Gold Stocks to Outperform in 2011
Look for Rising Investor Interest in Gold Stocks
Gold is the most important investment to own in 2011.
There are several factors at work that will continue to push gold prices much higher over the next several weeks and months:
- a continually weakening U.S. dollar
- rising consumer demand, particularly in China and India
- producer de-hedging
- central bank buying
- lower global supplies from scrap and recycling
- rapidly increasing investment demand
- decreasing world gold production
Most investors have already caught on to these facts and what they could mean for gold prices.
Forecasts of $2,000 an ounce... $2,500 an ounce... and now even $5,000 an ounce are commonplace among both professional and amateur investors.
And now, renewed confidence in gold has prompted many investors to start seriously buying gold stocks again.
Gold Stocks Shine in 2011
Gold stocks are once again seeing strong appreciation and starting to garter the attention of a greater number of investors.
I recently attended the Prospectors and Developers Association of Canada (PDAC) convention in Toronto. In the 10 years that I have been attending the PDAC, I have never seen such robust attendance as I witnessed this year...
The place was packed as investors, prospectors, suppliers, government reps, and mining executives from around the world convened to do business.
So I can tell you firsthand the gold mining sector is rocking and rolling once again. A rising tide lifts all ships...
And it's not the just precious metal mining sector that's doing well; the base metal mining industry has also recently began receiving heavy investor attention.
But when it comes to base metals right now, buyer beware...
Time to Ring the Register on Base Metals?
Many in the industry are extremely bullish on commodities of any kind. And I understand their argument for such a case.
But I also understand that the financial problems we experienced in 2008 have not been dealt with. And the mess is only worsening by the day, week, month, and year.
This is why I remain focused on the precious metals as the best opportunity in the junior mining space, and not the base metals.
At some point, the world will have to deal with a second round of major financial problems. This could seriously hurt, even cripple, the broader economy — and ultimately hurt the base metals companies.
So I continue to be most bullish on the precious metals, and I recommend taking any major gains on base metal stocks right now.
What's Next for Gold and Silver?
Within the precious metals complex, I maintain that while gold is going up, silver is going to move up even more — and by a large margin.
At AmeriGold, we are seeing more silver being purchased than gold. This is the first time this has happened in 14 years of doing business, and is probably a good harbinger of things to come for the silver.
That is not to say that our precious metals market will not have its occasional pullback; these will happen.
But gold and silver prices will continue to push for one new high after another.
You want to train yourself to buy the dips when they happen and take some profits when they are hitting new highs.
This is your key to understanding how and when to take some money off the table.
While gold has corrected again over the past week due to yet another technical bounce in the U.S. dollar, we can expect gold to easily break $1,500 within the next several weeks.
Analyst, Wealth Daily
Investment Director, Mining Speculator
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