Our analysis suggests that we are in a bull market in gold, silver and many mining stocks. The brokerage industry will not and has not made any such forecast. Brokerage houses and banks will avoid acknowledging that gold is in a bull market since if gold is in a bull market, the industrial stock market such as the Dow Jones Industrials and S&P 500 faces a bear market. It will not surprise us if gold moves down to as low as $1160 as anything can happen in this manipulated world of gold. The bottom is being finished but a shakeout is normal.  

Generally, brokerage profits plunge during bear markets and the brokerage profitability in mining stocks is limited due to the limited size of the gold mining stocks market.

Gold bullion has been in the process of fashioning and finishing a bottom for the last two years. But a better indication of a bottom has been demonstrated by some gold mining stocks. Many gold stocks were literally being given away at prices that were incredibly cheap. In fact many were and many still are at their lowest valuation levels in history. Lesson? Bull markets do not start for all stockssimultaneously.

During the last three years, during the brutal bear market in gold, we recommended Richmont, Claude and Niogold. They are up from our original recommendations 500%, 700% and 100% respectively; Niogold was taken over as well for shares by a mining company that has further exceptional upside. Our sources? We call the companies themselves and also speak to people in the mining industry.

Manipulation in gold bullion?  In our opinion, there has been manipulation and it continues by the large brokerage houses and banks. For example, examine the “midnight sales” on the gold commodities exchange that are done during periods of little or no volume. It was a method to create an image of weakness. Note well that it is paper contracts that were sold, not the bullion itself but it certainly creates the appearance of weakness in gold.

If not for the manipulation, gold would not have sold below $1400 an ounce. Moreover, if all the deliveries of gold held in “safekeeping” were forced to be delivered by the “safekeeping” organizations (“safekeeping” ?) to the owners, gold would minimally be selling at $2000 per ounce.  By the deceptive manipulation, it further weakened the mining industry’s ability to engage in exploration and finance operations. Bear markets are a normal and regular occurrence in all industries; however pounding a sector down to create images of weakness to benefit the short sellers and the banks is criminal.

Keep in mind that there are no longer the same number of market makers (formerly called specialists) maintaining positions in small low cap stocks and junior mining stocks; that is over. Also there is very limited research coverage in most companies’ stocks today. In most mining stocks, comprehensive research is non-existent. It simply is too expensive.

Napoleon said “ to never interfere with an enemy when he is making a mistake.” Many sellers (in a sense but not really “Enemies”) are making mistakes when selling many juniors at price lows. We feel that their mistakes are in selling their shares…and we took advantage and will continue to do so. Our advice to most juniors is to obtain research coverage and to not overpay for it. We have enough companies that we follow but there are others analysis firms that may be able to help.