Some readers have asked why I haven’t had much to say lately about mining stocks and the precious metals complex. In a word: risk. Those of you with access to my inside pages will already know that we recently took profits on, among others, a $3,600 winner in Newmont Mining. On January 21 we exited a tiny (i.e. 200-share) position that we’d held for just ten weeks. The resulting $3,600 gain, which included option premiums from two separate covered writes along the way, is enough to pay for a Rick’s Picks subscription for the next ten years plus a dozen roses for the missus on Valentine’s Day. The chart below shows that we got on board at just the right time, although the jury is still out on the question of whether our exit near $59 will prove to have been prescient as well.

Regardless, I believe that the risks of initiating a position in precious metals right now are not so very favorable as they were in early November, when we jumped on Newmont just as a spectacular rally was about to begin. At the moment, Newmont appears headed to as high as 67.01, a hidden-pivot resistance about 9 percent above current levels. That’s under the best of circumstances. But as we know, corrections in gold stocks can be especially severe, as is generally the case in powerful bull markets. And that’s why I have been biding my time. I would much rather buy Newmont and other precious metal stocks on weakness rather than in the throes of strong rallies.

But if this bull market is as powerful as I believe it is, there will be many more great opportunities for us to extract profits from mining shares. However, for me at least, managing risk the whole way up is absolutely essential. That implies buying shares only when we can do so without risking more than mere pennies per share. The last time we attempted to do so was (again) in Newmont, on January 30. We were looking for a slight dip and had positioned our bid accordingly; instead, the stock opened higher and continued to rise. We’ll try again, for sure -- but only on our terms. My goal is not simply to profit from the bull market in bullion, but to do so risking as little as possible each step of the way.