Last week Swiss Gold Letter posted that the bottom may be in for gold mining stocks. On Friday, November 4th, the GDX (the VanEck Gold Miners ETF) rose 11%. This move has all the hallmarks of the start of a major bull market.
The proper investment attitude in bull markets is to be invested. For those with an appetite to take a position, at the end of this post we offer some companies that can be purchased now to participate in the next phase of the gold market.
Sunday, November 6, 2022
Last week (on October 30th, 2022) we posted that the bottom may be in for gold mining stocks. On Friday, November 4th, the GDX (the VanEck Gold Miners ETF) rose 11%. This move has all the hallmarks of the start of a major bull market.
In our post last week, we noted that the probabilities were very high that gold stocks had seen their bottom and that a new bull market was on the way. We based this view on the fact that sentiment indicators were at all times low, oversold gauges were present and price action was starting to look much better with notable weekly reversals. (The chart of GDX below shows a triple bottom with a close above the 50-day moving average.)
Great bull markets start with a huge lift off!
Whatever the market, historical bull markets start with dramatic price action. This is true in most markets in equities as well as in commodities.
And on Friday, November 4th, 2022, the GDX was up 11%!
This is stellar performance for any stock market index. It also registers as a very significant one day reversal made more reliable because this reversal was on huge volume. In fact, it was the highest volume in over six-months.
This price action also confirms the already significant weekly reversal of late September.
Some of our favorite stocks have already seen significant upward moves. For example, the increases in Equinox Gold (EQX.V) up +26% Southern Silver (SSV.V) up +21% occurred in only two days.
Another very positive feature of this nascent bull market is that all major gold mining indices have significantly surpassed their 50-day moving averages. In clear English, this means that the big money, which is now mainly managed passively, will start flowing again into gold related instruments.
Sept '08 bottom gold +$50 in 1 day(+6.2%). Dec '15 bottom +$30 over 2 days(+2.8%), Oct '18 bottom +$41 over 3 days(+3.5%), May 19 bottom +$54 over 5 days (+4.3%), Mar '20 bottom +$111 over 2 days(7.5%), Mar '21 bottom +60 over 4 days(+3.6%). Nov '22 bottom? +$51 over 1 day(3.1%)— fred hickey (@htsfhickey) November 4, 2022
Are We Out of the Woods Yet?
Markets are always tricky especially in the short term. Of course what would make investors confident that this nascent bull market in gold and gold equities is for real would be for the price of gold in US dollar to be decisively above $1680.
Or what would make investors even more comfortable would be if gold mining indexes continue to trade well above their 50 day moving averages.
What is the Proper Investment Attitude in a Bull Market?
In a bull market, the proper investment attitude is to be invested. For those who have low exposures to precious metals, an investor might be wise to start building positions immediately.
For investors who already have significant positions in the precious metals markets, adding to stocks with very solid fundamentals may also make sense, as well as also averaging down on solid companies.
At the beginning of a bull market, the most common mistake is to always wait for a significant correction which never really materializes. Bull markets, especially bull markets in gold, climb a wall of worry!
Producers, Developers, Tax-Loss Selling Bargains and Indestructible Companies that We Like
As always, nothing in this market can be certain and SGL does not provide investment advice. If the S&P 500 completely breaks down, it may be that the selling pressure could bring down gold equities with it. For those who are hesitant, they might find more comfort investing in shares of indestructible companies like Riverside Resources. However, for investors who have an appetite to express positions in precious metals stocks as we climb the wall of worry, SGL presents below several stocks that we like and for which we have been, are or may be invested.
The stocks below are presented in the following baskets: producers, developers, tax-loss selling bargains and indestructible companies.
Tax-loss selling bargains are generally beat down companies which could be dumped by investors to harvest tax losses as we near the year-end.
We will explain why we like some of these companies in the days and weeks ahead.
McEwen Mining (MUX) - $3.66
Minera Alamos (MAI.V) - $.405
Cerrado Gold (CERT.V) - $.85
Osino Resources (OSI.V) - $.72
Liberty Gold (LGD.TO) - $.34
Lumina Gold (LUM.V) - $.28
Northwest Copper (NWST.V) - $.23
P2 Gold (PGLD.V) - $.265
Tax-Loss Selling Bargains:
Treasury Metals (TML.TO) - $.28
EMX Royalty (EMX) - $1.86
Magna Terra Minerals (MTT.V) - $.035
Chibougamau Independent Mines (CBG.V) - $.10
Talisker Resources (TSK.TO) - $.12
First Mining (FF.TO) - $.205
Grande Portage Resources (GPG.V) - $.215
Riverside Resources (RRI.V) - $.12
West Vault Mining (WVM.V) - $.95
Disclaimer: SGL does not provide investment advice and is not a registered investment advisor. Always do your own due diligence before making an investment. Investing in securities, especially junior miners, can be risky and never invest money you cannot afford to lose. SGL cannot guarantee the accuracy of the information in this post. SGL has attempted to present the information fairly, but it may own shares of these companies so bias cannot be excluded. SGL may buy or sell shares at any time.
SGL makes no representations, and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material on this website. You should seek the advice of a securities professional regarding any stock transactions. SGL cannot guarantee in any way that it is providing all of the information that may be available. Please do your own due diligence before buying or selling any security.