Time and again the majority of gold stock investors fail to profit. That will continue over the next several years despite our forecast of a major bull market in gold stocks. However, even with gold moving to US $1500 or more which has been delayed due to major banks and brokerage houses’ manipulation, most investors will not be successful. Yet some will realize large profits. That is the history of investing in gold and exploration stocks for the last forty five years.
Here are some valid reasons for the lack of investing success
The majority of investors become interested in gold stocks long after gold has moved up dramatically. They rarely invest in the stocks when they are selling at multi-year price lows. Yet, at the same time one can find that their managements are extremely large buyers. Their advantage is that they work at these same companies and are aware of the latest developments at their companies and in the mining industry.
The exceptional buying opportunities often occur when specific gold stocks are selling near multi-year price lows. When there is a “sale” on mining stocks and seemingly are being “given away,” few investors take advantage. Based on values and potential they are completely overlooked by all but a few. That is history.
Many investors wait for the major brokerage houses to issue buy recommendations on gold (silver) companies. That only happens on rare occasion since major American brokerage houses have shown themselves to be incapable of making timely recommendations for most stocks in general. As for Gold? Brokerage houses have a unique ability to begrudgingly recommend gold and mining stocks long after they have already had substantial moves up in price. Timely advice? Rarely ever!
During the last four years we suggested consideration of the old Claude Resources, Richmont and Niogold, from our original purchase prices they are up from 450% to 1400%……few if any major brokerage houses were recommending them. Two were selling at under 20 cents, NYSE listed Richmont was selling at one dollar, Niogold was under 20 cents. Claude and Niogold were taken over. However there were some that we mentioned that have not appreciated much while others have. Some companies will succeed and others will fail….. a large percentage of the mining companies go broke and disappear……finding gold in commercially sufficient volume is difficult and expensive.
Finding undervalued stocks early after having done necessary fundamental research gives the investor a solid advantage. Being there early can be another key to success.
Telltale signs or signals….investors should pay attention to the availability of bank financing for mining companies which has been an indication that the gold mining and exploration markets are heating up.
Napoleon Bonaparte advised “to never interfere with an enemy when he is making a mistake.” And many investors consistently make huge mistakes when selling some of their gold and silver stocks after years of frustration. It may just be the perfect time to “dollar cost average.” Most investors will not dollar cost average to take advantage of the price lows. Professional investors and insiders “dollar cost average” regularly.
Do the necessary in-depth research and enable yourself to take advantage of unhappy shareholders making major mistakes of selling their gold and silver stocks at their price bottoms……it happens all the time.
Eighteenth century inventor, scientist, writer and American ambassador to France Benjamin Franklin wrote in his “Poor Richards Almanac” that he who has patience will have it all.” Gold investments demand patience.
Today, many gold and silver stocks are very undervalued, we cannot tell the future but our analysis suggests that this may be the buying opportunity of the decade in gold and silver stocks.
