual funds that he holds within his portfolio
• "I didn't want large positions, and I still don't want large allocations.  I found out that 1% is a large allocation, and I don't take 1% positions very often."
• Why even his current favorite developer, 1911 Gold Corp (TSXV: AUMB) (OTCQB: AUMBF) is just barely over a 1% position size, and why he will not let it get over 1.5% inside his portfolio despite how much potential it has to rerate higher.
• Why his strategy takes the emotion out of holding a portfolio of PM stocks, and why active investors with 30 positions or less still will have a lot of risk and also emotion tied to any one position that is weighted too heavily.
• Why Don doesn't need to use stop losses, and doesn't care if a few individual companies fail.
• An overview of the disciplined strategy and checklists that Don uses for making acquisitions of any position.  Don shares a checklist of 10 criteria for producers, 6 criteria for developers, and 2 criteria for explorers.
• Why nobody can truly pick eventual winners, due to the nature of dilution versus value creation, unexpected acquisitions, and unforeseeable discoveries. All investors can do is pick potential winners.
• Coeur Mining (NYSE: CDE) is a company that didn't do will historically during bear market periods, but one that Don believes every precious metals portfolio should own.  He goes on to share why he feels this is a must own stocks, because of how well it performs during bull market periods, due to the excellent location of their operating mines, and because of how accretive the Silvercrest acquisition was for fixing their balance sheet and their future trajectory.
• First Majestic Silver Corp. (NYSE: AG) (TSX: AG) has been a poor performer in the past, but Don explains that their acquisition of Gatos Silver fixed the company, but that he believes a future acquisition could make them an even-better overall company.
• Avino Silver & Gold Mines Ltd. (TSX: ASM)(NYSE American: ASM) was a stock Don believes could be as much as a 50-bagger from the low to the eventual high in a $5,000 gold and $100 silver environment.  Even though the stock has run up over 6X on this recent move the last 2 years, Don still believes Avino is undervalued and heading much higher, but that it is also a prime takeover target in this cycle.
• Endeavour Silver Corp. (TSX: EDR) (NYSE: EXK) is one of the 8 silver stocks that Don believes you can "marry" for this PM cycle.  He unpacks why he has changed his mind from not initially liking the recent acquisition of their Kolpa Mine in Peru, to now seeing it as very forward-looking and value-accretive for the longer term.  Additionally, Don highlights why the Terronera Mine just finishing construction and beginning the ramp-up into production is going to be so significant to the company's growth profile and costs, along with the very large Pitarrilla Mine which is up next in the development cue. 

• In full disclosure, Shad is a shareholder of Coeur Mining, Avino Silver and Gold, and Endeavour Silver, and may choose to buy or sell shares at any time. 

Investment disclaimer:  This content is for informational and educational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. Investing in equities and commodities involves risk, including the possible loss of principal. Do your own research and consult a licensed financial advisor before making any investment decisions. Guests and hosts may own shares in companies mentioned.

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