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Junior Gold Stocks to Shine in 2011

Written By Brian Hicks

Posted January 11, 2011

All we seem to get from the government these days is the same ol’ song and dance.

According to them, everything is just peachy; they have everything under control.

Yeah, right!

How about a drink from the cup of truth?

The sheep are being led to the slaughter.

But wise investors have taken a different path in gold, silver, and other hard assets — and are making money.

Subscribers of Wealth Daily have been making money on the political and financial insanity in this way for the past several years by becoming well-informed and gaining an understanding of the situation at hand.

We prosper while the rest of the world suffers.

And in 2011, we plan to continue profiting by focusing on junior mining stocks more than ever…

Right now, it would be healthy for the junior mining stock market to see a bit of a correction after such a good run the past six months.

Just take a look at the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ):

jan 2011 tsx venture

Or take a look at the TSX Venture exchange, on which junior mining stocks comprise more than 50%:

jan 2011 gdjx

The world financial situation is still problematic with the “kick the can down the road” mentality we see from New York, London, and Washington.

At some point, the financial markets are going to have to deal with these very troubling issues, which I maintain will once again bring us incredible buying opportunities in many of our favorite junior mining stocks.

As I often say, how well you do as an investor is often associated with how well you manage your cash.

Now is the time to raise cash and be patient as to how we spend that cash in the future.

Gold and silver prices took a major hit recently on profit taking by large funds and small investors across the board. This was not unexpected, as the precious metals have been pushing for new highs consistently over the past six months with very little downside pressure.

Also, since the beginning of the year, capital gains now do not have to be paid until April of 2012 — prompting many to lock in profits.

I would expect the balance of this week could be to the downside with next week being a major turning point for the precious metals complex.

If the buying interest returns and solidifies our market as some expect it could, this would tend to be bullish in the immediate term.

If that does not occur, then we have something else happening in the precious metals market that could incur further downside momentum in the next month or so.

Overall, however, the longer term and big picture should bring another banner year for precious metals and their respective mining shares with bouts of extreme volatility in both directions.

For now, I am still not ready to make a call for how high each of the precious metals will go this year…

I will update subscribers on that topic as soon as I put together my next report.

Good Investing,

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