I’ve made no secret about it, the summer of 2015 likely marked the end of the precious metal bear market. Since the fall of 2015, the most liquid large-cap mining shares have rallied to near 52-week highs. The high-quality juniors are also avoiding sell-offs with the sector, and on up days are rallying 2 to 3 times higher than the GDXJ.
Physical gold and silver are rallying, too, becoming the best performing assets of 2016. Many are looking to profit in the gold sector, but my advice is buyer beware. Most mining shares are worthless, or ran by people who are completely incompetent.
If you’re going to speculate in the shares, please consider what legendary investor Rick Rule recently had to say. During an interview last week, Mr. Rule discussed the idea of resource optionality, a strategy he has used to create an enormous fortune for himself and investors.
Simply put, instead of owning producers who are depleting their assets at low prices, investors should consider shares of companies with large, established deposits.
It should preferably also come with management teams with multiple deposits that they can sell off at a later date. Rick noted Paladin Energy, who went from 1 penny to $60 using this strategy, and Lumina Copper, who traded for 50 cents and then ultimately sold its assets off for $160 a share.
Many others have done this; own the resources in the ground while assets are cheap, and then sell them when prices rise. It’s a hoarding strategy, as Rick called it – a perpetual option with no expiration date.
Right now, deposits that were $2 billion in a good market are selling for $15 million, and those same deposits will sell for $2 to $3 billion again, according to Rick Rule.
We’ve reviewed many of the companies Rick is referring to in today’s market, but I think one specific gold stock meets Rick’s criteria perfectly.
- It has an unbelievable management team, with a proven track record of success.
- 21 properties containing known mineralization
- Projects located in Central and North America (regional premium when gold bull market is in full swing)
- 8 Million ounces of gold resources!
- Stated objective is to acquire assets in a bear market. As prices rise, enter into joint ventures, royalties, spinouts, and the sale of some projects.
- Rick Rule is actually already a shareholder of the company.
- It’s headed up by a famous resource entrepreneur who has already built two billion-dollar giants.
To learn more about this gold optionality stock suggestion, click here.