2016 A Year in Review
As I was preparing to write this year in review report, the biggest thing that struck me was how much things have changed since this time last year. Last year gold was still in a multiple year bear market that switched to a bull market that I was on top of in the reports. Last December, my website had no sponsorships and now it has a great group of sponsors. I had no clients for my consulting work, now I’m the president and CEO of two public companies. A dramatic shift over a year and I’m equally as optimistic about 2017 as I was for 2016.
This past year has been one of personal and professional changes and now we have a pretty substantial political change as Barrack Obama leaves the White House and Donald Trump comes into power. During my lifetime of watching politics I’ve seen a lot of changes in power but, this one is the dumbest one I’ve seen.
Not only did voters feel it was wise to vote a racist, misogynist, and pathological narcissist in, they also confirmed their lack of intelligence by giving control of Congress and Senate to the GOP. Giving the right and the extreme right carte blanche to change things now, and when they shift the Supreme Court for long into the future. The US is about to lurch to the extreme right and as a visible minority, I’m not too happy about it, but as my friend likes to say, it is what it is.
I guess American voters really did want to send a message, the one they sent is that the world has become too politically correct. This outrage about the scourge of society they call political correctness is asinine.
What has this frightening wave of political correctness caused them to stop saying? And why? Americans have the right to free speech, what is stopping them, nothing is the answer. Other than their fear of wanting to look exactly like they will if they start spouting ignorant stuff. These people don’t really have a problem with political correctness, what they want is to be able to say ignorant stuff with no consequences.
Now that a buffoon like Trump, who rode a wave of angry white folks, and spewed a bunch of racist and sexist gibberish that a lot of folks bought into, everyone can be less politically correct and just let it rip. I actually prefer them to be less inhibited, I like to be able to know who the racist, sexist and backward are so I can steer clear of them. I guess in a way I’m against political correctness too, I would rather let the ignorant expose their ignorance openly.
As you can imagine I’m not a fan of conservatives, especially those on the far right, but I’m not a fan of liberals either. Mainly because I think most people that identify with either side of the political divide fail the logic and intelligence test. I had the privilege of taking chess lessons from a chess master who taught me an important lesson that applies to chess, business, politics, and life.
He told me to always look for the best move, not a good move, the best move for every move I take. If someone falls on the left or right on politics, they have made themselves incapable of finding the best moves. They have doomed themselves to political ideologies that force them to think everything on their side is correct and the other side is wrong. Now no matter how good a political side is, they have good and bad ideas, but if one identifies as being either they have made it nearly impossible to live by the chess master’s lesson and are doomed to make dumb choices.
We just saw that in the election with Donald Trump winning the White House and GOP the Congress and Senate, a perfect example of an epically bad decision. I get that voters want to make a statement, but there is making a statement and lunacy, giving the right a clean sweep is out there on the lunatic fringe.
Now we move from having President Barrack Obama, he came in on a wave of hope and change but was handed a brutal economy, then he basically followed George W. Bush’s plans on how to deal with the economic meltdown in late 2008. On an economic scorecard, he comes away with an A for the economic meltdown ending, but the almost doubling of the national debt to $20 trillion get’s him a D on paying for it.
When he came in, he talked about big issues like shutting down Guantanamo Bay and getting out of the nation-building business in other countries because warmongering isn’t really a leftish thing. But President Obama was not much different to George W. Bush and kept all the nation building efforts going in full force. Regardless of loss of life of military, innocent citizens caught in the crossfire and trillions spent for these warmongering efforts.
I’m no fan of either side of the political divide, my biggest problem with politicians is that they are politicians. They make a bunch of promises that they have no intention of following through on to get elected and then when they get in they do their thing.
I get people are extremely angry at politicians and the economic system that seems built only to increase the gap between the rich and poor. But, giving the White House to Trump and control of Senate and Congress to GOP is beyond stupid. Especially when they have new appointments to make to the Supreme Court that will drive America into the ditch on the right.
Gridlock would have been a much better decision, that way none of these whacko politicians on either side can do anything. The less politicians can do, the better as far as I’m concerned, their collective ineptness should prevent voters from ever giving one party a sweep.
They have, and now we have a new playing field that is run completely by right wing politicians. With a president that can start trade wars or actual wars with a Tweet on Twitter and seems to relish in having that power.
Which brings me around to a strategy that I will be discussing in the Outlook 2017 report that I will be putting out in early January. Security of supply in certain commodities will pay dividends in the future with the Twit-in-Chief Trump at the helm.
