It hasn't worked out quite like we planned. . . yet.
Investment positions in the junior mining sector, which were supposed to benefit when things went south in the broad economy, have fallen across the board.
It has been awful to watch, let alone being a victim participant.
This pullback has prompted many investors to look at their portfolios and ask. . .
Is the Junior Mining Sector Dead?
Over the last several months, the reasons to own physical gold and silver have become crystal clear to most investors. These include mining supply and demand pressures, inflationary concerns, and poorly managed U.S. macroeconomic policies which will lead to continuing devaluation of the U.S. dollar.
But since the last major rally in the junior mining sector in October 2007, gold and silver stocks have suffered despite bullish moves in precious metals, big new discoveries, and general market rallies.
The best index we can use to measure the general health of the junior mining sector is the TSX Venture. That's because the majority of companies listed on the exchange are junior mining stocks.
Since May 2007, the TSX Venture has fallen almost 70%. Below you can see this drop and how other major indicies have performed over the same period of time.
| Performance Since May 2007 | |
| TSX Venture | -70% |
| Dow Jones | -39% |
| NASDAQ | -34% |
| S&P 500 | -41% |
| TSX | -31% |
It looks rough. But I don't believe the junior mining sector is dead.
Breakthroughs nowhere near this big have paid investors over 10x gains
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As gold and silver prices break out now to new record highs, a select group of quality companies in the junior mining sector are going to do phenomenally well.
These will be the very best stocks to own as new investors come looking for profits in the junior mining sector.
Many stocks will no doubt fall by the wayside. But major gains will be the reward for those able to successfully navigate the junior mining sector and determine which stocks will benefit most when the time comes.
How to Find the Junior Mining Sector's Biggest Profits
The junior mining sector is in dire need of new buying, both retail and institutional. Since the beginning of the year, trading volumes have remained anemic, except for select quality companies that have enjoyed a nice rebound since the meltdown.
As most of you can see, only the highest-class quality stocks are getting any attention. But the overall junior mining sector remains mired in the mud at the moment.
This could change as we get to new record highs in gold and silver, bringing new retail and institutional investment to the junior mining sector. Stay focused on owning quality stocks in the junior mining sector in anticipation of this new retail buying, which will hit our market eventually.
It is difficult to pinpoint when this will happen. But gold in particular looks like it wants to break out. When it does, it should be a big move which will also pull silver out of its recent funk.
For now, we stay focused on the gold and silver stocks that can deliver near-term profits. Specifically, I recommend looking for quality junior gold and silver companies that are expecting to begin or significantly increase production in the near future. Right now I'm personally focused on gold stock in the Abitibi Greenstone Belt of Ontario and the gold in the Boise Basin of Idaho.
As far as base metal companies, they could take another year or two to recover. At some point, however, there will be a good buying opportunity in base metal stocks. But that moment is in the distant future.
As always, of course, owning a combination of both physical metals and select shares from the junior mining sector is the best way to protect yourself from the coming financial onslaught.
Good Investing,
Greg McCoach, Gold World
Investment Director, Mining Speculator
P.S. With a gold resource worth 63 times more than its market cap, this junior gold stock is getting ready to pay off big time. This tiny $0.34 stock could make it's first move over $2.00 in short order. The whole story is laid out for you here.
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It is very RARE that I comment on other peoples point of view or perpective on a subject. However, I would like to to say that " Greg McCoach in my own humble opinion is "A very knowledgeable individual with a great deal of insight" in the Junior Mining Industry!. Greg is able to and willing to share that insight and knowledge through his many written articles and personal interviews. I personally find Greg explains various topics in an "Easy to understand Manner" that gets right to the point. That is why I personally subscribe to "Minespeculator". I happen to personally like the "Format" of this publication. Keep up the GREAT WORK Greg!!
Sincerely: Carey Craig