“Accumulation time for gold 
and many of the gold mining stocks”

 By K.C. Grainger

MontrealAnalyst.com

“Keep in mind what Napoleon Bonaparte once said: “Never interfere with an enemy when he is making a mistake.” So if some investors are dumping a stock(s) that your analysis suggests is undervalued, keep quiet and accumulate.

1. Today, there are numerous large, medium and small cap junior mining stocks that are literally being “given away” at current prices. They have impressive reserves and resources, sufficient cash and quality management. However, when you find companies with such positive fundamentals, it may be prudent to not discuss them with others. Keep it to yourself or you may have a problem getting the amount of shares that you want.

2. Today, if you look at the brokerage houses’ screen of offerings, you will often find very few offerings of many stocks at or around their price bottoms. In many mining stock and other small cap stocks, there are very few offerings at or near bottoms. Keep in mind that a “bottom” occurs when the last fed-up seller sells! Most legitimate mining stocks today with adequate cash and reserves seem to have bottomed. Since July 2013, that bottoming out has been going on.

3. With many stocks, investors will often “throw them away” at low prices; this may be a superb opportunity to buy those shares. When a discouraged shareholder dumps a stock in frustration, another investor who may have done his or her homework might think as to “what a great opportunity I have here in this stock” and buys the stock when it is literally “on sale.”

4. Generally a falling Industrial stock market is good for gold and gold stocks, the 20 year bull market in stocks coincided exactly with the bear market in gold. Look back at 1982 to 2002! The stock market peaked the last time simultaneously with the bottom in gold, that was in 2001.

5. When investing in Gold stocks, “dollar cost averaging” is often the best approach since there is such little support and research coverage from the brokerage houses and market makers today. However, that creates an opportunity to accumulate stocks frequently at lower prices than you would have been able to in the past when the trading desks and market makers (specialists) would accumulate all the cheapest shares.

6. Suppose a junior mining stock that you bought at .30 cents has dropped to .08 cents after it had sold at $1.10 two years ago. Do you consider reinvesting at .08 cents? Certainly, if the fundamentals are positive, but you must do the research. We can be speaking of a $30 stock that has dropped to $5 as well. Eight cents a share may reflect no value in many stocks, but in other companies, eight cents may represent an exceptional buying opportunity. You must do or obtain full analysis.

7. Do we think that gold bullion and gold stocks have generally completed the bottoming out process? We do and if they suffer another manipulated price decline, keep in mind that gold is selling under the cost of production for many companies, so it cannot stay at that price for long as demand for the bullion is consistent and growing. Couple that with the fact that the U.S. Government is running a deficit of $5,000,000,000 ($5 billion) per day and you can interpret that as the fundamentals for hard assets are in place in this day of fiat money printing.”