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.