I get emails once in a while asking what mining stocks I recommend. 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 pass the same on 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 means 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 shows the difference between equities and gold over the past 40 years. The most recent was, of course, 1999-2000, when gold prices were $260 per ounce. From that point on, gold started its bull run until 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 percent 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 global issues are going on at this moment that will cause the tables to turn, and we shall see the precious metals start an upward move. One of these issues is the Chinese yuan oil pricing. This Chinese gold exchange 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 or later, something has to snap, and when that will be is anyone’s guess.
Currently, the mining sector is overshadowed by pot stocks, blockchain, and crypto stocks, as well as the giants like Amazon and Google. However, this situation presents a unique opportunity. There are potentially lucrative speculative buys in the junior mining sector and undervalued buys in the more established miners. The key question is when the market will shift, rewarding investors with substantial returns.
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 with 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 are also sky-high and continue to climb even more so since the government of Congo wants to add more taxes, etc, to its cobalt extraction industry.
Mining stocks I am watching or holding include Klondike Silver KS, GT Gold GTT, Fireweed Zinc FWZ
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