Gold market thoughts…Various points to consider, things you should know

Gold Analysis is not like mathematics or engineering and can be very mentally debilitating. There never seems to be a correct conclusion. Two plus two does not equal four most of the time, often it equals three, then seven, then ten. Truly and above all, investing in precious metals demands patience. American founding father, scientist and brilliant inventor Benjamin Franklin stated around 1760 that ‘“he that has patience will have it all.” Moreover, most investors cannot tolerate the brutal volatility and sharp price declines that occur in the precious metals and the metals stocks.

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% during the last eight years. In our opinion and based upon our analysis, we suggest that 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 described as in a bull market. The fact is that most exploration companies have not reported sufficient resources/reserves to justify them as being more than mere speculations….yet for years the largest returns for investors have been in the junior exploration companies that reported excellent exploration results.

The fact is that too many recommendations are made long after a stock(s) has already had a large move up prior to the recommendation. So generally speaking, an investing method that offers the potential for the highest returns requires that investors do the analysis themselves and obtain the research from some of the many private investment services.

Again, know this well: Brokers at the major North American brokerages are not permitted to solicit purchase orders for small cap exploration stocks (“juniors”) and for most small cap stocks as well. They can only execute buy orders that are requested by the clients themselves.  It does not make sense but brokers or bank and brokerage employees cannot solicit orders for stocks that are not covered on a comprehensive research basis by their own firms‘ research departments.

So brokers are restricted to soliciting investments only for the stocks of companies that are followed by their firms’  own research departments. (And we know how good their research departments are…!!!) Despite the fact that numerous precious metals and base 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. Again it makes no sense and it hurts investors in the long run!

Cyclical Analysis…The cycles suggest that we remain in a long term bull market in precious metals. More to follow within days.