An Emerging Strategy That Delivers Results

image3

A rocky beginning (July 2013 - August 2019)

Brian commenced his gold mining company investment in mid-2013 after the sharp fall in the first half of the year, sparked by co-ordinated sell-off of gold by bullion banks. Many gold mining companies began a nightmarish decline that would touch the bottom in late 2014.

During this time, he had to learn the ropes of selecting good quality mining companies, while managing losses as it mounted.

As the results show, despite the deep losses experienced in the first two years of as much as 70% of initial investment, Brian's portfolio caught up and even slightly outperformed against the renowned VanEck's Junior Gold Miners Index (GDXJ) over this period.

image4

Riding the rally (July 2015 - August 2019)

Brian's portfolio rode the turnaround of the gold mining companies' fortunes through a concentration towards mid-tier producing companies that were generating modest positive operating cash flows even through the hardest times in late 2014. These companies began to rise strongly in early 2015, notably Northern Star and St Barbara. As the gold price in US dollars bottomed in late 2015, the gold mining companies were gearing up for the next leg of the rally. The market jitters of early 2016 brought oil to below US$30 and this provided strong tailwinds on gold mining companies. Some of Brian's largest holdings at that time, Resolute Mining, along with Ramelius Resources and Regis Resources ascended sharply from March to September. 2016 was the year that gave him the momentum to start building his journey to be a focused gold mining company investor. After the US election in November 2016, the gold price and many gold mining companies began an eighteen month-long sideways journey. This period was emotionally testing as large gains were not forthcoming. However, renewed interest from the market  in the second half of 2018 resulted in some generous returns, propelling Brian's gold mining company portfolio to near 2016 levels.

image5

Consolidation and refining (January 2017 - August 2019)

Since 2017, Brian has developed a more systematic approach to valuing and selecting gold mining companies to include into his portfolio. As the performance chart shows, his portfolio returns became more comparable to the XGD even though the portfolio compositions differ. In times of a rising trend, Brian's portfolio would trail the index but would eventually overtake it, and a similar trend is seen in a falling market.

As his techniques refine further, he aspires to deliver long term outperformance against the XGD. This is a tall order as the index can be adjusted over time to remove laggards and include the star performers.

image6

Performance Measures Definitions

Geometric return considers the compound return of $1 invested over the entire period, rather than the daily fluctuations.


Standard deviation of returns is calculated using daily returns, annualised by assuming 252 trading days p.a. The standard deviation of returns reflects how much the observed returns varied from the mean return over the period. Another term used commonly is the volatility.


Beta is calculated as the portfolio's returns regressed against the daily returns of the ASX Gold Miners Index (XGD). The beta reflects the sensitivity of the portfolio's returns to the XGD's returns.


Adjusted R-squared is the percentage of the portfolio's returns that is explained by the variation of the returns of XGD, or measures the approximate correlation of the portfolio with the benchmark index.


Alpha is the level of outperformance of the portfolio against the XGD, expressed in annualised terms.


Tracking error is the standard deviation of the daily excess returns of the portfolio against the XGD, expressed in annualised terms.


Information ratio is the ratio of the annualised alpha over the tracking error. The ratio measures the standardised excess outperformance of the portfolio against the index, adjusted for the tracking error.

Disclaimer

The performance measures provided are unaudited and as such should not be considered to be accurate. Returns are calculated based on daily price movements and it is possible there are data errors. Past performance is not a reliable indicator of future returns. When interpreting these results, discretion is advised. You are advised to seek professional financial advice when making your own investment decisions based on the contents in this website as it does not guarantee your performance will resemble those shown here.