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Buy The Dip In Gold Miners

Written By Brian Hicks

Posted June 28, 2011

Volatility is the undersong of the summer.

The wild swings we’ve recently seen in the markets — in silver prices, the Dow, currencies, oil, etc. — have been a fulfillment of what we’ve been predicting for quite some time…

And we can expect this kind of market volatility, both up and down, to become much more pronounced in the coming months.

I maintain that the long-term direction of precious metals — and their corresponding mining and exploration stocks — remains bullish. But short-term bloodletting is going to occur from time to time that could break weak-kneed investors.

jun 2011 gold silver barsI have been recommending ownership of physical gold and silver with nothing but absolute confidence for over 13 years now.

Those who have listened during that time have done phenomenally well with very little risk, especially early investors. At my bullion dealership,, we have zero clients who have lost money during that 13-year period.

How many financial institutions can say this?

We were simply at the right place at the right time.

And, though we have been through plenty of ups and downs, precious metals prices kept moving higher…

Junior mining stocks — which represent more risk than ownership of physical metals — have also certainly had their ups and downs. But they’ve also been the source of our biggest paychecks.

Over the past three months, share prices of junior gold companies have taken quite a hit.

Canada’s TSX Venture Exchange, composed of ~50% junior mineral firms, has dropped over 20% since March:

jun 2011 tsx venture wealth daily

But this pullback is ultimately of little to no concern, and it will really serve to create a buying opportunity for us.

The fact is these types of pullbacks are common — and temporary. The junior market experienced similar setbacks in 2010 and 2009 before rebounding and breaking into new highs.

Take a look at a chart of the TSX Venture since 2009:

jun 2011 tsx venture wealth daily 2

Despite these short-term selloffs, gold stocks have climbed 1,400% off of 2000 lows, while the S&P 500 Index has experienced an 11% decline, according to J.P. Morgan.

As CEO and Chief Investment Officer of U.S. Global Investors Frank Holmes noted in an article on last week:

Gold stocks have historically outperformed the gold price by roughly a 3-to-1 ratio. This means that a 5 percent rise in the price of gold generally translated into a 15 percent rise in the miners. Recently, this leverage has eroded to about a 1-to-1 ratio, or lower at times, according to BofA-Merrill Lynch.

With the general junior mineral market currently being undervalued, I believe today’s investors will be exceedingly rewarded as the share prices of junior firms recover from the sell-off and quickly catch up to rising metal prices.

Our constant message to subscribers has been to own a combination of the physical precious metals and quality junior mining shares as the best way to protect yourself from the ills of big, bad government and all their fiat currency lies and B.S.

In recent years, as things have progressively become worse, we have also advocated the need to keep our money in currencies other than U.S. Dollars (the Canadian Dollar), and the necessity of starting and maintaining food and weapon storage of significant size.

I fear civil unrest and chaos will spread to the United States and Canada as the global fiat currency nightmare finally implodes. Organized uprisings are already starting to occur.

There’s a hot new trend in civil unrest, called Mob Robs, when a mob of people swarm into a store and take everything in sight. The store workers become completely overwhelmed and can do nothing to stop it.

These mob robs sound frightening similar to the food riots happening around the world. And the really disturbing part is that they’re happening more and more frequently…

Teenage ‘flash mob’ robberies on the rise in the U.S.
The Herald

June 19, 2011 The same technologies that for years have brought together the mostly benign and goofy “flash mobs,” in which groups suddenly break into dance at a mall or stumble around like zombies at train stations, are being used to plan and execute bold robberies.

Police say the suspects select a time and place and enter the store in droves, taking what they want and leaving before security or police can catch them.

Some of the most brazen robberies take place in the light of day and on busy streets despite all the security cameras and the watchful eyes of workers.

Here’s what a mob rob looks like:

jun 2011 mob rob

This is just the beginning.

Can you imagine what will happen when Social Security and welfare checks go out, but can’t buy a fraction of what they buy today?

Be Prepared

I believe we will continue to see wild fluctuations in all markets with increasing occurrence. This will be directly caused by governments and their central banks, which are completely out of control. They have no idea what to do other than dump more fiat money into the system and hope for a different result…

As the quote goes, “Those who don’t know or understand history are doomed to repeat it.”

If you understand this, you should have absolute confidence in what you are doing. And I tell you this today because in the coming months and years, you are going to need this confidence to stay the course.

We are very close to the final consequence phase of fiat currency madness. Chaotic volatility up and down is coming worldwide to all markets.

Get used to it; take it in stride. It is going to get a lot worse.

I believe being prepared with a significant cache of physical precious metals, land, food, and weapons is the best way to manage and survive with the least amount of problems.

But each one of us will have to choose which preparations make the most sense for ourselves and for our families…

I’m ready. Are you?

Good Investing,

Greg McCoach
Analyst, Wealth Daily
Investment Director, Mining Speculator and Insider Alert