These days the number one, two and three topic of conversation is the Pandemic Lockdown. You can’t hide from it, every channel every network, every person is being bombarded with this lockdown, and the natives are getting restless, people want their freedom, the virus be damned! Gold doesn’t care.
What do I mean? Well, gold seems to be going nowhere, we had a nice push up since the start of the year, the pandemic hit, gold sold off, just like everything else, in a rush to dollars, but it’s right back where it started, and ever since then, as the lock down continues, so does the non-action of gold, unable to break through that 1740-1760 area.
That’s a key level from a technical point of view. It represents a decade old resistance line, above which could mean much higher prices for gold, below that line is the status quo, maybe even some relatively significant lower prices.
The nature of markets with strong resistance areas is that if they pound that resistance and are unable to overtake it, they generally retreat. In order to take that line of demarcation, gold would need to get above that area of resistance and hold it at least a couple weeks, and establish a new base of investor value. From there prices would be free to go higher. That would be my scenario one (S1). if it fails to break through then price will likely fall to the next level or levels of support or value, which are pretty far down, about 300 points down to 1450. That would be my scenario two (S2).
The Portfolio Framework
Although we haven’t officially established a portfolio quite yet, being that the service is only a couple months old, I did refer to existing positions that you can see here, that I hold currently and can endorse as competent components of a resource portfolio. Currently it consists entirely of gold royals and some junior minor companies. Below is a spreadsheet of those positions. I purchased these positions in late February, prior to the massive 30% decline in the markets, and the spreadsheet shows the current state of those positions.
This is not a recommendation for you to buy this same allocation, rather this represents the specific assets that I have purchased just prior to starting this service, and which I will likely hold for the foreseeable future. I expect if we see the realization of Scenario One, this portfolio will do quite well. Should we see Scenario Two play out, I may be looking to add to this portfolio. Keep in mind this, I’m managing a very large account, and this initial purchase represented only the first tranche. So, let’s only use it as reference from that initial purchase. If you were to consider any of these companies, refer to the buy price on the spreadsheet as a reasonable entry.
Bottom line is that I expect to establish this as the baseline portfolio for the Asymmetric Advisor. At least from the Gold perspective. We are currently in position, or poised to take positions in Shell Midstream Partners, L.P. (SHLX) under $10, and Enthusiast Gaming Holdings Inc. (EGLX.TO) under $1.40. See the May 2020 Part One issue for information on SHLX. I will publish a future analysis of EGLX. You can find some mention of it in our #asymmetric Discord channel. Just search for EGLX.
I am partial to gold royal companies like Franco Nevada (FNV), Royal Gold (RGLD), Wheaton Precious Metals (WPM), and Osisko Gold Royalties (OR), but I feel they are over extended in this massive run up we had in April, the biggest run up in the larger market since 1987! I think if we realize Scenario two, they will pull back significantly, giving an ample opportunity for a first tranche for you, and perhaps a second tranche for me.
And as mentioned in the Discord group, I’m very interested in acquiring Sandstorm (SAND). So it, along with a few others, like Pan American Silver (PAAS) and Agnico Eagle Mines (AEM), which we may end up owning by default, as they are a likely major that might acquire Gold Standard Ventures (GSV), one of our speculative holdings. We can only hope, a cheap way to become an owner of a premier major.
Look for continued analysis in the Discord #asymmetric channel.
