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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

How Do You Make Money in Gold Stocks?

Commodities / Gold & Silver Stocks Jul 02, 2007 - 08:37 AM GMT

By: David_Vaughn

Commodities

The uranium price remains over 135 dollars per pound and seems content to remain climbing.

It amazes me how depressed and skeptical everyone becomes when a target price objective is not met. I suppose it's hard to remember what the original objective of the game is. And the objective is to make money in natural resource stocks. Is that objective being met? For those who had the good sense to listen to solid advice and purchase the best precious metals companies.


I might also add those who had the patience to wait long enough for their purchases to rise. A 30 day time line is not sufficient. Sad to say that most of the time it often takes realistically a year and/or longer for appreciable gains to materialize. Anyway, for those fixated on making money and not the short term price of the commodity gold they are making money.

I suppose there exists a class that is never in the market but merely dreams about investing on the day gold hits their predetermined target. But for those with prudence are always looking for those shares that are growing and undervalued. And these make money all through gold's constant fluctuations.

Dave, “Why should I send you an email?  To remind you again how correct you are?” “…here is an additional supporting perspective: one may view gold price manipulation through CB sales and the NY paper market, as a variation on gov't mandated price controls to fight (government created) inflation. The history of price controls and their failure goes back millennia - to ancient Rome .”  “Anyone who worries about these manipulations has not studied their history - governments cannot plan, nor can they manage, nor can they control without force or arms or threat of imprisonment - thankfully, we are not there yet. So these manipulations must fail, as they always have. Again, history is clear on that. People should stop fretting and instead celebrate the opportunity being afforded them by the manipulators   - to stock up cheaply for an extended time frame. Patience rewards those who have it.” George K.

John Doody is one such analyst who is making his subscribers money through his analysis of undervalued companies. Johns top 10 companies he recommends are up around 400% for the two years 1995 & 1996. John's newsletter is one of the best. There are about another half a dozen geniuses also making money in this market for those who care to listen to their work. I still believe personally the best strategy is to invest/speculate in at least six plus different companies with an equal sum distributed between each.

Don't be tempted to put all your eggs in one basket or you will reduce your odds of scoring a hit. Increase your chances of making money by distributing your speculation between at least six and more prospects. Again, this game is not dead but very much alive for those in the game. But unless you are a player you are not going to win or lose a dime. And as I say if you distribute and increase your odds the chances of you scoring well are greatly improved.

The following below are some excellent comments from a good gold analyst, Peter Grandich. This fellow writes good commentary.

Peter Grandich - “…there is nothing even close to suggesting the secular gold bull market has or is coming to an end.” “…fundamentals for gold haven't been better.” “As time goes by, we learn that more and more central banks and governments around the world are diversifying themselves away from the U.S. Dollar.” “…I maintain my strong affection for gold because of what I believe is going to be the driving force going forward – acute increase in geopolitical concerns worldwide. I can't emphasize enough how much of this makes up my bullish argument.” “…I [Peter Grandich] believe the geopolitical frontline is growing much faster than the average American has any notion of.” “…the fundamental argument appears to be the best that it's been for gold in quite some time. If you would like to err on the side of caution, use $635 or so as a mental stop and/or wait until we close above $675.” Click

Which companies do you speculate in? The point is that in every and any market there are those companies poised to climb in value. Even during the 1930s there were those stocks that made their owners money. Most notably the gold stocks of course. I have an old saying that I believe is most appropriate to succeeding in this market.

Always buy more than just one precious metals and/or natural resource publication - 6 is a good number. Learn to do your own diligence but also listen to a variety of information sources.

Are you still thinking of amassing great riches by purchasing just one stock and watching it rise to the moon? Better to spread your odds over half a dozen and instead watch your odds increase. How do you make money in gold stocks? Very carefully. First of all it must be understood that making money in gold equities is not entirely dependent on a rising gold price. Your endeavor is to seek out those companies with promising drilling results. Those companies that have already discovered something substantial and are under going the process of proving what they have. You are seeking those companies who are proving to have a verifiable deposit in the ground. And always there are discoveries. Always there are opportunities. The following individual is a name you should look for every week and when you see it you need to read what the man has to say. A very astute analyst. Someone you can learn something about the gold market from.

