All year, resource investors have been talking about what a terrible market it is. Commodities are on the rise, but related equities are being left behind. The market remains in the grip of a tenacious bear.
As a person just re-entering the market, I’m happy. It’s a buyer’s market. Value is increasing, but in many cases, prices are not. This creates opportunities I’m happy to make the most of.
But a funny thing happened on the way to the market today…
Gold dropped below the $1,300 price level yesterday for the first time since January. Given the bearish context, I would have expected most gold stocks to fall hard. As I wrote yesterday, I acted on that expectation, placing bids below market for the stock that was at the top of my shopping list.
No one took my bid.
Some folks did get filled at the price I bid, but there weren’t enough sellers for my bid to get hit. The stock was actually up at one point later in the day, despite gold’s sharp retreat.
I figured there would likely be some follow-on pain for gold today. I left my bid on the table. Early in the day, gold did indeed drop more. But instead of falling more, the stock I want to buy started rising!
It wasn’t the only one. Bargain hunters swooped in left and right, driving several gold stocks on my list upward in the face of still-retreating gold prices.
It was a striking reversal.
And now gold itself is recovering. Perhaps the paper-gold traders in New York are realizing that gold is being priced as though the Fed has started raising interest rates more aggressively when, in fact, it hasn’t done anything yet.
Meanwhile, back on the Toronto Stock Exchange, I still don’t own the stock I want to buy. The price has not only risen, but risen well above the higher limit I was willing to pay. Unless there’s another sudden reversal, I’m not going to get my order filled today.
That’s okay.
I will not chase the stock.
I’d feel really silly if gold tumbles again tomorrow, putting the stock I want back on sale.
What if it gets away?
That would be okay too.
This is not a stock I expect to deliver company-making news tomorrow. It’s a pre-production story that I expect to deliver exceptional gains as the mine gets built and put into production. Since I’m on the story early, I can afford to watch and wait for the market to come to me.
And if it never does, that’s still okay.
There are plenty of other opportunities. Better to miss some than to get sloppy, start chasing stocks left and right, and diminish my own results.
At times like this, I remember my motto: discipline pays.
