Is Now The Time To Buy Mining Stocks?
I get emails once in a while asking what stocks I recommend and while I don’t recommend any stocks or equities, I will tell people what I am buying and why I am buying them if I’m asked. I’ve gotten some good insight from some readers in the past and I hope to have past the same onward to them.
Right now almost all mining stocks are out of favor because of pot stocks, blockchain, crypto stocks and just the large money stocks like Amazon, Google etc., which mean there are what could be some very good speculative buys out there in the junior mining sector along with some very undervalued buys in the more developed miners. The big question is how long will it take before the market turns around so that these so called “good buys” reward investors with a decent return
The chart above is a 40 year chart showing the difference between equities and gold. Most recent was of course 1999-2000 when gold prices were $260 per ounce. From that point on gold started it’s bull run to 2011. Fast forward to today and we see that bullion is even cheaper compared to stocks than it was back in 2000.
So is it time to buy? Well I’ve been saying yes for the last 4-5 years and unfortunately I have been totally wrong. I never took into consideration things like zero per cent interest rates, massive amounts of money printing, a strong dollar, etc. and it hasn’t been nice being a gold bug during this time. However I do tend to believe that there are global issues going on at this moment that will cause the tables to turn and we shall see the precious metals start an upward move. Some of these issues is the China Yuan oil pricing, a Chinese gold exchange that only permits gold and not paper to be exchanged, a North Korean issue, maybe some US politics and we can’t forget the overwhelming debt issue, both personal and sovereign. Sooner of later something has to snap and when that will be is anyone’s guess.
So getting back to mining stocks, what stocks are looking poised for upward momentum the most? In my opinion silver plays will reward long term investors the best bang for their buck. I believe silver will do well because it is the smallest market in the world and is one of the few commodities that is being used more than it is being replaced. Once buyers of physical silver start asking for the real thing instead of cash things could get very interesting in my opinion.
Second would be zinc and then cobalt stocks which would also include nickel plays. Zinc because there is a large demand for zinc and the price keeps climbing. Cobalt prices also are also sky high and continue to climb even more so since the government of Congo wants to add more taxes etc to it’s cobalt extraction industry.
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