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Investing is more difficult than chess, according to Robert Sinn of Goldfinger Capital. At the recent Metals Investor Forum he gave investors practical advice on building a resource sector portfolio and determining when to sell.
While many investors build and maintain their portfolios with the help of an investment advisor or company, others choose to go it alone in whole or in part, taking on greater risk be it for fun, profit or both.
This is no truer than in the resource sector, where risky plays come with the promise of potentially enormous returns.
Speaking at this month's Metals Investor Forum in Vancouver, BC, Robert Sinn, senior content creator at Goldfinger Capital, spoke about the pitfalls junior mining investors face and shared advice to help mitigate risk and improve returns.
More complex than chess
Sinn drew from his experience as a teen chess master to make a point, saying that in six years of studying chess, he achieved something he's never accomplished in 21 years of studying markets — mastery.
He explained that while the combinations and variables in chess may seem infinite, they are not; however, when it comes to investing, especially in the resource sector, they are. From finding a resource, to mapping it, getting financing and ultimately building a mine, each step comes with challenges that could change the direction to success or to failure.
How can investors know? Sinn said it’s all about finding the signal through the massive amount of noise.
“In 2024, one of my key assertions is that we’re being flooded with noise, constantly. Just a deluge of noise, possibly your phones, or news or media, even companies are putting out noise. The stuff they’re telling us isn’t really that important all the time, right? We need to figure out what’s the difference between the noise and the signal,” he said.
For Sinn, one such signal came in October 2023, when Hercules Silver (TSXV:BIG,OTCQB:BADEF) announced strong drill results from its property in Western Idaho. Though he had never heard of the company, he recognized that the discovery was strong and the signal was strong. He bought in at C$0.29 and six weeks later shares were up 440 percent.
Sinn also pointed to Awale Resources' (TSXV:ARIC) February 29 news. While the company was simply reporting the completion of a drill program, he noted the excitement that came through in the news release.
“Not every company does this, a lot of companies will finish their program, but they won’t announce to the market. … But this news release was really explanatory. It was like they were really happy. They didn’t tell us what the assays were going to be, but if you read the words, they’re pretty excited,” Sinn explained to the audience.
On March 25, Awale announced results from the drill program, reporting an intersection of 45.7 grams per metric ton gold over 32 meters. While shares didn’t move after the company's February release, anyone who bought in then would have spent C$0.13 per share; when the results were announced in March, shares skyrocketed to C$0.98.
For Sinn, this wasn’t about creating magic, it was about understanding patterns in the industry and recognizing excitement from company executives who may not have had results, but had been on site, talked to people who knew the resource and had a good feeling they were on to something big.
Risk management
Sinn noted that in addition to finding the signal in the resource sector, investors need to understand their risk and where it's coming from. From there, it’s important to be aware of possible pitfalls and find the edge.
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