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We suspect that many precious metals investors are saying, “We don’t want
to play anymore!” and our reply is, “You mean you want to quit right now? Right at the bottom of this cycle? You must be crazy – and that is crazy with a capital C!” True, this is a very challenging market environment for resource shares, but we know what the ultimate outcome will be: higher share prices. The only question is “when” and our opinion is that we are very close in time (within days or a week or two at most) of being able to say that the lows are behind us. Let me explain. Words: 785
So says Dudley Pierce Baker (www.TheGreedyGuru.com and www.PreciousMetalsWarrants.com) in an article edited on behalf of Baker by Lorimer Wilson, editor of www.munKNEE.com.
Baker goes on to say:
Unfortunately, most resource investors, especially those new to this sector, are greatly disillusioned, have little staying power and are just scared to death. Who can blame them? They have spent all of their psychological capital and the theme of the day for them is, “How low can they go?”
Sure, we understand why investors are upset watching their portfolio go down, virtually day after day, but this current depressed environment is the seed for making investors wealthy. The buying opportunities are everywhere. As the expression goes, to make money you need to ‘buy low and sell high’.
We believe we are near enough to a bottom that if you have some remaining cash you should be putting it to work very soon. No one is going to ring a bell and call you and tell you the bottom is in place, you must make that decision for yourself. In our opinion, now is the time to suck it up, put on your big boys pants, keep your positions, and ride this out. To quit now would be the worst possible thing to do. The day will come when we look back on this time as being one of the best buying opportunities for the entire bull market and yes, we are still in a bull market.
What always follows a consolidation? A Rally!
Investors actually should be grateful for this buying opportunity and take full advantage of this current depression situation. Get some good advice, subscribe to some good services and make some good decisions. A few months from now you will be a happy camper, smiling, laughing and making money once again. It is just a matter of timing.
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I always like to share a few charts with readers as to where we are in the big picture. The first chart below is a long term chart of gold from the beginning of this bull market back in 2001 followed by a chart for the HUI (Gold Bugs Index) and a chart of the performance of the Canadian Venture Exchange.
Gold Pricing Since 2001
As we write this piece early on Thursday morning, gold is plunging, down also $20 to $1634.
You can see from the chart the 65 Week MA is at $1621. We are there and history shows us this has provided great support for the entire bull market.
The HUI Trend Since 2001
The above chart on the HUI reflects that this morning we are heading back down and actually retesting the lows of last week. The 400 range should provide us with great support. Looking at this chart it is easy to see the challenges for investors in resource shares. It is difficult – perhaps impossible – to see a long term trend: bodes more for a trading market than a buy and hold.
The S&P/TSX Venture Exchange Performance Since 2001
The chart above is representative of most of the juniors and exploration companies and is a picture of another nightmare for long term investors. To us, it looks like the Venture is holding up better at this point as we are nearing the bottom.
Conclusion
The above charts show that gold and its associated stocks are still in a long-term uptrend and currently searching for a bottom before the next big up move.
In closing, this is not the time to quit. As we said earlier in the article “In our opinion, now is the time to suck it up, put on your big boys pants, keep your positions, and ride this out. To quit now would be the worst possible thing to do. The day will come when we look back on this time as being one of the best buying opportunities for the entire bull market. This is THE time to be loading up on quality positions.”
Dudley Pierce Baker is the founder and editor of PreciousMetalsWarrants, an online subscription database for all warrants trading on junior mining and natural resource companies in the United States and Canada with a free weekly newsletter and also represents TheGreedyGuru.com in which the ‘best of the best’ companies are followed and recommended.
Related Articles:
1. “The Greedy Guru” Wants You!
A group of resource stock experts has started a new website called The Greedy Guru which they assert is “the only resource investment service you will ever need” and they want you to check it out. Words: 240
2. Sprott: Current HUI Level Spells O-P-P-O-R-T-U-N-I-T-Y
Before we end the year we will hit new highs in both [gold and silver]. Then the mining stocks [will] react. The big problem has been [to date has been that] there is not this momentum in the prices of bullion, which is keeping people away from the gold stocks. If we can get the price of gold and silver going back up, I’m sure people will come back into the mining stocks.
3. Jeff Clark: Are Gold Stocks Still Going to Bring the Anticipated Magic? Yes, Here’s Why
We’re invested in gold stocks not just to make money, but for the chance to change our lifestyles and with their lackadaisical [dare I say dismal] year-to-date performance, one may begin to wonder if they’re still going to bring the magic. [Here are my views on the subject.] Words: 740
4. John Embry: PM Stocks One of the Greatest Buying Opportunities of ALL Time!
If we’re not at a bottom [in gold and silver and precious metals stocks], we’re very close to it. The sentiment is dismal and you can see that particularly in the stocks which are almost tragic. I’m shocked quite frankly at the valuations and how low they are. In the fullness of time, this will be seen as one of the great buying opportunities of all-time.
5. Get Positioned: “Gold Rush” Will Cause Gold Stocks to SOAR – Here’s Why
Whatever their reasons, the number of investors wanting exposure to gold is increasing. Many who ignored it a decade ago are now buying. Those who started buying, say, five years ago, continue purchasing it today in spite of paying twice what they paid then. Slowly but surely, it’s becoming more important to more people…but what happens when it becomes a must-own asset to a substantial majority instead of a small minority? Sure, the price will rise, probably parabolically, but putting aside speculation on the price of gold for now, have you thought about what happens if you have trouble finding any actual, physical gold to buy? [Let’s explore that possibility and what that would mean for gold stocks in such an eventuality.] Words: 870
6. James Turk: Gold Stocks Are Making History – Here’s Why
We’re making history here. Gold stocks have never been this undervalued before. We’ve had a 12 year bull market in gold, but we’ve also had a 15 year bear market in the mining shares…It’s very rare in market history to see an outlier like this. This is an extraordinary event. Years from now we are going to look back and shake our heads in disbelief at how undervalued gold stocks were in 2012.
7. Is it Time to Load Up on Gold Stocks?
By almost any measure, gold stocks are undervalued but should we load up? Gold mining companies are earning record margins. Stock prices, however, have not responded in similar fashion but when the broader investing community begins to take notice, investors will snap up these highly profitable stocks and push prices higher. The “catch up” in gold stocks could be tremendous but the question, of course, is timing. We don’t know when gold stocks will begin to catch up and the data don’t suggest they must rise right now or that they’ve hit bottom so should we load up just now? Words: 590