Dollar lows . . . recession . . . record high gold . . . political upheaval . . . financial turmoil . . . civil wars . . . bloody rebellious uprisings . . . housing disasters . . . trillion dollar ARM resets . . . $100 oil in sight . . . and crippling bank writedowns often spawn vast wealth, proving that one person’s pain is another’s gain.
Don’t get me wrong. It saddens me to see others suffer. But it’s these times of disaster and crisis that make small caps, undervalued stocks, and beaten stocks the most attractive.
If it hadn’t been for the severe political and economic crisis in Turkey in 2001, we wouldn’t have found Turkcell (TKC:NYSE). After plummeting from $24 to less than $1.50 on the heels of the lira’s 50% haircut, smart investors picked up beaten-down TKC and rode it back to $16.50 on Turkey’s recovery.
If it hadn’t been for inflationary fears, the 1979 Iran hostage crisis, or the Soviet invasion of Afghanistan in 1980, patient gold investors would have never watched as $104 gold skyrocketed 725% to $850.
Even today, gold’s ascent reflects current economic and political crises, strengthened by a falling U.S. dollar, escalating Iran and Iraq anxiety, $90+ oil, and smart investors looking to increase gold stockpiles on pullbacks.
But along with the stellar rise in gold, there are still small cap stocks poised for significant upside . . . and all it would take would be a war with Iran, a terrorist attack, or further unnecessary rate cuts.
The secret to finding these uncovered, ignored or forgotten small caps is to look at junior gold mining companies that may be eventual acquisition targets. One of those is $564 million Great Basin Gold (GBN:AMEX).
Granted, GBN has rallied from $2 to $3.50, but the opportunity is in the pullback.
Great Basin Gold has assets in South Africa and Nevada. Production at the Nevada property is estimated to begin in 2008 with 150,000 ounces of gold. Production in South
Africa is estimated to begin in 2009 and could reportedly produce 254,000 ounces of gold.
While there are no current revenues to report, GBN has cash and equivalents of about $100 million and no debt. For the first six months of 2007, the company posted a net loss of $17.7 million or 13 cents a share, as compared to a $1.1 million or one cent per share loss a year earlier. But with Nevada production slated to begin in 2008, GBN could start seeing meaningful revenue streams.
GBN is a small cap buy on further economic and political crisis.
This is just one opportunity we’re piecing together for our newest investment advisory service, Small Cap Trading Pit. On launch, you’ll find investments that are most likely to soar on momentum, news, volume spikes, insider buying, piggybacking, demand and dwindling supply, and technical argumentation using four of the most powerful indicators we’ve found.
Your first shot at the advisory service is on its way. Look for it.
Happy Investing,
Ian L. Cooper
