The Bottom for Miners...
Are We There Yet?
Any family who has taken young children on a long car trip knows all too well the familiar whining of the kids, who impatiently say from the backseat, "Are we there yet?"
Recent events this summer have given me hope that the bottom for our junior mining shares may finally be approaching.
This is a time to watch closely if you are a contrarian — and to use any available cash to purchase the best companies at a severe discount.
As metals prices were getting hammered again in July, I began to see several stories that are typically the kinds of signs I look for when our market makes a bottom...
The first story is Jim Rogers announcing he is starting to buy gold once again.
In an interview with Hard Assets Investor last month, Jim Rogers said the following:
When Jim Rogers talks, investors listen.
He is considered by many the world's best-known commodity investor.
HAI: All the talk recently has been about the recent plunge in gold. You've been saying, for a long time now — even when prices were hitting record highs — that you weren't going to buy until prices corrected to $1,200. Are you still planning on buying there?
Rogers: Yes, if it gets there. I bought more today [June 18], as a matter of fact. I bought a little bit, not much, over the last few days in case this was the bottom. I would not be surprised if there's another chance to buy lower later on, but I'm buying and I own it. I haven't sold any.
HAI: How do you determine whether gold is a good value or not? What has to happen for you to get completely out of gold and stay out?
Rogers: All these things will end in a bubble someday. Long bull markets always end in a bubble or mania before it's over with. And when there's a bubble in gold, I hope I'm smart enough to get out. We haven't seen a bubble yet. Until recently, if you went around any U.S. city, you would see signs outside many jewelry stores saying, "We buy gold." And the American people line up to sell gold. Later there'll be signs there saying, "We sell gold," and people will be lining up to buy it in big ways. That hasn't happened yet.
HAI: What do you think is the most underappreciated commodity story out there right now?
Rogers: Maybe sugar. But I don't really know. I haven't thought about it. Just find out whatever is down the most and find out where the most bears are. And that's probably it. I don't know whether there are more bears on silver and gold or on sugar right now. But wherever the most bears are, that's where you should look.
The second story is a sudden change in the pace of purchasing physical metals.
This has typically been a good bellwether sign that things are about to turn — especially when it happens during the slow summer months.
Multiple news agencies on Friday, July 19, reported a similar message:
Precious metals advanced Friday, though they plunged in June and for the second quarter.
Gold for August delivery traded higher Friday by $12.10, or 1%, to settle at $1,223.70 an ounce on the Comex in New York. The daily gain, supported by improved physical demand, was a first for the yellow metal this week.
"There is definitely some increase in the pace of physical purchases," Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview according to Bloomberg News.
"We are also seeing some short covering after prices started rising."
The third is the continued number of stories that the likes of Goldman Sachs and JPMorgan Chase are closing out their short positions in the precious metals.
Is this for real, or is it just another head fake to lure the masses out of their metals positions?
While I never really believe anything bankster scum like Goldman Sachs and JPMorgan Chase have to say in the media, they have had a good run on the downside of the metals. And they are smart enough to understand that quantitative easing in massive amounts is on its way, despite what is being touted in the media right now.
Thus the current dollar strength will be exposed as the next big round of QE is served up and metals prices once again gain center stage in the unfolding drama.
Any talk that the secular bull market in precious metals is over is total nonsense.
I am now cautiously optimistic that we may finally be on the verge of putting in the bottom on metals prices and junior mining shares. And I really could care less what the bankster scum have to say, but it would make sense for them to start covering short positions at this point.
Looking back, I certainly didn't see gold and silver correcting this much.
However, I do expect that after the bottom is in and we experience a soft, slow recovery, things could get very interesting in a hurry as the derivative time bomb makes its way into the news again later this year or early next year...
Someone sent me this anonymous quote that I think sums things up perfectly:
Similarly, a fog has descended upon the metals markets and it is obstructing your view. I can assure you, though, that this fog too will soon lift and a new day will emerge, beautiful and bright, and when it does, your physical metal will have you prepared for all that the world has to offer.
Whoever said that certainly has a great grasp on what is happening...
This is a time — when the news is bad — that the contrarians make their bets, giving themselves the best chances for success in ownership of precious metals and junior mining shares.
When you buy real low, you have that much more room for selling higher when our market fully rebounds.
So, are we at the bottom?
It's certainly beginning to feel that way to me, even though we are only getting the first clues at this point.
I don't expect anything dramatic at first; just a slow turn of events leading us past the bottom for now...
Hopefully, this is the beginning of the next big phase in the secular bull market in precious metals and our junior mining shares.
Until next time,
Greg McCoach for Wealth Daily