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Managing Editor, Wealth Daily
The junior gold stock market has seen the typical downward bias during the month of May, as investors took money off the table with expectations of a slow summer.
In particular, fickle hedge funds managers who are known to dart in and out of the junior gold companies have left the table for the moment seeking better returns elsewhere.
You can see this “Sell in May and Go Away” effect in the HUI and XAU six-month charts — both of which have taken a hit from recent highs.
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But not all junior gold stocks are experiencing a lull right now.
A particular group of gold stocks is faring very well, despite the pull back in precious metal prices and the “Sell in May” effect. And this small group of junior explorers is just getting started…
Junior gold firms with assets in Canada’s Yukon Territory have held up rather well compared to the overall junior mining shares indexes.
The reason for this is the $600–$800 million dollars expected be spent on exploration and development work over the next six months in the Yukon. That’s a lot of money going into the ground, and highly prospective for new discoveries.
And it leads me to believe we’ll see a few big new discoveries in the Yukon this year that will show the world what a modern gold rush looks like.
When gold fever really hits the mainstream, the Yukon gold rush be like nothing we’ve seen in our lifetime…
I believe interest in Yukon gold stocks could be a catalyst to bring a whole new set of investors to our junior gold stock arena, something our market has desperately needed for quite some time. Or it may be as simple as precious metals prices reaching for new highs in the coming months, bringing a greater portion of the investing public into our market.
Either way, I am optimistic for our market in the short, mid-, and long terms. I expected gold and silver prices to rebound from the latest correction rather quickly.
I believe gold will push through the $1,600 level — and possibly higher, depending on the state of the economy over the course of the next seven months.
The silver story will be bigger.
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I now see silver prices pushing past $50 towards $75 an ounce before year-end.
A Quick Word on Silver
The most important thing we’re seeing in the precious metal rebound is that silver is out performing gold. What this tells us is silver will now be the leader in the secular bull market for precious metals moving forward…
Gold was the best performing asset for the last ten years. But silver will be the best performing asset for the next ten.
This is not to say that gold will not perform well. It will; it’s just that silver is going to perform better.
I firmly believe the Fed will try to do QE 3… 4… 5… 6… to infinity if they could, as the only tool they have left in their arsenal of economic destruction. This will be highly inflationary, and silver will again act (like gold) as a currency.
Those who are long-term bearish on silver will be slaughtered.
The fundamentals and dynamics in both metals is rock solid for much higher prices for a long time to come.
Ownership of the physical metals is one of the best assets to protect yourself from the terrible and unfortunate events that loom in our near future.
And as precious metals prices continue to push for higher and higher new highs, our quality junior mining shares are going to perform exceptionally well.
I maintain that investors will continue to do very well this summer in the precious metal and junior mineral exploration markets.
Analyst, Wealth Daily
Investment Director, Mining Speculator and Insider Alert