Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Canadian Gold Junior Mining Stocks Soar, Should You Buy Now?

Commodities / Gold & Silver Stocks Dec 08, 2009 - 02:26 PM GMT

By: Jeff_Clark

Commodities

Best Financial Markets Analysis ArticleFor years, gold bugs like Doug Casey and his team have been saying that once gold takes off to stratospheric heights, it will take the gold mining stocks with it. It’s called the “Mania phase” of the commodity bull market.


Has this time arrived now?

If it hasn’t, it sure does a good look-a-like job. In the last weeks, the gold price has reached new records almost daily – the latest intraday high being $1,226.50/oz. The Chinese government has been urging its 1.3 billion citizens to buy physical gold and silver. And serially successful fund managers are beginning to load up on gold and gold shares.

BlackRock is a global commodities investment fund with a total of $1.4 trillion under management and serves as manager and adviser to the U.S. Federal Reserve. Not only did BlackRock state last month that “Central banks will be net buyers of gold this year as they diversify away from the U.S. dollar, marking a reversal of a decades-old trend” – the fund itself has a total of $4.655 billion invested in gold shares. Comparing the size of the gold stock market to the size of their portfolio, the 0.3% of their assets said to be invested in gold shares comes to something like 1 to 2% of the gold share market.

Financial website Minyanville agrees that “The smart money is already piled into gold,” listing high net worth investors like George Soros and Jim Rogers, and well-known fund managers like Bill Gross and Kyle Bass of Hayman Capital, Donald Coxe of Coxe Advisors, and David Tice of the Prudent Bear Fund.

The proof is in the pudding: On December 1, the Canadian TSX stock exchange posted its highest close in 14 months, and since the end of September, the S&P/TSX gold index was up 13%.

"There are really only four sectors in Canada — mining, energy, financials and everything else," Colin Cieszynski, market analyst, CMC Markets Canada, told the Vancouver Sun.

"For the most part, the seniors in the energy group have been flat for awhile and the banks have been flat for three months. One of the only areas that has been moving with a sizable weight on the index has been the mining sector. Since (gold) is one of the only areas moving, it's being noticed."

So, should you jump into gold stocks with both feet?

Louis James, senior editor of Casey’s International Speculator, one of the world’s most respected gold mining stock advisories, warns of throwing caution to the wind. In a recent interview with The Gold Report, James stated, “Gold stocks are . . . highly, highly speculative.

Most gold companies don't have any gold; they are exploring for gold or developing projects that they hope will be economic. Only a few actually produce gold, and even the biggest producers are highly volatile, because the price of their product fluctuates constantly and strongly.”

“If [the juniors] do make a discovery, they go from having literally nothing but a geologist's dream to having something of measurable value. The difference in valuation can be huge; this is how it's possible to get 10-baggers or even 50 times your money on one of these stocks.”

Discerning the potential multi-baggers from the barren holes in the ground, though, is not an easy feat – but the market, says James, has done part of the work for investors.
”In 2007 and 2008, before the jitters, the market was overvaluing a lot of companies, practically anything with ‘gold’ in its name. Some of these companies didn't even have any assay holes drilled into their prospects; all they had were theories and hopes, and they were trading for tens of millions of dollars. Since last fall's crash, there's been quite a separation of wheat from chaff, and many of the companies that had nothing but theories or hopes have not recovered significantly.”

Still, James and his colleagues at Casey Research are expecting another market correction before gold – and by extension, gold shares – begin their trip to the moon: “If you're psychologically predisposed to being nervous about your investment, and you know you'd have a hard time dealing with a drop of 30%, 40% in a month or two, maybe this is not a good time to be buying speculative gold stocks.

“That having been said, if you stick to quality companies, buy an initial slice of your ideal position now, and fill out the rest of your position at a lower average price if it fluctuates downward, you preclude the possibility of missing out on a stock that takes off. But you have to believe in your picks strongly enough to see a sell-off as a buying opportunity.

“Our general recommendation right now is to focus on the best of the best. Everything in the International Speculator portfolio has resources drilled off that can be defined by one of the regulation-complaint categories or another. And it's all gold and silver right now.”
Finding the best of the best is, you could say, a house specialty of Casey’s International Speculator, with a nearly 30-year history one of the most reputable advisories of its kind. And for a very limited time, you can get it for a fraction of the normal retail price.

Until December 18, we offer a 40% discount on a one-year subscription. Try International Speculator risk-free for 3 months – with full money-back guarantee. Plus, receive a free holiday gift if you sign up today. Click here to learn more.

© 2009 Copyright Casey Research - 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.


© 2005-2022 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