Precious Metal Mining Stocks May Be Making History Today

Gold Stocks Turn

 Gold always does what it should do…it just never does it when we think it should. –Richard Russell

gold stock bears

Past bear markets in precious metals miner stocks have been vicious since they are last in the production cycle as a commodity producer.

lundeen062511b

Past history of mining shares….

Unless these past three days are simply window dressing and short covering, then something meaningful may be occurring:

BIG GDX

Small GDX

The GDX represents several of the senior gold producing companies. The GDX has under-performed the gold price as represented by (GLD) for about 5 years and especially in the past two years.  Note the radical change in the past two days as gold, ironically, fell below the all-in cost to produce an ounce of gold for the majority of mining companies.

Change

Two days is just one sign, but a big one in my opinion. Until after the Fourth of July weekend, the true trend may be revealed since this is quarter end and before a long holiday next week. I am bullish for the long-term in SELECTED, WELL-CAPITALIZED companies.  Remember to do YOUR own thinking and correlation is not causation. I have been two to three months early and down 20% so far, but I sense a turn–finally?!  Prices are absurd.

Perhaps better to listen to an old pro (albeit biased)

Speaking toward what he’s seeing from the institutional investor community, Rick said, “This is the fourth time in my career that I’ve seen capitulation selling, and it get’s ugly and spasmodic…Last week I was on the East Coast of the United States visiting very large institutional investors, and the level of indecision I saw was absolutely classic of the period right before capitulation—andthis week, right on schedule, we’re getting it. [It’s] truly ugly, but it’s the kind of cleansing the market needs.”   (Source: www.bullmarketthinking.com)

Hear interview: 6272013rule

 

Learn more:

http://www.kitco.com/ind/Trendsman/2013-06-28-Epic-Opportunity-in-Gold-Stocks.html

http://www.stentormedia.com/gold-mining-stocks-have-outperformed-the-dow-since-1920

http://www.fgmr.com/gold-mining-stocks-have-outperformed-the-djia.html

http://www.gold-eagle.com/editorials_08/lundeen062511.html

http://www.gold-speculator.com/mark-lundeen/77176-barron-s-gold-mining-index-gold-silver-1920-dollar-terms-they-re-cheap.html

HAVE A GREAT WEEKEND.

PS: if you have a question, please post it in the comments section–my emails are swallowed up.

7 responses to “Precious Metal Mining Stocks May Be Making History Today

  1. Hi John,
    What do you think about the for-profit educators such as Strayer (STRA) and Apollo Group (APOL) which are trading near 52-week lows?

    • IT is best not to comment on what one knows nothing about. I passed on Apollo. If you can’t value the company nor understand the industry, move on. It certainly seems very cheap on the numbers so the question you have
      to ask is why is it so cheap and what is wrong with the perception. Do you have a variant perception?

      Certainly the growth in student debt is totally unsustainable. Their industry will come under enormous change. How would they do if students could not BORROW to go to school?

      Are they the cost/value provider in this industry or do they dominate a niche.

      But if you can’t answer those questions move on. This is one of the magic formula stocks so you could just mechanically own this stock in a basket of 20 or so companies. Cheap usually wins.

    • T. Pham – FYI – the value investors over at FPA Capital wrote a little bit about APOL in theirost recent quarterly:

      http://www.fpafunds.com/docs/hc_capital/capital-2013-q1-commentary-2.pdf?sfvrsn=2

  2. yes, something did happen, in another country, there will be at best a small dead cat bounce.

  3. Thanks Yohama for sharing that. Well, FPA believes that APOL’s normalized earnings are about $3.00.

    You have to see if you can derive your own estimate of normalized earnings with a margin of safety.

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