This move has nothing to do with the fundamentals of gold or silver. Simply put I want to run a concentrated portfolio and my number of holdings is getting too large. With the Federal Reserve backstopping the entire US financial system, the risk of "calamity" is lessened (in return for inflationary pressure and dollar destruction)... but this is more along the lines of, I see no reason to hold gold/silver when I have coal/fertilizer. I already know where the prices of those are a year out - whereas gold is speculative, subject to the whims of the market, and a lot of people believing in a fantasy called "2nd half recovery". So I just don't see the need anymore to hold something that is sort of replicated in other ways in the fund; yet carries more risk. I'd rather simply be more concentrated into my top holdings with this money.
People often email me "wouldn't it be better just to buy and hold, since your stock picks are solid, and they just usually go up over time?" I have to remind them, that they are focusing on the winners and not the losers. (of which I have more than my share) Kinross Gold (KGC) is a great example where trading around a core position and taking out profits when offered saved me. (one of many examples). So yes, I sometimes leave money on the table on the "big winners" but I remain consistent in approach and this approach has locked in profits (or much smaller losses) on my "losers." For example, I have a small profit in KGC despite the chart below. So I am closing my 1.1% stake in Kinross Gold (KGC) with just under a $1000 profit, selling at $19.75Not so fortunate with my silver holding, Silver Wheaton (SLW) which despite some trading and profit taking I still exited with a $1200 loss. Considering the chart, that's a small miracle. I am selling the last of my Silver Wheaton (0.3% stake) in the $13.70s. Net net, these 2 positions essentially cancelled each other out.
Again, I want to reiterate these are not typical sales - i.e. specific to the stocks. (I actually like the KGC chart in fact) This is more of a strategy call. I am simply at the point where I want to become more concentrated and narrow the number of holdings, as it is starting to get bloated, and if I'm going to focus on commodity exposure, I am going to stick with subsectors which I have pricing visibility - so why take the tougher road, when the easier road is offered?
When the dollar is "strong" all of these sectors sell off (incorrectly) but when "weak", I know which ones will rally based on what I foresee a year out - I can't say the same for gold / silver (although I do believe the flooding of world with Western currencies will continue to help these precious metals as well).I am looking for other things to sell as well, to continue to narrow my focus.
Disclosure: No position