Based on people that Trump is adding like Peter Navarro, will almost ensure trades wars and currency wars. In this kind of environment, gold will also do well. This will also be a key theme in the Outlook 2017 report.
Report Card on Trends
In the Outlook 2016 report, I made some big calls on the ending of the 2011-2015 gold bear market and the start of the next multiple year bull market for gold. At the time, very few were seeing that, especially in the early part of January.
What got me ahead of the crowd, was I saw a Santa Claus rally for gold late in December 2015 and then I was looking for confirmation of the January Effect. I’m always watching closely for what happens in the last week of a year and the first week or so of a new year due to how accurate the January Effect is as a bullish indicator.
What I look for is a late December rally that follows through into the first week of trading in January. When this happens it usually means that the trend will continue to be bullish during the year. Last year, I saw a very strong move in gold during late December that followed through in early January.
When this happened, I made a very bullish call on gold, saying that it would be one of the best-performing assets. For the first nine months of the year or so of 2016, we saw a very powerful move in gold followed by a correction.
In the Outlook 2016 report, I also had a key strategy to buy on the weakness early in the year and look for opportunities to take profits to build up cash to take advantage of selloffs. No trend goes straight up and so I stressed it was important to take profits during strong rallies. I actually thought we would see a couple dips during the year and rallies to follow.
Instead, we got a big move and then a late in the year selling when the USD and US stocks got euphoric about a Trump win and GOP win of Senate and Congress.
Also in the Outlook 2016 report, I picked a group of stocks that I thought were well positioned to take advantage of a bullish move in gold. Several of those companies were exceptional performers, and by following the strategy advice, I made sell recommendations in the summer on a bunch of big winners. By doing this, I dodged the weakness at the end of the year, not because I predicted it to be as deep as it was, but because I followed the strategy. This is another example of the value of sticking to the game plan.
I also made calls on the USD and US stocks in the Outlook 2016 report and was expecting a significant correction and weakness throughout the year. I got the correction part right, as we got a pretty solid correction in the USD and US stocks early in the year. Instead of more weakness, they came back with what I can only see as confidence coming from an extremely accommodative Federal Reserve. It certainly didn’t happen because of improving fundamentals and earnings growth. It was hot air, and I’m seeing the USD and US stocks priced for perfection and very risky.
My gold stock picks and strategy that had me put out sell calls on a bunch of big winners puts the overall performance of stock picking for the year at exceptional. I would put the picks and timing calls up against my peers and be very happy with how they shape up.
Report Card on Sponsors
Alset Energy (ION.V)
Alset has been a wild ride in a short period of time, they started out as a sponsor, then shortly after beginning as a sponsor had a management shakeup that saw the company in a bind, then I became the new President and CEO of the company. I had no idea that was how this would play out, but after I joined the company, we got things moving in the right direction again. Recently, we announced very good lab results from sampling of the company’s lithium-potassium salars in Mexico. We are still in the very early stages of testing the chemistry of these salars, and are off to a strong start. I would invite you to check out the Alset Energy website, where you can find the corporate presentation, lab results and other info to do homework on our efforts.
Nevada Exploration (NGE.V)
The gold supply chain has been weakened significantly over several years due to decades of under-spending on exploration. This is creating a situation that has new gold discoveries lagging significantly behind what is being mined yearly. The result will be an exploration renaissance that will require a lot more money in exploration and that money being used by smart explorers. Nevada Exploration has a strong team and a method to explore for gold in Nevada using groundwater to vector in on targets using groundwater sampling. It is this kind of unique approach that can really open things up for new discoveries in Nevada. Much of the state is undercover which makes it hard to explore the covered bedrock. Where the bedrock is exposed is where the mines are but the rock undercover has just as much potential. I’m happy to have these guys on as a sponsor as I believe they are doing impressive work that will help them grow into a larger company.
Premier Gold Mines (PG.T)
Often when I talk about Premier Gold, I say that they have an enviable portfolio of projects from exploration through to production in Ontario, Nevada and Mexico with partners including Centerra Gold, Barrick and Goldcorp. I have been following the company since inception and they usually outperform their peers during gold bull markets and don’t get punished as much in gold bear markets. The reason is that they have a strong team running the company that are aggressive and look for opportunities to add to their portfolio when things are reasonably priced. I expect to see them continue to outperform their peers and continue to execute on their growth goals.
