Swiss Vote Could Be Catalyst For Gold To Break Above 5 Month Downtrend
Jeb Handwerger | Nov 27, 2014 11:40PM ET
Despite the junior resource sector being near a major bottom and going through a bear market of epic proportions, I still believe that this may be one of the best times to add to quality positions. Nothing perfects one’s craft in the financial markets like a bear market. In a bear market one has to refine their skills in stock picking. The emergence of a new bull market is usually the most propitious time for outsized gains.
I was blessed in selecting two of the best performers in 2014 which was an extremely volatile and treacherous market for junior miners. In a bull cycle it is easy to pick winners as all stocks rise even the subpar ones. In a bear market it is extremely challenging as 90% of the stocks fail even the good ones who pass all stock selection rules. Nevertheless, I continue my mandate from my premium subscribers to scour the resource market for the most exciting opportunities that could be a winner in any market.
Investing in stocks is easy if you follow the rules that have proven to be successful over time. The number one rule is buying low and selling high. Many investors are chasing the US dollar and Large Cap Equities to record heights liquidating all their junior miners. Be careful of selling low and buying assets at record high valuations.
Similarly in 2011, the herd mentality pushed silver and gold to record values selling all their stocks before a multi-year correction ensued. See my article back in 2011 which was published on Seeking Alpha which warned about the precious metals market overheating and my video analysis from August 2011 forecasting a bottom in the S&P 500.
The opposite tactic should now be considered of liquidating large cap equities, real estate and the US dollar and build positions in junior resource stocks that are extremely high quality and compelling takeout targets. Gold and silver could gap higher by the end of 2014 and the top notch juniors could skyrocket.
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Its not just me that sees the value in gold, but entire nations. The Swiss voters on November 30th will decide to back the Franc with a 20% gold reserve with a pledge never to sell its gold again. If the Swiss approve this they would have to purchase 1,500 tons of the yellow metal. This is a significant amount considering the Russians bought close to 19 tons in October. Demand in China and India is still strong as evidenced by record coin sales and numismatic premiums rising.
If the Swiss decide to back their currency it could be a shot heard around the world and could spark a global rush to buy physical gold and silver by other nations. Eventually, that change in psychology could affect our junior mining positions trading at pennies on the dollar to see explosive gains.
Many Central Banks around the world have a zero or negative interest policy. This expansion of fiat currency on the market has never occurred before yet investors are flocking to the US dollar in record proportions. However, smart investors are already positioning ahead of the masses. When the US dollar bubble pops and follows other currencies lower, then gold and silver may appear as the new safe haven. It is at this time where our junior miners which are trading at pennies could be trading for dollars.
When this financial event occurs it will be too late to buy. One has to prepare ahead of the storm. What makes one wise in the market? Being able to see the developing storms ahead and acting upon it before it hits. The rebound in precious metals could be one of a series of gaps higher. Right now look for a rally to begin when the recent downtrend in gold since July is broken to the upside at $1205.
Look at a few of these junior miners which could be on the verge of a major move higher.
1)Take a look at thisthis junior as they are large PGM deposits in North America. Dundee put out a research note after the transaction which showed if the company was bought out at the same valuation as Duluth it would be more than double its current price.
2)great exploration team and I am excited to hear of further results.
3)For more speculative investors looking for the potential of outsized gains posted here and should be read.
Disclosure: I own all three companies and they are all website sponsors. Be aware of conflicts of interest and please always do your own due diligence.
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