Kenneth J.Gerbino - “…adjusted for inflation, the strong commodity bull market that started in 2001 has barely begun to catch up in real terms to the general price level of everyday goods and services in the 1960's.” “… a doubling of commodity prices from 2006 levels would only take the index in real terms to the price levels of the 1960's. Therefore commodity prices should continue to trend much higher over the next decade .” “The mining sector lead by the gold and silver mining companies should be the premier investment sector for the next decade. Patient investors should be rewarded with above average returns while enjoying above average portfolio and monetary insurance as politicians globally ignore centuries old basic economic laws that clearly prove that printing money and creating high debt levels to solve short term political problems always ends up creating more economic problems.” “Gold is the people's choice for safety and lasting value.” Click

Forget about the gold price and concentrate on quality companies with proven deposits and those in the process of being proven. Let me make a hard and sincere observation about making money via speculating in gold stocks. Read the following passage below.

“The goose that lays the golden eggs likes to lay where there are eggs already.” Charles Spurgeon

The point I have so sincerely tried to drive home is to look for that precious metals company that has found a deposit already and is in the process of further drilling to substantiate its find. Look for the goose that has already begun to lay golden eggs. There are quality companies always on the horizon worth purchasing. You just have to dig to find them.

Wisdom is the right use of knowledge. To know is not to be wise. Many men know a great deal, and are all the greater fools for it. There is no fool so great a fool as a knowing fool. But to know how to use knowledge is to have wisdom.” Charles Spurgeon
Use wisdom in your selection process. Dig a little deeper and look a little more wisely. There are always those worthy companies to add to your portfolio. Educate yourself and listen to much knowledgeable counsel. Do you ever wonder how empires end?

“That Rome should ever fall was unthinkable to Romans: its foundations were unassailable, sturdily sunk in a storied past and steadily built on for eleven centuries and more.” How the Irish Saved Civilization, Thomas Carhill

The United States has existed for barely 20% of the time of the Roman Empire yet its civilization hinges now on barely a thread. Indebted to the tune of trillions of dollars to other nations growing rich off of the fat of the United States . It is unthinkable to many today that our empire should fade in the distance and pass from greatness. Yet, for those observant these signs are already evident.

“Be thou comforted, little dog, Thou too in Resurrection shall have a little golden tail.” Even if I knew that tomorrow the world would go to pieces, I would still plant my apple tree.” Martin Luther

Make that a golden apple tree.

“Eternal Rome , eleven centuries old, hardly foresaw its doom.” “What we can say with confidence is that Rome fell gradually and that Romans for many decades scarcely noticed what was happening.” How the Irish Saved Civilization, Thomas Carhill

The eternal United States , barely a little over two centuries old, hardly foresaw its doom. What we can say with confidence is that the United States fell gradually and that Americans for many decades scarcely noticed what was happening.

We are in a new investment era that is very much altering the way we invest including changing simple investing rules. Gold Letter, Inc. reviews this new era and recommends those resource stocks, including gold, silver & uranium mining companies that are under valued and poised to rise in this age of increased demand for resources.

Gold Letter's 10 best performing stocks are up over 2,000% and GL's top 55 performing stocks are up over 500%. Close to 90% of all Gold Letter's recommendations since inception in January, 2003 are up approximately 252%. GL charts are computer generated and updated every hour while markets are open.

Click here to order Gold Letter

“…there is a convergence of global events that will have profound implications for our world. The effects of the convergence are just now beginning to manifest themselves in our country.” Doug Tjaden, Traditions of Men

By David Vaughn
Gold Letter, Inc.
David4054@charter.net

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2007, Gold Letter Inc.

David Vaughn Archive

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