The Daily Gold Premium

Dear Investor,

I'm Jordan Roy-Byrne, CMT. Before I tell you about the gold shares let me tell you about myself. I'm a Chartered Market Technician and a member of the Market Technicians Association. In 2010-2011 I was an online contributor to the CME Group, the largest futures exchange in the world. My work has been featured on CNBC.com and Financial Times Alphaville. My commentaries are syndicated on all of the major Gold-related websites.

The gold and silver shares are incredibly volatile and unsafe over the long-term. Someone once told me that these companies were not real businesses. Doug Casey says they are burning matches. You have to get rid of them because ultimately they will blow up one way or another.

That is because commodities are very cyclical. Gold and Silver are extremely cyclical. Even in a secular bull market, there are not corrections but crashes. It makes it nearly impossible to run a successful company over the long haul. The value of Gold < Silver fluctuate so much that poor assets can suddenly become great assets and great assets become uneconomic. Hence, the gold and silver shares fluctuate like no other shares on the market.

As you can see from the Barron's Gold Mining Index, there is a sharp boom bust cycle, where the bust can take away nearly all of the gains. During the secular bull market of the 1970s, the BGMI had two corrections of more than 60%. And keep in mind; this is an index of the largest most established companies. If they declined 60%, what happened to the smaller, high growth companies?

If they survived those downturns, (which some inevitably do not) something like this happened:

To achieve such spectacular gains, an investor would have had to buy at bottom and hold through spectacular corrections of 83%, 94% 52% and 89%.

Why Am I Telling you This?

Most advisors tell you what to buy. And they may make quality recommendations. But do they tell you when to buy it? Do they tell when to take profits or when to sell? This is important for any trade or investment. As you may now be realizing, this is extremely important when it comes to the gold and silver stocks.

As you can see, after a boom these stocks typically give back most, if not all of the gains. The current bull market is moving into the later stages in terms of time, but not in terms of upside potential. That means that we could experience very sharp gains in a short period of time. At the same time, the eventual bust is likely to negate most of what could be historic gains! This is why we must use volatility to our advantage. You must know when to be cautious and when to be aggressive.

Model Portfolio Performance

Our Model Portfolio since inception has outperformed all of the benchmarks. Specifically it has outperformed 17/19 individual benchmarks. This year our portfolio is up 5.5% despite the gold stocks being in the negative. Furthermore, our portfolio is calculated in Canadian Dollars. In US Dollars our portfolio is up 9.5% on the year. This is very good considering the overall negative performance in the sector.

How do we achieve this kind of performance? Let us show you ...

Criteria for Picking Winners

1. Buy Value. We look for companies that based on their price today are trading at a discount now or likely bigger discount 12 months from today. The takeover game is a huge part of the resource business. Quality undervalued companies will not remain so for long.

2. Don't Chase. Gold and resource stocks can rise substantially in short periods of time. However, they can often fall 25-40% very quickly. We reduce risk by never chasing a company whose share price has appreciated tremendously in recent months. Hence, we try to find stocks that are less vulnerable to a sudden downturn.

3. Fundamental Catalyst. Undervalued resource companies need a catalyst to reach their full value. This can include going into production or announcing new resource estimates. We always evaluate what news is on the horizon and the potential impact on the share price.

4. Technical Catalyst . Resource stocks will typically trade in either an impulsive manner or a long consolidation. We seek to find shares that have very recently broken out from long consolidations or that are trading within a consolidation and have a chance to breakout within weeks.

5. Tight Share Structure . This is critical for various reasons. The mining business is a very capital-intensive business. Companies can raise funds by going into debt or selling shares. The companies who can find and/or develop a resource while keeping the share structure tight and undiluted are the companies you want to own. That speaks of good management. Also, the tighter the share structure, the faster the shares can appreciate. .

Huge Potential

In even the last year and a half of the previous bull market, junior gold and silver companies experienced tremendous gains. Take a look at this graph:

Please note the difference between the juniors and the producers. Anyone can tell you Newmont Mining or Yamana Gold is going higher. Investors will make good money in those stocks (if they can sell at the right times). However, traders and investors can make historic gains if they turn their focus to the junior producers and explorers, who will be the "growth stocks" of this bull market.

What if you were lucky enough to invest in juniors, not in 1978 but in 1975? Take a look at the gains in these juniors:

To our knowledge we are the only publication that tracks as many companies as we do on a week-by-week basis and offers our research and analysis to the public.

As an independent analyst, I make my living by providing high quality actionable research to folks like you. I take my work seriously as my subscribers are my lifeblood. Unlike typical Wall Street analysts or newsletter writers with thousands of subscribers, I don't have the luxury of being wrong. My career depends on providing subscribers with top notch and accurate research.

If you have any questions, don't hesitate to ask! Looking forward to finding big winners for you,

Sincerely,

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com