We have seen the initial stage of a bull market in gold and other hard asset commodities which beginning in 2015 has already carried some small to mid cap gold stocks up 800% and more. But the majority of mining and exploration stocks have languished. Yet at the same time experienced shrewd investors have been accumulating the mining shares. The price weakness has offered patient value oriented investors opportunities to accumulate mining shares while they are exceptionally cheap. Keep this in mind, “He who has patience will have it all” a quote of Benjamin Franklin.
Our analysis now suggests a move into the $1400 to $1500 (US Dollars) which will bring with it an enormous move up in many gold, silver and exploration stocks. Our analysis, which includes fundamental, technical and cyclical analysis has never been this positive. Yes, the banksters may continue with their manipulation of gold bullion but that game should end soon.
Bon conseil We want to thank our mining investor friends Claude Lemire, Ray Langevin, Louis Baribeau, David Crevier , Philippe Cloutier and Peter Cashin for their advice and input,
What have we waited for? One thing is the need for a bear market in the industrial stocks which we almost require to have a bull market in gold and mining stocks.
What is the one most important ingredient today for a bull market in gold? We have said it time and again; we need a lower value in the US Dollar to have a bull market in gold. We have seen it developing.
Are the gold and silver mining stocks undervalued? Yes, most of the legitimate mining and exploration stocks are carrying the lowest valuation levels we have seen in over thirty years. The sector is the lowest valued of all investment sectors. Yet, still half of the companies will fail.
Why are they carrying such low valuation levels? The brokerage industry suffers during a bull market in gold as it occurs with a bear market in industrial stocks bringing brokerage industry losses. Any increase in trading volume in mining stocks is insufficient to make up for the losses. Thus brokerages will fight a gold bull market and discredit anyone or indicators that suggest a bull market in gold and commodities.
Another person asked “if there is manipulation in the price of gold?” Is he kidding? The manipulation has been so obvious in the futures contracts which are paper not real gold bullion. One recent afternoon’s volume (again paper) would be equal to seven months of total world gold production. A real gold bullion sale of that size would be physically Impossible but the futures paper sales do create the deception of weak gold. It’s not gold they are selling-it’s paper.
A Manipulation example On November 18, 2017, sales of 15,000 commodities gold contracts were executed within two minutes; it was “notional” which means that it was paper contracts representing gold and not gold bullion itself. That sale would be equal to approximately 2000 tonnes of gold bullion. In our opinion and the view of many others as well, the purpose of the ruse sales is to create a “weak gold price image” suggesting that gold is unworthy of investment consideration.
Little if no research is being done by brokerages Some claim that it is too expensive to have research coverage on smaller stocks despite the fact that many are undervalued and offer clients opportunities for exceptional capital gains. Many brokerages do not permit brokers to buy most mining stocks despite extreme undervaluation of the shares.
Disappearance of the brokerages house “Market Makers” In the past, market makers helped bring balance in the sales and buys in stocks, offering buying support when needed and offering shares when necessary. They would hold large positions in the stocks that they made markets in. At the same time, the market makers’ research departments would issue research reports which could create investor interest in the stocks. Most research has disappeared and investors must look for other sources.
What are the insiders (officers and directors) doing in the gold and silver stocks? Insiders are the very managements at the gold companies. They have been buyers throughout the bear market in metals with little selling. Even today there is very little insider selling at all. The fact that they are not selling and holding tells us something. Yes, they expect upside ahead.
At the same time, insiders at the major U.S. industrial corporations (non-mining) are currently selling at the highest rate in history. In a recent four week period, officers and directors sold over $2,000,000,000 ( $2 Billion) of their own personally owned shares.
Cycles…Maybe the most important ingredient of all
Cycles can be very useful when trying to make timing decisions. It is important for investors to recognize that several important cycles are saying that Gold should soon have a large move up….very large. At the same time, several cycles forecast bad times for the industrial stock market.