Gold Stocks are an Enigma

​Our inbox is flooded. Gold has hit an all-time high on Tuesday, yet the junior mining sector, the companies that are out there actively drilling and exploring for the chance to find new deposits of minerals, the opportunity to turn dirt and land into riches, the future of this industry and the source of newly-replenished deposits for the big producers, aren’t rocketing higher like traditional wisdom would assume they should.

After all, we can all see it… Oil, uranium, gold, nickel, wheat, natural gas, aluminum, copper, and virtually all the major commodities are hitting new all-time highs or multi-year highs.

Why, then, aren’t the junior mining stocks leading the charge, and why aren’t they trading at a premium to the underlying commodity?

I can show you a number of various charts, graphs, and historical data that show how cheap the mining sector is, and I can also highlight the acute supply of some natural resources given the building, construction, and infrastructure boom that millennials and Asians are driving forward, but the simple answer is that this sector needs two things to go bananas (because the fundamentals are already strong):

  • M&A Activity: The majors are beholden to their board of directors and institutional shareholders. They, of course, see that the industry is in a healthy place, that margins for operating mines are thick and rich, and that they should be thinking about acquiring new projects, but there is very little of such activity.

What are these companies waiting for? Inflation is at 40-year highs and the supply forecast for materials looks robust, yet nothing is getting inked.

Once we start seeing juniors getting bought out, the speculation frenzy over who is next will bring new pools of investors into this sector hoping to bet on the right one, and that will result in epic rallies.

The reason that I believe the amount of activity is depressed is because companies are afraid of the environmental costs associated with launching new projects when governments are so anti-mining, and they’re concerned about the long-term ramifications and reclamation costs.

In the end, that will not stop M&A (Mergers & Acquisitions), but it is delaying it.

  • Silver Prices: This seems to be an over-simplified reason, but it is 100% accurate.

Silver, for whatever reason, whether manipulation, suppression, or just market-force price wars, isn’t breaking out yet.

Silver is the speculative engine, the energy drink before the party, the kick-starter that really makes an already exciting moment turn into an adventure.


Silver follows oil, which makes it even more curious to see silver so “boring” while oil is going to the moon.

What we believe will be the big catalyst for the junior miners and the entire natural resource sector is the inclusion of silver in this incredible year for commodities.

Once silver makes its ascent towards $29.50/ounce and is able to power through it, the gates open, and silver could be priced at $36.50 in no time.

Those who buy physical Silver Eagles are already paying that much…

Best Regards,

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