NAPOLEON’S ADVICE   Keep in mind  that Napoleon said over 200 years ago to “never interfere with your enemy when he is making a mistake.” The so called “enemies” today are the frustrated investors who are selling out their positions in the mining stocks. In reality, they are truly our friends as based upon our analysis, they are creating what may be the opportunity of the decade-selling their undervalued gold and silver stocks at exceptionally undervalued prices. Market history has shown that very few investors take advantage of the low prices.

 

MOST GOLD STOCKS ARE CARRYING THE LOWEST VALUATIONS IN THEIR HISTORY so investors should take advantage of the “sale” on undervalued gold and silver assets. Moreover, some gold companies’ resources are being valued as low as at $5 and $6 per ounce that they have as in-ground gold resources. We used to often see valuations at $30 to $120 an ounce. Naturally there are many factors involved in the valuations but suffice it to say the gold (and silver stocks) are incredibly undervalued.

 

COMPREHENSIVE RESEARCH for the vast majority of small capitalization “junior” mining stocks is almost non-existent today. Stocks that do not have research coverage  underperform others in their sector. The minuscule spreads between the bids and offers have devastated brokerage profitably. Mining companies would be well advised to find research coverage as they severely limit their upside potential without it. We cannot take on research now but are attempting to find research firms.

 

A BEAR MARKET IN INDUSTRIAL STOCKS IS ALMOST ESSENTIAL for a true bull market in gold and silver  stocks. Yes, we do need a bear market in the industrial stocks to at the same time have a positive market in gold stocks. We have said this for the last two years and it still stands.

THE BROKERAGE INDUSTRY does not want to face a bull market in gold since brokerage profitability drops during bear markets in industrial stocks such as the Dow Jones and S&P 500. A bull market in gold mining stocks cannot replace the business lost in an industrial bear market. So do not expect to see accurate and timely advice from the major US brokerage houses.

 

GOLD STOCKS’ PRICE CHARTS indicate that they are in a bottoming pattern and finishing up their price lows, many have since the summer of 2013. Yes, many mining stocks have already bottomed.  Some technical indicators suggest that more time is needed but we are close to finishing the bottom. Technical Analysis suggests that bids should be in for many stocks that are cheap fundamentally that are exhibiting technical bottoming patterns as well.

 

CYCLES! PAY CLOSE ATTENTION TO THEM.  Very major and important cycles are finishing their bottoms and are projecting a major bull market in gold. At the same time, the cycles now project that the stock market faces a difficult period for several years. Please pay attention to the cycles, they are so important. All markets are cyclical, keep that in mind. However, at times they are not on schedule.

 

SUPPLY AND DEMAND NUMBERS for gold bullion could not be more positive, gold bullion is bought heavily by the China, Russia and India and Germany cannot even get their own gold delivered from the “safekeeping” at the New York Federal Reserve.  Safekeeping? They call it “safekeeping;” can you believe that?

 

DEFLATION? We do not see it, but gold can perform well and has performed well during deflationary times; just take a look at the price chart of Homestake Mines during the 1930’s.

 

MANIPULATION IN GOLD? It is so obvious, you have seen enormous futures short selling which often occurs when the market is illiquid and lacks bidders of any size. The purpose of the manipulation is to create the impression of weakness in the gold market. Why? We think that some of the world’s central bankers need the gold price weakness so they can still issue debt at 1% yields. But at the same time, when any gold bullion becomes available for sale in size, China, India and Russia are heavy buyers. The artificially created weakness in gold bullion is to China, India and Russia a superb buying opportunity.