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Time To Accumulate Mining Stocks (Especially Juniors)

MBA, Market Analyst & Author @ The Mining Stock Journal

March 5, 2020

A few of my subscribers asked me recently about the lethargic action in the miners lately given that the price of gold has started moving higher again. But it helps to step back and look at a longer time-frame. For the last 52 seeks, the HUI has significantly outperformed GLD. I also ran the comps for 6 months, 3 months and 1 month. The HUI has outperformed gold for the last year up until the last 30 days. Nothing unusual with that. Assuming the current bull move in the metals sustains for a while, the mining stocks will soon begin to outperform the metals again.

The myth is that the stocks lead the metals. But this is not true for periods when longer-term sustainable moves occur. Gold leads, typically followed by the larger cap miners, followed by silver. Bringing up the rear are the risky juniors, which can provide huge returns in a short period of time. Currently the mining stocks – and especially the micro-cap junior exploration “venture capital” stocks – are extraordinarily undervalued in relation to the prices of gold and silver. Chris Marcus of Arcadia Economics and I discuss this view in Chris’ podcast:

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Dave Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance. He currently co-manages a precious metals and mining stock investment fund in Denver. My goal is to help people understand and analyze what is really going on in our financial system and economy. Dave publishes the The Mining Stock Journal a bi-weekly subscription newsletter that features junior mining ideas as well as relative value ideas in large cap mining stocks.