Sirios Resources (SOI.V)
One of the most exciting discoveries of gold throughout Canada in the past couple decades was the Eleonore gold mine that was discovered by Virginia Gold. They were bought out by Goldcorp and now Eleonore is in production and Sirios has key ground beside the mine and have an exciting gold discovery. There is a lot of gold on this property as one can see every time they report a new batch of drill results. The trick now is for them to find where there is enough of it to have a mine. Often this becomes a scientific mystery that needs to be understood and they are learning plenty from their drilling and stripping at the surface for samples. They are getting a better understanding of the geology, and each time they do they improve their chances of making an important gold discovery. They have some of the best gold exploration ground in Canada and I continue to enjoy having them as a sponsor and watching them move the Cheechoo gold project forward.
Tarku Resources (TKU.V)
Tarku is a company that came to my attention when John Kaiser and I were doing our Zombie Search and Rescue Mission shows. I was really impressed because management called me up after hearing I called them a Zombie stock and wanted to explain why they weren’t. What caught my attention was their gold exploration project in Quebec. It is in a good location, beside a known gold mine with a geophysical and geochemical anomaly that looks very exciting. Another benefit of the location of the project is it is near the road built to open up the Renard Diamond Mine owned by Stornoway. I’ve been a little disappointed that they didn’t raise a bit of money and do more exploration on the project. I still like the project and my hope is they start looking at rolling up their sleeves and get to work on exploring their gold project.
Tudor Gold (TUD.V)
Tudor Gold is a company founded by Walter Storm, who also founded Osisko, with a focus on key strategic exploration projects in the Golden Triangle of British Columbia. This season they built a camp that is ready to be used for several years as a base for all their projects. They drilled a lot at their Treaty Creek project and ran geophysical surveys that have been used in the region to find a lot of gold. In addition to this project, I’m also really impressed with their Electrum project, this is a well know project in the Golden Triangle that has been noted for the extreme high-grade gold and silver. But as is often the case with high-grade, it isn’t the easiest thing to chase at depth with a drill. They have a great opportunity to advance the project in a different way. These high-grade veins come to surface and they can go in and bulk sample them which can give them a better idea of what is happening than trying to figure it out with a drill rig. I really like this approach as it has the potential of being more representative of the gold grade. They are loaded up and ready to roll for next season with a camp and plenty of drilling to do, I like their chances to hit.
West Red Lake Gold Mines (CSE:RLG)
Lately, I have been disappointed with the performance of the company, not because of what has been happening with the drilling. It is more about focus for me, I see two targets on the project, one is the Rowan Lake target and the other is the Hinge Zone of the Newman Todd Structure. This Hinge Zone target is a classic Red Lake target and what the focus of drilling should be on. I’ve tried on several occasions to spend time with management explaining the importance of the target, but based on the last news release after the last drilling results, it is clear to me that they don’t agree with me about the key target and want to spend their time working on Rowan and the Hinge Zone target. That would be fine if the company was well financed and had a small share float. But they aren’t well funded and they are over 100 million shares out, it is getting to a point where they need to focus every dollar they can raise on the target that gives them the best chances for success. If I were running the company, I would put all my focus on the Hinge Zone target and do a better job of explaining the target and the importance of drilling it.
Wolfden Resources (WLF.V)
Wolfden has an exceptional discovery of high-grade nickel-copper at their 100% owned Rice Island project in Manitoba. But early in the year, they faced a dilemma, the direction of the key geophysical anomaly was extending out onto ground that they didn’t own. They were hamstrung in that they couldn’t really bang the drum about what they have because they wanted to get the neighboring ground. I had a chance to interview Don Hoy from the company shortly after they did a deal to acquire the ground next to their discovery. Now they have nothing holding them back, Don also explained in the interview that they will be doing a ground based geophysical survey, off the ice once it is thick enough, to prepare them for drilling in the 1st quarter of 2017. I’m looking forward to that work as I can see 2017 being a breakthrough year for their Rice Island project.
Report Card on Stock Picks
GMV Minerals (GMV.V)
After I shifted gears in my July 5, 2016, report when I dropped several of my gold picks from the Outlook 2016 report. Part of the reason was that I felt it was time to harvest profits because as a group they were up well over 100%. The other reason was, I wanted to make room for new picks. On Aug. 23/2016, I started coverage of GMV Minerals as a new pick. They had come up during an interview show that I had done with Eric Coffin. During the interview, Eric explained what he liked about the company and as he was telling their story I checked out their corporate presentation. I looked at their geophysics and saw several targets that stood out to me, one is the extension of their known resource that looks like it could be bigger than what they have already drilled. They also have some very strong geophysical anomalies elsewhere on the project that show plenty of potential. They are starting to test these geophysical anomalies and I’m watching closely for the results that could propel them higher.
