Optimistically Dark When It Comes To Gold

Gold versus paper money

I’m here at the Sprott-Stansberry Natural Resource Symposium in Vancouver, Canada.

And what a day so far!

Robert Friedman, Founder of Ivanhoe Mines [TXV:IVN] delivered an outstanding presentation. I saw the legendary resources veteran present last year in Melbourne. And he never ceases to amaze! Indeed, he’s one of the best salesmen I’ve ever seen.

Rick Rule, Chairman of Sprott US Holdings, interviewed him. Rick has over 35 years’ experience in the resources game — another living legend in the business. And it was nice to hear that he’s bullish on the same resource sectors that I believe offer the greatest potential over the next couple of years.

If you’ve been following me in Money Morning though, you probably know that right now I’m extremely bearish on most resources. But while I’m bearish resources, I see immense value!

So when Rick Rule says that he ‘loves a horrible resources market’, I understand why…

Check out this chart

To understand for yourself, check out this chart. It shows the performance of the junior gold mining sector against the US S&P 500. And that performance is shockingly bad. While the US S&P 500 is up nearly 70% from 2012, junior gold stocks are down nearly 90%!

I got this chart from Steve Sjuggerud, Editor of True Wealth at Stansberry Research.

As I watched Steve present my jaw dropped. You’d think he’s got a working crystal ball. Not only did he tell his readers to start buying stocks at the GFC low in 2009, he got them into real estate in 2011, and biotechs in 2014 — before the bull market. He ended up making his readers 800% on the biotech trade.

But what’s even more extraordinary was that he cashed out of the Chinese stock market recently. He bought at the bottom last year, when the mainstream was complaining about Chinese ghost cities and over-leverage, and he just sold for a net gain of 86%.

As you can see, the best strategy is to ignore the mainstream. Instead, become a contrarian. Or else you’ll just be part of the 99% that lose money.

Talking about contrarians, Steve’s now turning his attention to gold stocks. Given his track record, this is a good signal…

Now, before I go on, if you don’t know already, I’m extremely bearish on gold stocks. And Steve does agree with me. While his attention is on the gold sector, he’s not buying…yet.

He’s not even trying to pick the bottom. This is because Steve is a conservative value investor. For this reason, he wants to buy once the uptrend resumes.

I, on the other hand, am looking to identify the bottom using technical and fundamental analysis. The bottom normally comes when everyone is extremely, and overly, bearish. And we aren’t there yet. This is why, for the past 18 months, even when gold was as high as US$1,350 per ounce, I’ve been warning that we’ll see it fall to US$931 per ounce.

But either way I’ll start recommending gold stocks soon — even if it goes below my target, which is looking more likely.

It takes courage to buy when everyone else is selling, but sometimes it just makes sense to buy what everyone else hates.

Rick Rule — these are the times when you make the big dollars

Rick Rule has a strong opinion on this. He says that ‘during a resources bull market, everyone wishes they knew exploration companies when they made the discovery drill hole. But in a bear market, like we’re in today, no one…absolutely no one…wants to hear about these companies. And this is the best time to buy — one to one and a half years in front of everyone else.’

And that’s exactly what I’m doing. And have been doing for Resource Speculator readers. I’ve been preparing them this year for next year, when I believe we’ll see the resumption of the resources bull market. I’ve even pinpointed where I believe the bottom will be for my subscribers.

As such, I suggest getting your positions ready today. If you pick the best stocks in the best sectors, you’ll set yourself up to make the big bucks. And if you want to know the best sectors, click here.

I’ll be back with more news from the conference tomorrow.


Jason Stevenson,

Resources Analyst, Resource Speculator

Ed Note: This article was first published in Money Morning

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Jason Stevenson

Jason Stevenson

Jason Stevenson shares his extensive knowledge of Australia’s mining sector as Markets and Money's dedicated resource analyst. Whether it’s iron ore, gold, copper or lithium, you can rely on Jason to give you in-depth analysis of the biggest and most important sector of our economy. Jason provides in-depth research to Resource Speculator, Australia’s premier resource investment advisory.

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