Gyroscopic Investing

portart wrote: I am thinking of shifting my VP completely to mining stocks. Do you think it's too early. I see there could be more to drop but looking at all the charts, they are dead on their ass as lows of ten years ago.
Any opinion on this?

I think it's a good idea, but you need an exit plan.  When will you sell? 

Also, I would not put my whole VP if it was me.  In my experience for these speculations to work out, you need to have a small enough sum of money involved that you don't get emotional with big swings (up or down).

My GDX investment is down approximately 30% and I am in no rush to re-balance into the position. The GDX ETF has experienced net inflows as the NAV has declined.

http://www.indexuniverse.com/sections/f ... n-aum.html

It appears as though being a contrarian is no longer contrarian :-)

portart wrote: I am thinking of shifting my VP completely to mining stocks. Do you think it's too early. I see there could be more to drop but looking at all the charts, they are dead on their ass as lows of ten years ago.
Any opinion on this?

I think it's more difficult to advise someone on their vp as compared to reminding someone to save earnestly, avoid credit card late fees, and stick with the pp. The latter are rather like being someone's rehab sponsor. But the vp is your chance to let your seeking alpha Alpha Male run wild. I bought into a mining stock at some point when other members here were excited about GDX, and I'm still feeling the pain. Just a nibble, though.

My vp is half short-term treasurys at this point and I have no regrets.

Edit: one typo only

portart wrote: I am thinking of shifting my VP completely to mining stocks. Do you think it's too early. I see there could be more to drop but looking at all the charts, they are dead on their ass as lows of ten years ago.
Any opinion on this?

I took a small position in GDXJ January 2015 at the money call options in June, when it was at $33.  It (the underlying ETF)had a rally of 10 or 15% and the position doubled.  I didn't sell it b/c my plan was to hold it for at least a year (for tax purposes).  It's now worth about 1/3 of what I purchased it for.

My plan is to wait until June of this year and then sell it.  If the miners are still in the dumps, I'll double my money. 

I feel like the risk/reward is pretty good with this.  I use a small amount of money and never lose any sleep over the position (I mostly just enjoy watching it from day to day). 

Using options is kind of nice for trading something cyclical like the miners. 

The miners really do seem to be in the dumps, but who knows how bad it might actually get for them. 

I think if you believe that gold will finally bottom in 2014 (who knows for sure but if the market continues to recover, the next logical step is inflation) the miners will be the buy of the decade. Even if they come back 50% off their lows, you stand to make a terrific gain in a short period of time. Even if they don't respond, most of the downside is already priced in so it will be like holding cash.

portart wrote: I think if you believe that gold will finally bottom in 2014 (who knows for sure but if the market continues to recover, the next logical step is inflation) the miners will be the buy of the decade. Even if they come back 50% off their lows, you stand to make a terrific gain in a short period of time. Even if they don't respond, most of the downside is already priced in so it will be like holding cash.

I agree with you, but I think this trade may take a lot more patience than people tend to think. 

If I had a large sum of money to invest, I might take half and buy GDX and keep the other half in cash and then pick some rebalancing bands to stick with until I felt like they had recovered enough that it was time to get rid of them. 

Remember, too, that part of the story with the miners is declining ore quality across the whole industry.

If the price of extracting gold is rising more quickly than the price of gold itself, then simply looking at whether the price of gold is rising or falling might not tell you all you need to know about whether a mining company (or miner ETF) would be a good investment.

The miners will go up long before if anyone knows if they stand to money or not through speculation in the face of a rising gold and silver price.