It’s one of the most hated sectors in the entire market.
And I’m buying big.
I’m talking about junior mining shares.
As you read this, mining shares have bottomed — and are starting to rise.
And as I told you a couple weeks ago with regards to silver, the same is true with junior mining shares…
It’s not too late to buy, but the train is leaving the station.
Right now, junior mining stocks are selling at fire-sale prices.
Many are trading below their proven resource, below their resource reserve estimates, and some are trading near or below cash levels.
That’s right — some of these companies are being valued at or below their cash levels.
Take junior gold miner Keegan Resources (KGN), for example…
The company has two multi-million-ounce gold projects in Africa. KGN is well-capitalized and trades on the New York Stock Exchange.
But it’s a junior.
This past May, Keegan got to a low of $2.35 a share.
At that price, the company was valued at $177 million.
Yet Keegan Resources had nearly $200 million in the bank and zero debt…
It was trading below its break-up value!
Not only did the market not assign any value to the company’s cash position; it assigned nothing to the company’s resource.
That’s the very definition of blood in the streets.
When markets get this absurd, it’s time to buy — with both hands.
Last week Keegan reached $4.20 a share on good volume: a gain of 79% since the May lows.
For every Keegan Resources, there are ten like it waiting to snap back in the continued rally of gold and silver.
The best representation of this is the TSX Venture exchange in Vancouver.
From the highs of February this year, the Venture has been in a free fall, a staggering decline of over 30%:
That’s a 30% decline in six months.
However, the Venture bottomed in late July around the same time that gold and silver were putting in a bottom… and is now up roughly 9% since making that bottom.
Vancouver is ground zero for the junior mining market.
Be it gold, silver, copper, coal, oil, lithium, or other rare earth metals, a good two-thirds of the world’s junior mining companies get their start-up capital and financing in Vancouver.
And in Vancouver, one of the most successful investors in the junior mining market is billionaire Frank Guistra.
In a recent interview with respect to the junior mining market, Frank Guistra said:
The resource market is in the worst state I’ve ever seen it in…people usually connect irrational and stupid market behavior with peaks of markets, but it takes place at the bottom of markets too. And it’s just as bad [at bottoms]… fear is a much stronger emotion than greed…
[There are] companies developing world-class assets trading at pennies on the dollar.
Guistra went on to explain his optimism for the junior mining sector based on the global inflationary scenario about to be unleashed because of massive money printing by central banks around the world.
Dear reader, it’s time to load up.
And as I told you on Monday, in next week’s Wealth Daily I’ll have a list of junior mining stocks that are about to double, triple — even quadruple — in the coming months…
Forever wealth,
Brian Hicks
Check us out on YouTube!Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.