International Wastewater Systems (CSE:IWS)
This is another new pick after the July 5, 2016, report when I put out sell calls to take profits and also make way for new picks. They are a technology play as they are using wastewater recovery to create energy. They have commercialized their technology and have it in use, since adding this pick they have struck up some interesting deals and I’m watching for further deals as they continue to prove the merits of their technology in industrial applications. It will be all about the numbers and I like their prospects for partnerships to help them grow into a much larger company in the renewable energy space.
Serengeti Resources (SIR.V)
Serengeti was another addition to the picks after the July 5, 2016, report, and I picked them for the potential of their gold-copper project in BC. They had good drill results, but I think they dropped the ball when they reported the results. They made some serious steps to unlock the potential of the project and have positioned themselves well for the drilling season in 2017.
Uravan Minerals (UVN.V)
Uravan had the opportunity to test their exploration model and failed. That doesn’t mean that the method doesn’t work, it means it didn’t work on the targets they drilled. They are sort of back to the drawing board to refine the model based on what they learned from the drilling and get new targets ready to drill. That folks is the exploration game, as one of my mentors once said to me, sometimes the magic works and sometimes it doesn’t. I still like their exploration method and want to continue watching them drill targets if they get it right one time they are off to the races.
Dalradian Resources (DNA.T)
Dalradian was one of the top gold picks included in my Outlook 2016 report, they were $0.73 and I dropped them from coverage in the July 5, 2016, report, they closed at $1.02 that day. My concern at that time was the Brexit issue plus there was some noise from local politicians about the permitting of a mine. I still like the gold deposit, but I left a lot on the table as it went higher to hit $1.68. It was still a winning pick, but the poorest performer of the picks, if this is the worst pick, I’m okay with that.
Pretium Resources (PVG.T)
Pretium has been a remarkable pick from the Outlook 2016 report when they were trading at $5.06 and had tripled in price by the July 5, 2016, report. In that report, I recommended a sell half to lock in profits and let the rest ride as they move closer to being a producer. They have a high-grade project in the Golden Triangle of BC and are getting close to starting production. I see them as a core holding that will have surges in price as they become a producer and as gold moves higher. My position is we are in the early days of a multiple year bull market that will rival the gold bull market from 2001-2011 and in that environment, they will grow into a major player in the gold mining business.
Sabina Gold & Silver Corp. (SBB.T)
I started coverage of Sabina back in mid-November 2015 when they were trading at $0.63. I then picked them in the Outlook 2016 report and they had the same share price of $0.63 that day. In the April 2016 update report, the stock was $1.63 when I made a take profit recommendation and then dropped them from coverage in the July 5/2016 report closing at $1.35 that day. They have a good project when it comes to the drilling results. But the problem for them is they got a negative ruling from the Nunavut Impact Review Board (NIRB) that is now before the Federal Minister and they await the final ruling. My feeling is that the Federal Minister will agree with the NIRB and they will have to start all over to fix the issues and resubmit. This could cause a 1 to 3-year kind of delay. Investors don’t need to be in a hurry to own this one, until after they fix the permitting issues.
Yamana Gold (YRI.T)
This is another of the top picks from the Outlook 2016 report when they were trading at $2.64, I then followed that up with a sell half call in the July 5/2016 report when they closed at $7.40. I made the sell half, partially to lock in big gains, secondly to make room for new picks in the report. I didn’t want to remove them from coverage because they are a core holding type of company that is liquid and can be confidently bought on weakness and a good candidate to clip big gains during rallies in gold.
Kaminak Gold (KAM.V)
In the Outlook 2016 report, I added Kaminak to my radar screen, they were trading at $0.85. Then I dropped them in the July 5/2016 report as they were trading at $2.80, they had received a takeover offer from Goldcorp and I wasn’t expecting a competing bid. Shortly after that, the takeover happened and now Goldcorp owns the project.
Gold Standard Ventures (GSV.V)
Gold Standard Ventures was another big winner from the Outlook 2016 report, they closed at $0.86 that day. They had moved up to close at $2.64 on the closing price for the July 5/2016 report when I recommended selling to make room for others.
That’s all for now.
All the best,
Allan Barry Laboucan
Alset Energy (ION.V)
Allan Barry Reports
P.S. my reports are for information purposes only, before making any investment decisions it is important to do your homework and speak with your financial advisers.