by Sean Brodrick, Resource Strategist, The Oxford Club
Friday, March 7, 2014
This week I attended the Prospectors and Developers Association of Canada, the world’s biggest mining conference. And I found bargains galore… bargains that you can scoop up.
To be sure, mine is a contrarian view. Gold and silver miners have been in a bear market for years now. They’re far from their highs. It’s fair to say that Wall Street hates miners right now.
But have the underlying fundamentals on gold and silver changed? Nope. Demand continues to be strong, and supply weak.
And as gold prices came down last year, miners and developers refigured their projects and turned over every rock to find a dollar. Sure, some companies went belly up. But that just means that other companies got to pick up great projects for a song.
So we now have low-cost miners and developers that picked up projects on the cheap, run by guys who know how to squeeze a dollar until it screams. The best ones not only are going to make money – but are going to make a lot of money
And as I’ve learned here in Canada, that long bear market meant a lot of potential gold projects were deferred. Jeffrey Christian of CPM Group told us that about a third of mining projects scheduled for development at the beginning of last year have now been shelved.
That means future supply will be squeezed. And so those miners who have working projects and can make money now are bargains.
Someone who gets the positive reality underlying all the doom and gloom is Rick Rule, chairman of Sprott U.S. Holdings.
“Bear markets are like sales,” Rule said. And he compared the low prices in select miners right now to walking onto a car dealer’s lot and finding every Lexus marked at 75% off.
“If someone lowered the price of a Lexus by 75%, would that make you less likely to buy it?” he asked. “Wouldn’t you like to buy a Lexus at 75% off?”
Rule says the market has been de-risked. And that really raises the opportunities for upside. “You’ve been here through the pain,” he added. “Why not stick around for the gain?”
I’m coming back from Canada with new recommendations for my subscribers. If the market is 75% de-risked, as Rick Rule says – and I agree with him on that – then I’d say the odds are these stocks are going to do all right.
In fact, I’d say the bigger risk is doing nothing. Sitting on your hands could cost you a lot of money.
All the best,
Why You Shouldn’t Trade the Russian Occupation
Talk about whiplash…
News over the weekend that Russian troops had occupied Crimea caused hair-trigger traders to hit the exits hard on Monday. Fearful a hot war would develop in Ukraine, equity markets swooned worldwide. The next day, however, Putin announced he was “not going to fight the Ukranians” and the S&P 500 promptly hit a new all-time high.
My (Future) Life of Leisure
Last month, I figured out what I want to do when I retire. I plan on being a guest lecturer on cruise ships. You make some money, live the good life and see interesting places. Sign me up. I discovered this while sailing with The Oxford Club Chairman’s Circle Wealth Cruise from Australia to Bali. We traveled aboard the magnificent luxury ship Crystal Symphony.
Gold Is on Sale for 75% Off
This week I attended the Prospectors and Developers Association of Canada, the world’s biggest mining conference. And I found bargains galore… bargains that you can scoop up. To be sure, mine is a contrarian view. Gold and silver miners have been in a bear market for years now. They’re far from their highs. It’s fair to say that Wall Street hates miners right now.
Supplies of This Gas Are Dangerously Low
January may go down in history as the coldest month this century, according to some reports. The frigid weather gripping much of the country has produced a supply crisis for a gas that millions of Americans rely on to heat their homes. But it’s not the gas you’re thinking of.
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