Authors: K.C. Grainger and Bob Pellerin

Is gold in a bull market? Yes it is and it has been since its bottom in 2013. However, it depends on which companies’ we are talking about. Some gold mining and exploration companies’ shares have had moves up in price from 50% to over 900%-and more during the last eight years. In our opinion & based upon our analysis, we foresee a larger more encompassing bull market in the precious stocks is commencing.

 Most juniors (small exploration companies) have languished. But it depends on what is included in the bull market as most have not moved to the degree that could be designated as in a bull market. The fact is that most exploration companies do not have nor have reported sufficient resources/reserves to justify them as being more than mere speculations….Yet for years the largest returns have been in the junior exploration companies that reported excellent exploration results.

The fact is that most brokerage recommendations are made long after a stock(s) has already had a large move up prior to the recommendation.( at least on a percentage basis.)Thus generally, an investing method that offers the best potential for the highest returns requires that investors do the analysis themselves and/or obtain the research from private investment services.

Know this well: Brokers working at the major US brokerages are not permitted to solicit purchase orders for small cap exploration stocks (“juniors”) and actually for most small cap stocks as well. The brokers are permitted to execute buy orders only if they are requested by the clients.  It makes no sense but brokers (or bank/brokerage employees) generally cannot solicit orders for stocks that are not covered on a research basis by their own firms‘ research departments.

So yes, brokers are restricted to soliciting investments for only the stocks that are followed by their own research departments. (And we know how good their research departments are,,,yeah %&#@! Despite the fact that numerous metals companies are extremely undervalued based upon their fundamentals such as their cash positions, reserves, asset values, insider ownership, the brokers are not permitted to buy them. We know it makes no sense.

Cyclical Analysis…Cycles are imperfect indicators but they have been helpful timing elements to keep in mind. The cycles we see are now in for gold and silver and suggest that we are in a long term bull market for precious metals. Cycles are rarely perfectly on schedule, but  they can help in telling investors where the markets are at.

Question! Why do the small cap gold and precious metals juniors drop so much in price during corrections and bear markets and far more on a percentage basis than the larger mining stocks?

Answer: We have said for years that there is little to no support from market makers (specialists).In the past, market makers would hold  ”inventory” stocks that they made markets in. At the same time, there would be comprehensive research coverage by the banks and brokerages that would investor create interest and attract buying in the stocks. That comprehensive research coverage is rare today to nearly non-existent. 

Thank you, K.C, Grainger and Bob Pellerin

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