Gold is back and the party in mining stocks is only getting started

Well, you know that we have seen a brutal bear market in mining stocks. Gold bucks index was trading above 600 and then it collapsed within a few years to 200, and I think this short intraday dip below the 100’s at the gold bucks index, the HUI, this was probably one of the greatest bear traps in history. Since then, gold mining stocks rose I think 150%, but nobody really believes in this rally and I’ve got a great chart showing bull markets in mining stocks and you can see that those are actually quite a ride. At the moment, we’re only at the beginning of this party probably. It’s like if you join a party at eight or nine, that’s not the time when the party really kicks in. Around two or three, that’s probably the time when the party is really going on, and then you should be smart and leave the party a bit too early probably, and it’s the same in investing.

So, this party in mining stocks is only getting started and I think the reasoning for that is that there’s been some creative destruction going on in this sector. We have seen that, you know, the companies, they are taking care of cost discipline now. They became more transparent. They wrote off big projects. They focus on reserve grades, so they’re really focused again on profitability, and we have seen their margin actually, we’re pretty stable. In fact, I think that the leverage on a rising gold price is much higher nowadays than a couple of years ago because those companies that really survived this massive bear markets, they’re now resting on a really solid foundation. Therefore, I think, yeah, we’ve got great investment opportunities especially in the developer segment, but also in single mining stocks, and that’s what we’re focusing on nowadays in our investment process.

Gold is back and the party in mining stocks is only getting started