Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Junior Gold and Silver Mining Funds or Individual Gold and Silver Mining Stocks

Commodities / Gold and Silver Stocks 2016 Jul 15, 2016 - 08:48 AM GMT

By: Bob_Kirtley

Commodities

Background
We will start with a quote that is sometimes attributed to Sir Winston Churchill, the British Prime Minister, who led Britain during the Second World War.

 “If you’re going through hell; keep going”


With the enemy at the gate Sir Winston Churchill didn’t have much choice other than to stick it out. For gold bugs such as me the bear market in gold and silver was a really difficult time, but these are phases that we just have to get through. However for gold and silver bugs we did have a choice and as dull as it seemed at the time of the bear market we chose to keep the lion’s share of our funds in US Dollars which outperformed gold.

The chart of above compares gold and the USD and we can clearly see that that from 2013 until today that gold has underperformed the USD with gold down 20% and the USD up 20%. This has of course all changed this year when gold took off from $1075/oz to $1343/oz gaining 20% as the USD dropped a tad from 99 on the USD Index to 96 registering a loss of 3%.

Funds or Individual stocks

The question now for many investors is whether or not to utilize the funds or hand select a list of individual companies that they think will do well in this unfolding bull market. In order to make this comparison we will take a quick look at the Market Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ). If we now look at its performance on a YTD basis we can see that this fund is up 160%, which is terrific. Some stocks have performed very well indeed and others have not been able to gain any real traction.

This fund’s top 3 holdings are:

B2Gold Corp (NYSEMKT: BTG) Mkt cap US$2.73B - 5.66%

Alamos Gold Inc. (USA) (NYSE:AGI) Mkt cap    US$2.60B - 4.95%

First Majestic Silver Corp (NYSE:AG) Mkt cap US$2.50B - 4.89%

Please note that these 3 stocks are all valued at US$2B plus so they are hardly juniors.

B2gold is up 203% Year-To-Date

Alamos Gold is up 202% Year-To-Date

First Majestic Silver is up 421% Year-To-Date

Performing not so well are:

China Gold International Resources Corp Ltd (TSE:CGG) up 23% Year-To-Date

Primero Mining Corp (NYSE:PPP) up 11% Year-To-Date

One of the reasons to invest in such a fund is that the loses accrued by some stocks are minimized by those stocks that make gains. On the other hand the gains that are made are also diluted by those stocks that don’t perform and so the result is a sort of average for the precious metals mining sector. This YTD performance of 160% is comparable to the Gold Bugs Index (HUI) which is up from 100 to 270. GDXJ also has huge liquidity and can trade 20 million shares in a day. This amount of trading allows the investor easier entry and exit points oppose to a small junior miner where a large number of buyers all moving at the same time will drive the stock price up. Funds such as these carry small fees but nevertheless you do have pay them for their expertise.

Stock selection on an individual basis requires a fair amount of work and once the purchase has been made, continuous monitoring is required. Many investors don’t have the time, energy or the inclination to conduct their own due diligence so selecting individual stocks as a means of investing appears arduous to them.

It should be noted that when an investor wishes to exit a position in a small junior miner the possible lack of buyers at the time may mean that the sell orders can’t get filled and so the price declines rather quickly.

Prediction
This is a snippet from our latest update to our subscribers, “I know I am putting my neck well and truly on the line with the following prediction but I believe it will happen:

Some of the precious metals mining companies that are available today and can be purchased for $2, $3, $4 – they will go up by the same amount in one trading session when this bull market starts to really spark. That’s right a $3.00 stock will increase by multiples of its current price, a 7 fold move would see this stock trading at $21.00, then we get a spike of say 15% in one day for an increase of $3.15. We will re-visit this prediction in a few years from now and see if we were close or not.”

Conclusion
The PM mining sector has burst into life in dramatic fashion this year and from a technical analysis standpoint looks to have run too far, too fast, suggesting that a correction is on the cards. However, the fundamental factors including the massive amount of money printing that is taking place, faltering economies, a dismal performance in the banking sector, the increased demand from China and India is exerting pressure on the physical supply of both gold and silver. This situation will intensify over the next few years driving the precious metals sector higher despite their current overbought position. That’s not to say that we won’t have any pullbacks, we will and they will be gut wrenching when they arrive, however, we expect them to be short lived.

Patience is the order of the day as we live in the fast lane with dramatic changes, such as the UK referendum along with other referendums to follow as the European Union eventually implodes. We also have presidential election in the US which no doubt will bring with it some changes that we haven’t anticipated yet.  There is also the single most important factor affecting the economy, currencies and the precious metals market that can be summed in two words: ‘Janet Yellen’. Without doubt a close eye must be kept on monetary policy. The possibility of a rate hike this year has almost disappeared and any hint of more QE will supercharge gold prices.

Hopefully you have used this bear market to analyze and research the stocks that you would like to own and have formulated a short list that you can manage and keep on top of once you have made your acquisitions. Our watch list is huge however we have identified around 20 stocks or so for purchase, some we have acquired and some are yet to be purchased. This bull market has a long, long way to go, so don’t worry if you have missed the start, as with all bull markets there will be dips and numerous opportunities to trade in what we believe is going to be a very interesting and exciting period for precious metals fans across the globe.

Finally, go gently and don’t fall in love with just one particular stock, this is not a game for your heart; it is a game that will be won by your head.

Got a comment, then please fire it in whether you agree with us or not, as the more diverse commentary we get the more balance we will have in this debate and hopefully our trading decisions will be better informed and more profitable.

For disclosure purposes I do own First Majestic Silver Corporation (AG) but none of the others mentioned above.

Go Gently

Take care.

Bob Kirtley

Email:bob@gold-prices.biz
www.gold-prices.biz  
URL: www.skoptionstrading.com

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. Winners of the GoldDrivers Stock Picking Competition 200

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.

Bob Kirtley 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