A very interesting article on patience in the junior sector

Patience, a missing ingredient for many gold investors.

Last week, one of my favorite juniors appeared to be breaking out after having downtrended for quite a few months. It is very possible that this company, Skygold might house one of the largest gold properties in North America. The one flaw is that it is an unusual type of gold, low quality but massive tonnage, similar to the giant properties found in Russia. But that it why the stock is a $1 not $30. To own it is a calculated risk-reward situation, the kind I prefer. But as in the other juniors, many once confident holders have lost their vision, and more importantly, their patience.

So over the weekend, one of its proponents, a highly regarded geologist and holder, decided to put out a sell explaining that “he didn’t have the patience to wait” until it became clear that the mine could be profitable. On the basis of his recommendation, Skygold has fallen about 20% over the past two days, and cries and tears can be heard across North America. Of course, I was annoyed by this the sudden downdraft, but over the past 7 years or so in the gold market, I have learned a few lessons. One of the most important is learning to be patient even when nothing is happening, or a stock that I like is not moving up as I had anticipated. If the fundamentals remain strong or even getting stronger, I will look to add on bad days. I try not to panic if my assumptions have proven correct. As an aside, one is that we will see gold in the many thousands of dollars and the financial system irreparably shredded. If your prophetic eyes are open, you can see this vision starting to come to pass.

The first lesson I learned came from Virginia Gold which I bought at around 50 cents in 2002 only to sell it about a year later after it had barely traded for days on end I thought real gold winners would trade heavily and had some real price movement. I wanted more action and went elsewhere. Perhaps 6 months later, the stock started to move up as it announced that it had made a very prospective find. Within about a year, Virginia Gold had been bought out by Goldcorp and the price of the stock was over $10. Now that is 2500% since I had impatiently sold it.

But the painful lesson made its mark. I had Mag Silver which went from about $2 to $1, only to then go up to over $9 where I sold it. The same could be said from another great favorite, Great Basin, which I bought at a top at over $2 only to see it sink to $.85. Today it is $3.60 and holds two of the better properties in the world. Do you see what I mean?

Patience is considered a virtue, but more importantly, it is a fruit of the Holy Spirit and considered of great worth in Scripture. It is part of the character not only of godly people, but I believe of successful investors who understand its value and place in the scheme of things.

On the flip side, one of the tragic characters of the Bible is Esau, who impatiently and impetuously chose to sell his priceless birthright to his twin brother Jacob for a bowl of porridge. He was starving, unable to control himself, and consequently he is written down for all eternity as one who did not please God. Imagine having that inscribed upon your obituary!

Along with most of you, I believe that the world has never seen such an impulsive or impatient generation as the current one in America. It is incredible to see how many will buy a TV, a car or even a expensive house that will saddle them with debt for the rest of their lives purely on a whim or impulse. It is the main reason that we are in such a mess today. No savings, in over our heads with debt as a result of having no self-control or a little patience. And if they have gold jewelry at home, they are streaming down to their pawn shop to cash in and buy some other useless item. How many articles have you seen in the past month that features this phomenon?

Regrettably, as an amateur observer, I have seen these traits extend to our beloved gold community, even among the most professed bull. So many have jumped into a stock, irregardless of price, because of a new recommendation or a lot of headlines and internet buzz. And many jumped out in the same manner. They could not control their emotions.

Over the entire length of this historic move in precious metals, they might still show a respectable return. But I am convinced that the real financial prizes will inevitably go to those who have done their homework, who have made studied decisions to buy and sell, and then have the patience and vision to see what they expect come to pass.

Chuck Cohen