Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Reality Always Wins… But Never on Schedule

Stock-Markets / Investing 2015 Mar 18, 2015 - 10:25 AM GMT

By: Casey_Research

Stock-Markets

By Louis James, Chief Metals & Mining Investment Strategist

“Expect the worst and you won’t be disappointed” is true enough, but it’s a miserable way to go through life.

For investors, expecting the worst is paralyzing, a reason to do nothing.

But when a market gets beaten up the way the natural-resource sector has been over the last few years, pessimism comes to dominate the chatter in boardrooms, blogs, and cocktail parties the way mold takes over a shower. It’s a blight.


“There are no buyers left in the market; it will take years to recover.”

“There’s no financing available, so everything will grind to a halt for years to come.”

“Don’t step on that black spot.”

Recent experience in the resource sector has been so bruising that the wounded have turned to pessimism as a psychological defense, to feel wise and experienced, or at least a little less foolish. An upbeat assessment wouldn’t just risk more money, it would risk more pain.

What Is

Opinions are plentiful, so rather than offering one more, let me summarize what I know for certain: price and value are related, but they often diverge.

The essential investment formula is “Buy low, sell high.” What makes that more than a truism is that price and value often move in different directions—but not forever. Price is a wandering dog that eventually comes home to value.

Hidden in the wreckage of today’s beaten-up resource market are stocks you can buy for much less than their real value. Entire companies are trading for less than their cash. Not all those stocks are going to recover, however, since in some cases management is such a liability that the cash is likely to be wasted. But it does tell us we are at or near the best time to implement the “buy low” part of the investment formula, picking up the stocks with real value.

Critical point: Don’t wring your hands over whether the bottom of the market is behind us or in front of us.

The only thing that matters is that you buy truly undervalued stocks in companies that have assets of real value—deep value, as is fashionable to say these days—and the management strength to develop that value.

That’s the reason Casey Research is holding a timely online event titled “GOING VERTICAL”. Eight stars of the mining industry and seasoned resource investors  discuss the historic opportunity the current market offers, and the best ways to prepare your portfolio for a shot at the jackpot when the gold market rallies again. Register here to watch this free event now.

I know how difficult it is for investors to buy into an unpopular market when most of the pundits are dissing it. “What if it goes even lower?” is the big, paralyzing fear. Logical argument and economic reality—our civilization and most of the people living today simply cannot exist without natural-resource extraction—is not enough to neutralize the worries.

A Functioning Memory Is a Big Help

Fact: If you are in the right stocks, it’s possible not only to recover from a severe correction but to come out way ahead.

Below is a selection of actual stock picks from Casey International Speculator on which we made a lot of money despite severe retreats in the market and plunges in share prices. As a group, these stock rose after we recommended them, then fell an average of 69% before going on to become winners. The average gain from those lows to subsequent peaks was 795%. More downdraft than anyone wants, and more profit than most investors dream of.

Now, I’m not claiming this was our whole portfolio, nor that we sold any of these stocks at the top. What I am saying is that we made excellent returns on all of these stocks even though every one of them spit in our face after we bought it, selling off substantially—and then came back with gusto. One fell 90% and then soared 1,200%.

Key takeaway: Stocks in good companies will recover from even the most serious bear mauling.

What’s Coming

Whether it has already happened or is yet to come, three signs tell me the bottom in junior gold stocks is not far off.

  • Investors don’t want to hear about junior gold stocks. Most readers who started this article didn’t even read this far.
  • When gold broke through its previous low last November, most pundits announced it would drop to $1,000 or go even lower. It rebounded instead.
  • While the sector continues to languish, stocks of the best junior companies have risen dramatically and largely have held on to those gains.

All good signs, yes. But I’d feel better if you didn’t bet on the timing. For a sure thing, bet on the value you can buy on the cheap now.

Click here to watch Franco-Nevada’s Pierre Lassonde… Casey Research Chairman Doug Casey… Pretium’s Bob Quartermain… Sprott US Holdings chairman Rick Rule… Aben Resources’ Ron Netolitzky… U.S. Global Investors CEO Frank Holmes… and Casey Research metals experts Jeff Clark and Louis James in GOING VERTICAL.

The article Reality Always Wins… But Never on Schedule was originally published at caseyresearch.com.
Casey Research Archive

© 2005-2019 http://www.MarketOracle.co.uk - 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