Precious Metals Mining Stocks – More Pain to Come? (November 23, 2016)

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It happened… The spot price of gold broke below $1,200/oz! Wow, it really is starting to feel like late 2015 all over again…

screen-shot-2016-11-23-at-9-37-41-pm

As I discussed in the last update, “The trend ain’t yo friend right now…

That is, unless you just so happen to adore good deals… If so, you can EASILY find them in precious metals and the mining stocks… Cheap merchandise is readily available yet again… And right now (similar to last year), there’s hardly any buyers remaining!

Point blank — Retail investors LOVE to chase price action alone (hmm, strange… all of a sudden I’m no longer getting any text messages regarding precious metals mining stocks), and almost nobody likes to look at their portfolio when it’s bloody beet red… Forget about going out shopping for more assets!

In other words, human psychology and emotions are such that it will lead people to buy and sell at precisely the most inopportune times — It is emotionally satisfying (for whatever the reason) to buy at (near) all-time highs when risks are at their most elevated levels, and to sell into extreme weakness at (near) record lows when risks are at a nadir.

Be cognizant and recognize that our innate emotions will typically steer us towards the losing strategy of buying high and selling low! If not that, the retail investor will usually elect to sit on the sidelines… paralyzed by fear at precisely the time when the best deals are most plentiful!

Here is Investing 101 for you (which everyone knows and hardly anyone actually practices):

“Buy low and sell high!”

Of course, I can only speak for myself, but as an investor who has chased assets both up and down, my track record CLEARLY shows that the best gains that I have ever scored in my investing career occur when I’m buying into immense fear!

Having prior data (personal results) in my back pocket greatly explains why I won’t touch shares of the S&P 500, Dow Jones, or Nasdaq with a 1,000 ft. pole… not today… At all-time record highs!?! Are you kidding me?!?

No way, Jose…

So, with that said, most definitely I’m tuned into the precious metals mining stocks right now and extremely eager to add more bargains! When cheap becomes stupid cheap, I start buying hand over fist!

The caveat I would add is this — Don’t fire all your ammo all at once! Nobody can perfectly time market tops and bottoms… But you don’t need to in order to succeed massively with your investment returns (buying stupid cheap Trumps all in the medium/long-term)… Hence, my own personal strategy is to simply buy in tranches… Therefore, if I’m “too early” with my entry points (that ALWAYS tends to happen in a severe downtrend!), I allow myself sufficient and enough opportunities to reduce my cost basis (meaningfully) later on…

Without question, it does take some serious conviction to dollar-cost average (DCA) all the way down, catching falling knives throughout the entire process… until the tide turns…

But for all the investors who were worried that they might have “missed the gold/silver train for good” back in July, August, well, what more could you possibly ask for?!?

Here’s your second chance at redemption…

Fundamentally speaking, NOTHING has changed post-election… except for market sentiment (which is usually almost ALWAYS wrong and fickle in the short-term)…

Gold and silver are getting thrashed right now, at a time when most other commodities are soaring… Does that make sense to you (this is a trend that I’m not convinced will be long-lasting!)?

Check out these charts below!

Copper:

spot-copper-60d-large

Lead:

spot-lead-60d-large

Zinc:

spot-zinc-60d-large

Nickel:

spot-nickel-60d-large

There you go… The markets have spoken, and they strongly believes that economic growth (and demand) is set to take off in the future!

Also, most everyone is convinced that inflation will pick up rapidly… which explains doesn’t explain much at all as to why gold and silver (which in theory should act as inflation hedges) are selling off like they’re about to go obsolete… I guess that is unless everyone out there seriously believes that real + nominal rates will be able to rise quickly enough to continue to outpace inflation by a healthy margin… With all the debt in the current system, yeah, good luck with that…

Anyway, when it comes to silver, it’s often considered a hybrid — part money (like gold), and part industrial metal…

I’ve long believed that if/when push comes to shove, silver is going to ride, side, and die with gold… NOT the other base metals…

This certainly looks to be the case at this time…

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To my untrained eye, the 60 day silver chart sure looks to resemble that more of the 60 day gold chart than the other commodities (copper, lead, zinc, nickel) shown above…

Does it really make any sense for the price of silver to be in rapid decline when the consensus out there is that the next economic boom (which would no doubt consume a ton of raw materials) is just around the corner?

 

Why is silver being left out in the cold?

 

As for gold… Well, that’s pretty obvious — Gold is a useless pet rock!

 

Duh!

 

Which is why I’m getting pretty amped up and eager to go hunting for more gold shares!

 

Oh, and let’s not forget about adding some silver stocks too… Silver, the other heavily oversold and unloved industrial monetary metal.

 

No fear at the bottom… If the markets will giveth, then I will (gladly) taketh!

 

Happy Hunting!

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Mining Stocks – Rules of the GameFI FighterNo Nonsense LandlordBSRJay G Recent comment authors
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Srini
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Srini

Jay,
Not seeing the carnage i was hoping to see in miners at the opening. – Give me (more) Red…….

My stomach is not aching. so more pain to come???
cheers
Srini

Roadmap2Retire
Guest

Hahaa why is silver being destroyed? Like you, I thought it was only gold that was a pet rock 🙂

I am tempted to nibble more here and buy as gold has fallen below $1200. Keeping my eyes peeled for some good opportunities here.

Happy hunting!
R2R

Tom V
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Tom V

Sell the rumor, buy the news! Check the silver spread in the Asian market
Didthesystemcollapse.com

Jan
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Jan

Jay, what are your thoughts about all the talk that India might ban gold (?!).
Do you have any idea what is going on with this?
Thanks for your articles.

Jay G
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Jay G

Saw something interesting – Looks like someone bought 507,000 shares of Orca Gold OTC listing today, 14x the average volume. Entire sector is tanking and the one stock I want most is up 14%!

BSR
Guest

I sold off my gold stock about 2 months ago. Made 200% gain and moved on. It seems to me another chance is about to come for a good trade. I will for now wait and see. If a cash flow positive gold mining company’s stock price becomes favorable again, I will jump back on.

BSR

No Nonsense Landlord
Guest

It’s hard to tell where precious metals are headed. Inflation? Deflation?

I do like my index stocks. No home runs, but steady. I can hold without worrying about a capital gains hit. With high flyers, like precious metals, you need to be more nimble.

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