Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Time To Focus On Economically Viable Junior Gold Miners

Commodities / Gold and Silver Stocks 2013 Aug 23, 2013 - 06:05 AM GMT

By: Jeb_Handwerger


We may have seen the bottom in the precious metals and the miners. A major uptrend could just be beginning in these oversold sectors. We are starting to see the major miners such as Barrick (ABX), Newmont (NEM) and Kinross (KGC) rebound off of historic 20 year lows as they raise cash and sell off higher cost assets. The market may have already priced in a worst case scenario. Gold and silver prices are rebounding strongly, which may cause a powerful move in the historically oversold sector. With stronger balance sheets, the majors will be able to focus on lower cost, more profitable and secure Nevada mines where they are producing gold below $400 an ounce.

The major miners will continue to focus on their low cost, low risk operations which made them so successful in the first place. I am closely following the highest quality juniors with attractive economic profiles in Nevada which the majors may find more attractive than some of the assets they are selling in Australia, Africa and/or South America. Look for increased M&A activity as the majors refocus their investments on low cost junior miners in Nevada, the best mining jurisdiction in the World. Marginal players in risky jurisdictions will struggle and lose market share to cash-rich juniors and mid-tiers in secure locations.

In late June, I wrote about a historic opportunity to buy the miners at possibly once in a generation multi-decade lows. I wrote, "It is during these difficult times in the resource sector when the greatest opportunities are discovered. Remember American Barrick Resources started off as a 16,000 ounce producer in the 80s down market in gold and grew to be Barrick Gold Corp, the largest gold producer in the world." It was their discovery at Goldstrike in Nevada which made them grow exponentially. I expect investors will continue to hear good news coming out of Nevada's low cost mines and increased merger and acquisition activity with high quality juniors.

SLV iShares Silver Trust NYSE + BATS

For weeks, I have been focused on some of the junior players on the verge of a breakout as I see potential long term bullish base reversals forming. Silver (SLV) is making its most impressive rebound since the May 2011 top. Some of the junior miners (GDXJ) in Nevada are outperforming and should continue on the next upturn.

Market share will be gained for juniors who have a strong treasury and have lower capital intensive profiles. There are some juniors who have outperformed the majors by a wide margin in 2013 and should continue to do so on the next upturn. Some of the fundamental characteristics of the juniors that have been outperforming and breaking out have been high grade discoveries and lower cost production scenarios.

Research of the management teams is critical in this business. Only management teams which have a significant amount of the shares in their own hands and have proven track records should be considered. If the mine is near production, one must ask if the team has engineers that have gotten mines into production in the past.

SIL Global X Silver Miners NYSE + BATS

The junior gold miners and the silver miners (SIL) are beginning to outperform versus the overall equity market which is in correction mode. Investors should stick to the gold mining etf's (GDX), unless they are willing to do a lot of due diligence which includes researching the share structure, financials, technical reports and management.

However, if you do your homework in the junior space you can see some of the really exceptional situations and possibly outpace the benchmarks. This recent junior mining meltdown has given astute followers of the space a clear advantage as they can observe the high quality junior mining situations with the shareholder base which outperforms in both good and bad markets.

GDXJ Market Vectors Junior Gold Miners NYSE + BATS

During a correction one can easily observe which companies have strong financial support and can advance even during volatile economic weather. One should stick to companies with only strong cash positions and major shareholders such as reputable institutions or major mining companies. The junior miners with quality assets in stable jurisdictions, great balance sheets and tight share structures should outperform in the coming upswing.

Disclosure: Author does not own any securities mentioned.

Subscribe to my free newsletter to get up to the minute updates on rare earths, uranium, gold and silver.

By Jeb Handwerger

Disclosure: Author owns no stocks mentioned.

© 2013 Copyright Jeb Handwerger - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeb Handwerger Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules