Managing My Investments In 2014

Of course, I am entirely responsible for my investment result. There really is no excuse for allowing such a loss.

As I have detailed to you in Ian's Investment Insights Special Edition, November 2013, gold stocks as evidenced by the HUI made a key point reversal top in September 2011.These reversals on monthly price charts are almost infallible in predicting a long term trend reversal. That reversal certainly did because it indicated the peak in prices for the bullish phase of the HUI 3rd long term cycle and the commencement of the bearish phase of that long term cycle. In the chart of the HUI from January 2008 to January 2012 depicted below, that key point reversal is clearly visible. I took the liberty of showing the key point reversal high in March 2008 to show the importance of this indicator. That reversal in March 2008 was the peak of the bullish phase of the 2nd long term cycle for the HUI. The bearish phase of that long term cycle ended in October 2008 and that was the start of the 3rd long term cycle. Anyway, I should have told my readers after the HUI Key point reversal in October 2011 to exit their gold share positions in anticipation of the bearish phase of the 4th long term cycle.; I didn't, nor did I act accordingly on my own behalf.  My excuse is that I didn't see it. As I have written, I won't let that happen again and will be far more chart vigilant in the future.

Monthly chart of HUI (Gold Bugs Index) Jan 2008-Jan 2012

That the 4th long term bullish phase has not yet commenced is attributable to vicious manipulation in the gold market.   No, I am not making an excuse for my investment performance when I write that, I am simply stating the obvious.  This ongoing gold price manipulation has been very destructive not only to the price of the precious metals themselves, but also to the precious metals stock prices. This has likely caused the demise of several junior mining companies, many of which possess a dedicated management team with viable assets.

We know that all cycles, including investment cycles are governed by natural law. This means that they will always follow a preordained path from the beginning to the end of the cycle. The end of a cycle is its beginning.

Unfortunately, the course of investment and economic cycles can be temporarily influenced by the introduction of additional money in an effort to forestall the negative aspects of these cycles. While these efforts may temporarily bring relief, they can never succeed; indeed, the greater the monetary effort prevailed upon to negate the negative aspect of economic and financial cycles, the more calamitous is the ultimate result as the cycle resumes its natural course. To this end, during 2014, we should expect that the general stock market is likely to face a crash in prices and precious metal and precious metals companies are likely to catapult to much higher prices. Our study of cycles suggests that both events are likely to occur in the 1st quarter of the year.

So with my bullish outlook for the precious metals prices in 2014, I now turn my attention to my principal investment account, which is my RRSP (Registered Retirement Savings Plan).

During 2013, I made several adjustments to my individual holdings, in order to position my account as best as I could for an anticipated return to bullishness in the precious metals. I never have harboured any fear of weighting my holdings, giving the largest weighting to what I consider will be the best price performer. In that regard, I am not adverse to being heavily over weighted in just one company. So the adjustments that I was making during 2013 and particularly during December was to achieve the weighting that I wanted by the onset of 2014. In December, I was even selling stock for $0.01 to purchase shares in the company that I wanted to have the greatest weighting in the account. This was Barkerville Gold Mines (BGM/V).  Barkerville's  year -end share price was $0.41. That price plus the number of shares in the account was equal to 52.77% of the total account value as of December 31/13.

In 2014, all precious metals stocks should advance in conjunction with the anticipated rise in the prices of the precious metals themselves. Beyond this, I am looking for the fundamental reasons that will positively impact each of my stock positions during the coming year.

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Ian A. Gordon, The Long Wave Analyst, www.longwavegroup.com

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