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Email this10:24 am
May 20, 2015
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Hi there, I am not very well versed in investing, so would love some insight (is possible) from investors. I am 30 years old, so have about $50 000 in my RRSP thus far. I made the silly rookie mistake of investing about $20 000 in gold and silver stocks in 2013 when things were HOT! HOT! HOT!
The stocks I invested in via, my RRSP portfolio, were:
Kinross Gold (K)
Silvercorp Metals (SVM)
Argentex Mining (ATX)
Regretfully, they are all down about 60% or more. As such, I have these huge losses in my RRSP right now. Having said that, I still have 35 years before I retire. Do you think it is better to hold them in hopes that silver and gold will eventually go up at some point, or is it better to just get rid of them, for fear that they tank to the ground, and then I lose 100% of my funds! Your advice is more than appreciated.
12:52 pm
February 24, 2015
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I have been investing in precious metals stocks for 35 years, and could probably publish a newsletter, and I feel for you. During that period, at times, I would probably have been considered a genius, and at other times, not. My advice is not to sell now. You have invested a portion of your RSP in one of the most volatile sectors but you still have a long investment horizon. As you get closer to retirement, you should definitely diversify. But in the meantime, if you sell, you are betting on two decisions - to sell one asset at the right time and to buy another at the right time. Personally, I use technical analysis especially RSI for buy and sell decisions. When one of your stocks goes up so RSI over 70, then sell some or all. But don't sell now when RSI is around 50 for your stocks.
7:40 pm
September 5, 2013
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Sorry to hear your loss. If you still hold your investments underwater for 60% and wish them come back up, then i think you should just sell and move on. I am not discouraging you. But you dont have any plan before you involved the risky equity market. Capital preservation is the most important in the financial market. It doesnt mean you can loss big when you are young. Those talking heads told you to take risks for growth, even before you have a plan b when things not going well.
You need 120% return to get back your capital. In this 3% for 20 year bonds environment, your 35 years compound are barely enough.
I made the same mistake when i was young. I really wish someone told me this 30 years ago when i can buy long term bonds at 20% rates.
8:08 pm
October 21, 2013
Online
Have you considered selling these and moving the money to precious metals index funds?
Mining is a volatile industry. If you want to stay in the sector and recoup your losses later, it might be safer to invest in the sector than in individual mining companies. Depending on which index fund you choose, this might also give you exposure to other kinds of precious metals as well.
9:22 am
April 6, 2013
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chaddy said
... I am 30 years old, so have about $50 000 in my RRSP thus far. I made the silly rookie mistake of investing about $20 000 in gold and silver stocks in 2013 when things were HOT! HOT! HOT!
...
Regretfully, they are all down about 60% or more. As such, I have these huge losses in my RRSP right now. Having said that, I still have 35 years before I retire. Do you think it is better to hold them in hopes that silver and gold will eventually go up at some point, or is it better to just get rid of them, for fear that they tank to the ground, and then I lose 100% of my funds! Your advice is more than appreciated.
I don't think it is a smart idea to wait for a losing investment to break even before selling. Just ask those who still have their Nortel shares. Selling them for a 60% loss at $50 looks pretty good now in hindsight. Nortel shares closed the past week at 0.4ยข in the over-the-counter market in the US.
I think one makes better investment decisions if one looks forward, at the future prospects of an investment. That is in contrast to looking backwards, at how much one had paid for the investment and what one's profit or loss would be.
Your $20,000 in those three gold and silver stocks is down 60%. They are worth $8,000 today out of your $50,000 RRSP. That's 16% of your RRSP. I think this is the question to ask: Knowing what you know now, if your RRSP were $50,000 cash, how much of that $50,000 would you invest in those three gold and silver stocks today?
If your answer is "I wouldn't touch them with a ten-foot pole," then you should sell and invest the $8,000 into something better.
If your answer is 10% or $5,000, then you should sell some to reduce your portfolio exposure to 10%.
If your answer is 20% or $10,000, then you should buy more.
One of things I've learned over the years is that what I paid for a stock in the past has no bearing on how much that stock will be at in the future.
11:48 am
January 23, 2013
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+1 for Norman1. It does not matter how much it was paid before.
2:52 pm
February 24, 2015
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I don't see anywhere that OP has mentioned breaking even as a goal. The problem with selling now is that OP will likely never buy that asset class again, so if gold soars he will not be taking advantage of it. At 30 years old, there are lots of future RSP contributions which can be invested wherever. There is no need to take a loss now.
7:50 am
June 29, 2013
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I certainly would not sell. Investors tend to panic with stocks and sell too quickly. One needs to hold for the long term.
This fellow is only 30 and has been said above, so many more years to contribute to an RSP and invest in other or more stable sectors with new contributions.
Also, since the loss is within an RSP there are no tax advantages to selling i.e. cannot apply against capital gains.
9:07 pm
January 4, 2014
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You'll need a 150% return to break even from a 60% loss.
Brimleychen said
Sorry to hear your loss. If you still hold your investments underwater for 60% and wish them come back up, then i think you should just sell and move on. I am not discouraging you. But you dont have any plan before you involved the risky equity market. Capital preservation is the most important in the financial market. It doesnt mean you can loss big when you are young. Those talking heads told you to take risks for growth, even before you have a plan b when things not going well.
You need 120% return to get back your capital. In this 3% for 20 year bonds environment, your 35 years compound are barely enough.
I made the same mistake when i was young. I really wish someone told me this 30 years ago when i can buy long term bonds at 20% rates.
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