Junior Mining Stocks to Beat Previous Highs

By: Laurynas Vegys | Mon, Mar 24, 2014
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Despite last week's pullback, the precious metals market is off to an impressive start in 2014. Gold is up 10.6%, silver 4.3%, and the PHLX Gold/Silver (XAU) 17.1%. Gold, in particular, had a great February, rising above $1,300 for the first time since November 7, 2013.

This has led to some very handsome gains in our Casey International Speculator portfolio, with a few of our recommendations already logging triple-digit gains from their recent bottoms.


Why Junior Gold Mining Stocks Are Our Favorite Speculations

One of Doug Casey's mantras is that one should buy gold for prudence, and gold stocks for profit. These are very different kinds of asset deployment.

In other words, don't think of gold as an investment, but as wealth protection. It's the only highly liquid financial asset that is not simultaneously someone else's obligation; it's value you can liquidate and use to secure your needs. Possessing it is prudent.

Gold stocks are for speculation because they offer leverage to gold. This is actually true of all mining stocks, but the phenomenon is especially strong in the highly volatile precious metals.

Most typical "be happy you beat inflation" returns simply can't hold a candle to stocks that achieved 10-bagger status (1,000% gains). In previous bubbles-some even generated 100-fold returns. And we may see such returns again.


It's Not Too Late to Make a Fortune

Here's a look at our top three year-to-date gainers.

CIS Top YTD Gainers vs. Gold and XAU

What's especially remarkable is that all three of these stocks shot up much more than gold itself, on essentially no company-specific news. This is dramatic proof of just how much leverage the right mining stocks can offer to movements in the underlying commodity-gold, in this case. Two of the stocks above are on our list of potential 10-baggers, by the way.

So have you missed the boat? Is it too late to buy?

Gold Stocks Have a Lot of Catching Up to Do

Looking at the chart, two bullish factors jump out immediately:

Now consider the following data that point to a positive shift in the gold market.

  1. After 13 consecutive months of decline, GLD holdings were up over 10.5 tonnes last month. The trend is similar to other ETFs.

  2. Hedge funds and other large speculators more than doubled their bets on higher gold prices this year.

  3. Increase in M&A-for example, hostile bids from Osisko and HudBay Minerals to buy big assets.

  4. Apollo, KKR, and other large private equity groups have emerged as a new class of participants in the sector.

  5. Gold companies' hedging of future production-usually a sign of insecurity among the miners-shrunk to the lowest level in 11 years.

  6. China continues to consume record amounts of gold and officially overtook India as the world's largest buyer of gold in 2013.

  7. Large players in the gold futures market that were short have switched to being long.

  8. Central banks continue to be net buyers.

To top it off, there's been no fallout (yet) from the unprecedented currency dilution undertaken since 2008-and we don't believe in free lunches.

The gold mania train has not yet left the station, but the engine is running and the conductor has the whistle in his mouth. This means...

Any correction ahead is a potential last-chance buying opportunity before the final mania phase of this bull cycle takes our stock to new highs, well above previous interim peaks.

 


In spite of the good start to 2014, most of our 10-bagger gold stocks are still on the deep-discount rack. And you can get all of them with a risk-free, 3-month trial subscription to our monthly advisory focused on junior mining stocks, the Casey International Speculator.

If you sign up today, you can still get instant access to two special reports detailing which stocks are most likely to gain big this year: Louis James' 10-Bagger List for 2014 and 7 Must-Own Stocks for 2014.

Test-drive the International Speculator for 3 months with a full money-back guarantee, and if it's not everything you expected, just cancel for a prompt, courteous refund of every penny you paid. Click here to get started now.

I hope you will take advantage of this opportunity in front of us-while shares are still relatively cheap.

The article Junior Mining Stocks to Beat Previous Highs was originally published at caseyresearch.com

 


 

Laurynas Vegys

Author: Laurynas Vegys

Laurynas Vegys
Research Analyst
Casey Research, LLC.

Laurynas Vegys

Laurynas Vegys is a financial analyst whose work supports all of Casey Research's metals publications. Laurynas is also one of Louis James' former students, having attended a Casey Youth Conference on Liberty and Entrepreneurship in Lithuania during a summer between classes while working on his master's degree from the University of Vilnius. Laurynas' background in finance and economics has equipped him with skills necessary for his analytical work on the metals team. He researches diverse base and precious metals plays as well as global trends both in the mining industry and the global economy.

Laurynas was a perfect fit for the Casey team, having lived in a dozen countries and visited at least 50 more. He prefers to think of himself as a citizen of the world, just like Doug Casey. Like Louis, Laurynas is fluent in several languages, including his native Lithuanian, Spanish, Russian, and French. Laurynas has a great passion for his work and strongly believes in the potential of the mining industry to substantially improve lives of millions of people around the world -- a positive contribution to our world that investors deserve to be amply rewarded for participating in.

Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained herein is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the publisher and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. Doug Casey, entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications. Corporate policies are in effect that attempt to avoid potential conflicts of interest, and resolve conflicts of interest that do arise in a timely fashion. No portion of this web site may be extracted or reproduced without permission of the publisher.

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