Gary probably failed grade 6...Multiple times.

While some retail traders are bailing and others are voicing concerns over Gary’s silliness, it appears that the man himself has decided to double, or should I say Triple down. 

GDXJ had a 200% rally from the 2016 low and it was relentless. JNUG managed a 1,100% rally of the low and Gary managed to catch anywhere between 5-10% of that, depending on how many lies you believe. 

Such moves are more the exception rather than the rule. Going by HUI’s performance, the 2016 rally was only matched once in the entire 11 year bull run (2002) from 2001-2011. In fact my tremendous success in going long and short GDX was owed to identifying the virtual lockstep with the 2002 rally. The point here is that if HUI rallies 150% from the lows once about every 15 years, and Juniors (GDXJ) rally 200% from the lows, it is going to be very unlikely that this can be repeated multiple times. So a JNUG move of 1,100% is very, very unlikely. 

Even then, from its peak in 2016, GDXJ gave up a whopping 40% of its NAV and JUNG did an impressive 88% drawdown (From $32.5 down to $4). It follows that such rallies require massive drawdowns to reset sentiment.

So let’s assume we can mimic this volatile year (2016), how many years of such rallies and declines will JNUG require to reach 1,000?

So here is what we assume:

1) Every year GDXJ rallies 200% from its low. Then declines 40%.  Every single year. 

2) You are a stupid retail trader and you believe Gary. So you invest in JNUG. Starting with a price of $4 for JNUG at the end of 2016 and assuming we get 11X increases (because of straight linear rallies compounding more than 3X) on each run up and 88% declines, we need 13 years to reach 1,000. Not 4-5 as the master says.

JDST	Low	High
2017	4	44
2018	5	58
2019	7	77
2020	9	101
2021	12	134
2022	16	176
2023	21	233
2024	28	307
2025	37	406
2026	49	535
2027	64	707
2028	85	933
2029	112	1231

But wait; there is more as the salesman said. In addition to achieving this extremely unlikely possibility one more thing must happen.

There was not be any 1 year period without this kind of movement.  A standard sideways chopping range over 2 years can decimate 80-90% of the value.

And here is fucking funniest part. When you see this you will laugh your ass off. What if all of this happened? What if Gary after being wrong every year from 2011-2015 finally got something right, 2 years in a row? What if GDXJ went up 200% each year and then had a 40% correction? Every single year.  

And now just for fun we will assume that instead of doing this fucktard JNUG thingy, you just invested in GDXJ, what would happen then?

Starting with same GDXJ value as JNUG’s (I have adjusted the price so it is easy to correlate what is happening), you would have 10 times more money in GDXJ then in JNUG. 

GDXJ	Low	High
2017	4	12
2018	7	22
2019	13	39
2020	23	70
2021	42	126
2022	76	227
2023	136	408
2024	245	735
2025	441	1322
2026	793	2380
2027	1428	4285
2028	2571	7712
2029	4627	13882

So even if you believed this ludicrous outlook, why would you "invest" in JNUG over GDXJ? Not to mention that in any other sideways/long consolidation scenario, GDXJ would outperform JNUG 100 fold over the coming decade.  

 So Gary, the first lesson is on the house.          

To all other readers, if you find my research and ideas useful, please consider donating a nominal amount to UNICEF or a charity of your choice. When you do please email me that you have even if it is $1. I have a goal of raising $1,000 for charities for 2017 through my blog. Thank you.