Silver Explorer That Got Away Might Suddenly Be a "Buy"
On the list of stocks that in retrospect should have been added to our Portfolio in 2023, this silver explorer ranks near the top. I actually looked at it and bought some as a “lottery ticket,” but concluded that it was a bit too early-stage for this newsletter.
What a difference a year can make. So far in 2024 it’s done everything right and has been rewarded with a 100%+ stock price gain. Had it been in our portfolio it would have been one of the biggest winners.
But today its stock price took a hit (for a predictable reason—see below). So now, with some caveats, I’m adding it to our Portfolio. Better late than never (hopefully).
Here’s the general principle, followed by the specific company story:
Why You Don’t Buy a Gold/Silver Explorer After a Big Run
One of the important lessons in the gold/silver explorer space is that missing out on a big stock price move isn’t necessarily the end. Frequently, a nice run will be followed by a correction, for one of the following reasons:
The run-up creates embedded profits that shareholders quickly take, thus sending the stock back down to attractive levels.
Investors realize that those great drill results or that joint venture agreement with Newmont will take years to result in a profitable mine and move on to greener pastures, causing the stock to retrace its previous gains.
The explorer takes advantage of its suddenly high stock price to raise a ton of money, to which investors — sick of being diluted — respond with a wave of selling.
The lesson: Don’t stop paying attention to a promising explorer just because it soars beyond your reach. Keep watching, and it might drop back into your hand.
Is that the story here? Maybe.