From this point forward, there may never be a better time in our lives to invest in the gold mining sector. That sounds extreme but hear me out.
My research has uncovered some amazing facts that show that the 2016 bottom in the gold mining sector has much in common with the bottom in the stock market in 1942.
1942 was literally the worst time for the stock market. It was trading at the same level as in 1901, 41 years earlier. Its rolling 5-year return was the second worst of all time, while its 10-year return nearly the worst of all time. And the market had just endured a 5-year long bear market.
Over the next 14 years the S&P 500 gained nearly 7-fold with only a single bear market of only 30%. The stock market's total return over that period, including dividends was nearly 14-fold!
In early 2016, the Barron's Gold Mining Index was trading at the same level as 42 years earlier. Its rolling 5-year and 10-year returns were the worst in nearly 95 years! The gold mining sector had just endured a nearly 5-year long bear market, its worst bear market ever.
Sir John Templeton, perhaps the greatest investor of all time said to buy when conditions are the worst. That was true for the stock market in 1942 and also true for gold mining companies in January 2016. Gold Miners rebounded 150% while Junior Gold companies surged 200%.
However, markets (and especially precious metals markets) do not rise every month or quarter. There can be periods of sharp gains but then periods of correction and consolidation.
Since the summer of 2016, the gold stocks have corrected and consolidated for a total of 17 months.
Let me explain why this could be your last best buying opportunity.
The gold stocks are following a pattern that several markets followed after mega bear markets. We define a mega market as a bear market that lasts at least nearly 3 years and declines over 80% in price.
We found that a mega-bear market is typically followed by a sharp but not long-lasting rebound.
The market then corrects and consolidates for a long period of time which typically dwarfs the time of the initial rebound.
But eventually the recovery resumes and the market surges higher.
Here is how the gold stocks currently compare to three of the most infamous “mega-bear” markets.
The history of mega bear markets implies that the gold stocks (which are following the historical pattern) should begin a sharp leg higher sometime in 2018.
And the technicals (chart patterns) are setting up for such a move to take place over the next few years.
GDX (large gold stocks) upon a close above the 2016 high at $30 has a measured upside target of $50. GDXJ (junior gold stocks) upon the 2016 high at $50 has a measured upside target of $83.
This is why I have focused my career on Gold and the junior mining sector.
There may be no better time to invest in and speculate in the precious metals sector.
Gold and gold stocks should certainly perform well but your eyes should be on the junior mining sector where select companies could rise 5-fold, 10-fold, even 20-fold over the next few years.
I'm Jordan Roy-Byrne, CMT, MFTA, the editor and publisher of TheDailyGold Premium. I'm a Chartered Market Technician, a Master of Financial Technical Analysis, a member of the Market Technicians Association and have spoken multiple times at major mining investment conferences.
You may know me from my book, The Coming Renewal of Gold's Secular Bull Market: Dump U.S. Stocks and Prepare for Gold's Final Run, which was first published in May 2015 and correctly anticipated the revival in Gold and gold mining stocks.
Unlike the vast majority of my competitors I invest my own money and inform subscribers as to what I am buying and selling. My model portfolio is a real brokerage portfolio, which provides complete transparency and accountability to subscribers.
Since I started my newsletter in 2009, my portfolio has more than quadrupled. That is during a period when GDX and GDXJ have lost 37% and 39%. Note that the majority of newsletters do not publish portfolio results due to the disastrous losses they incurred from 2011-2015.
In 2017, GDX gained only 7.5% while GDXJ gained only 1.5%.
Had you joined our service at the very end of 2016, you would have had the following opportunities in 2017:
We bought a developer in northern Canada on December 28. It later surged 200%...
Days later we bought an explorer in Canada, which gained 101%...
A day later we bought another explorer in Canada, which gained over 120%...
In February we bought an early stage explorer in Mexico. It surged over 150%...
In the summer we identified a promising discovery in Australia. We bought in, and our initial buy gained almost 300%...
Recognizing another tremendous opportunity, we recommended that company’s partner, which had not been discovered yet by the market. It exploded over 480%.
You are probably wondering how we generated strong returns during a difficult period. The good news is the sector is in a new bull market and therefore much easier to make money than it was a few years ago. However, making money is not enough. You have to make it and then keep it.
I do not want to share all my secrets but let me provide information relating to our process.
First, we look for the junior companies that own the projects a larger company would want to buy. In short, these are projects with multi-million ounce potential and high margin potential. Second, we want to buy value. The better values we can find, the less downside potential and therefore more potential upside there is.
With respect to the portfolio, we want to size positions correctly. We seek to overweight the positions we are most confident in while underweighting higher risk but higher potential companies.
Finally, there are important rules with respect to taking profits and selling. We always want to cut our losses before they become bigger losses. We use a mental stop loss of 20% on our positions. Also, we should let winners run but periodically "trim" these positions when they become too big.
"I have been following Jordan’s work for the past six years and can say he is absolutely one of the best analysts in the field. I am continually impressed by the volume and quality of content Jordan puts out on a weekly basis. His reads on both the fundamental and technical picture allow readers to understand the market and his company analysis and stock selection are excellent. He is one of the best in this industry at finding stocks that can rise 500%-1000%. Understanding the nuances and particulars of this sector requires a steep learning curve. It can take years to fully acclimate yourself. Best to learn from Jordan and let him do the work for you!"
— Collin Kettell, Partner & CEO Palisade Capital
"In an industry full of snake oil salesmen and fairy tale promises, Jordan Roy-Byrne's advisory services and deep comprehension of the precious metals market is second to none. He understands that markets have cycles, in particular highly volatile gold mining shares, and helps his subscribers navigate pitfalls by selecting the right securities which can dramatically outperform while cutting losses quickly. Highly recommended service for those with desire to invest in the gold mining sector."
— Tiho Brkan, Fund Manager for High Net Worth Individuals
"I have subscribed to many investment services over my lifetime. I can honestly say Jordan Roy-Byrne has developed not only one of the most analytically accurate, but also has hit the high water mark by making his analysis feel personalized. In addition to a detailed weekly report, he often sends additional emails with daily observations of not only the physical metals and miners, but also related metrics such as the market and currencies. His service is a great integration of history and future probability that has not only helped me make money, but also avoid losing. It truly is a 5 Star Service at a great price."
— Donovan P. CPA & Attorney
There is no catch. For less than $1/day you get my high quality, actionable research and you can invest right alongside me.
There is a second chance opportunity in this sector and if you don't act soon you risk missing the next big move. Warren Buffett always says it's better to be a year early than a day late.
I believe the gold stocks could explode higher over the next 12 to 18 months and 2018 could be your last chance to invest at cheap prices.
"I am simply a pure market-timer for a broad basket of gold stocks and precious metals. Jordan, on the other hand, has provided superior STOCK-PICKING abilities over the longer-term. I am familiar with most gold stock subscription services over the past 30 years. I rarely provide endorsements of any kind, but Jordan's ability to analyze individual gold/silver stocks has been among the top 5 services over the past decade. First and foremost, I respect his integrity. "
— Dr. Jeffrey Kern, Developer of SKI Gold Stocks Trading System