How I Doubled The Value Of My Portfolio With The Gold & Silver Miners

People are getting excited about gold and silver right now, and with good reason. We have all lived through previous bull runs, but who actually made…

by Simon Popple of Brookville Capital

How I doubled my SIPP.

A lot of people are getting very excited about gold and silver right now. And with good reason. We have all lived through previous bull runs, but who actually made and KEPT any money? Appreciate some of you did, but I bet many didn’t.

The problem with bull markets is we get TOO confident. A good example is the real estate market. When the bull started roaring some 20 or so years ago, many wanted to ride the bull. Perfectly understandable. They probably started investing a relatively modest amount, but as the bull roared, they sunk in more and more. They couldn’t lose. Many quit their jobs to commit their lives to real estate.

That’s all well and good when things are going well. The trouble is, when the bull runs out of steam, you don’t want to be on it.

Unfortunately, some people are. They think the bull will never stop. But it does.

That initial “modest” commitment often balloons into more than they can afford to lose. Taking many from very rich to very poor – in the blink of an eye. They’ve made…then literally lost a fortune.

Making money is hard enough, but keeping it is just as difficult. You can liken it to climbing a mountain – more people die coming down Everest than going up it.

When you’re in the midst of a bull run, you’re getting a fantastic ride – but you do need to get off.

I’ve already doubled my Self Invested Pension Plan through gold and silver miners. In fact, the recent run up in prices has meant I’ve almost doubled it since the lockdown. I’m riding the bull for now, but I do plan to get off!

I would not view myself as a major risk taker – at least as far as my pension is concerned, but anyone who does not understand gold or silver probably would.

Covid-19 has decimated many investment portfolios. Rent is not being paid to many property owners and dividends are looking shaky. And we have not yet had the stock market crash that many of us are fearing. Whilst this is likely to bad for all stocks, I’m convinced that gold and silver shares are better placed than most. Sure, they’ll get hit – but if they bounce back anything like they did in 2009 – it could be very short-lived.

In fact, one of my favourite gold company’s have just doubled their interim dividend.

You can’t print gold and silver.

Tax concerns

Here in the UK there are several ways of making tax free investments. SIPPs and ISA’s to name just two. Some of you live elsewhere, but I’d be surprised if there are not at least some tax efficient vehicles for you to invest in.

COVID-19 has meant huge holes in government budgets. Holes that will have to be plugged. Nobody knows what they’re going to do. We don’t make up the rules. They do.

All I would say is they’re unlikely to leave any stone unturned.

Potentially taxing parts of our lives we thought were beyond the taxman’s reach.

Will that include ISA’s and SIPP’s? I don’t know.

At the moment they’re tax free and even after a double, my SIPP could still do with a lift.

I want to make hay while the sun shines.

In the words of JFK:

“The time to repair the roof is when the sun is shining”

So I’m trying to sort my SIPP out now.

If I don’t, I won’t have enough money for a comfortable retirement and all my eggs will really be in my house. That’s massive exposure to not only the UK property market, but also sterling. Yikes.

How I doubled my SIPP

Over many years of investing I’ve developed a system. I call it the 3 R’s.

Research, Resources and Risk Management

It’s a bit of a mantra.

To give yourself the best chance of making money you need all three. It’s a bit like a recipe for a cake – you need everything to make it work. You can’t cut corners.

Here are my 3 R’s

  1. Research

I use my B.R.I.D.G.E. system. You may have another way – whatever works for you. I’m sure you’ll agree, you’ve got to carry out a lot of research on where you’re putting your hard-earned money. If you don’t it’s essentially gambling.

  1. Resources

Time and money. You need the time to carry out your research and at least some money that you don’t need to spend anytime soon – one reason SIPPs are so good – because you can’t spend it until you’re 55 anyway. Time could be on your side.

  1. Risk Management

Not all mining stocks are the same. Some are far riskier than others, so you need to strike a balance you’re comfortable with. You probably know this, but a lot of people don’t.

I break stocks down into a fantasy football format – The stadium are physical metals, goalkeeper’s typically have a market value of over US$5bn, defender’s,US$1bn – $5bn, midfielder’s US$100m – $1bn with forwards being the explorers who typically at least start off with a market value of less than US$100m.

Once you’ve worked out what “formation” you want, it’s time to think about your exposure to metals – do you want a bias towards gold, silver or something else.

Then you need to think about geography – you don’t want all your exposure to one country – at least I don’t.

Once I’ve selected a prospect for the squad, it then goes through my B.R.I.D.G.E. system to make sure it fits the bill. A lot of work goes into selection. If the prospect is a goalkeeper or defender, the chances are everyone has already heard of it. Midfielders are likely to be known to those of you who already invest in the sector. Forwards on the other hand, tend to come to my notice through my scouting system in Australia and Canada. Typically, these are under the radar until they find something. Chalice Gold was my “try before you buy”. I told people about it when it was 12.5 cents back in February 2019, it’s recently traded as high as 137.5 cents.

Obviously there are no guarantees, but you only need to find one or two of these to make a profound impact on your investments.

Why I did what I did

For many years I’ve had concerns about spiralling debt, low annuity rates and more recently negative interest rates. As gold has been a store of value for thousands of years, I felt myself gravitating towards it.

I’ve written two newsletters – Metals & Miners for Moneyweek and Gold Speculator for Agora Financial. But I wanted to do my own. The Brookville Capital Intelligence Report was born in March 2019 and I must say the timing has been great. We’ve now just hit over 50% return across our core portfolio (which includes 3 cash positions) – things are going the right way. But I know that won’t always be the case.

Given you’re reading this I’d expect you to be interested in gold and silver. I hope they’ll be very good to you. But please remember – “don’t love anything unless it can love you back” – I can assure you – gold and silver mining companies don’t love you – and neither does the bull.