Watch the Gold Stealth Bull
I began warning of an impending decline in the stock market and a gold stock correction about the 20th of September. I may have missed the top but not by more than a few days. And on the 14th of October, I suggested that it was once again safe to be buying gold stocks. Again, I didn't miss the bottom by more than a few days.
I want to warn readers now of the Stealth Bull. It's here and while it's been creeping higher, few people recognize the significance. If you like listening to the gold and silver cheerleaders, they will fill your ears with stories of how gold is going to go up $50 in a day, "any day now" and silver is headed for $100, "any day now." Beware of the cheerleaders, they will lead you astray. The best bull of all is a Stealth Bull, one which charges forward to new highs, then falls back and scares hell out of everyone, then charges forward.
Did you know that there are actually people who believe the price of gold is being held down by a conspiracy? Gold is 20% higher and has been in a bull market for over three years and there are people who still think it's being held down. But they are the same people talking about a $50 move higher in a day, "any day now."
You don't want to see gold going up $50 in a day. That's what it did back in January of 1980 just before it hit its high. $50 moves take place when the Bull is about to collapse, not when a bull starts. Instead, a Stealth Bull is what you want to see. It's the three dollars up and two dollars back which can keep going on for years.
We are in a bull market. Forget conspiracy/manipulation theories. You can't make money betting on manipulation. All markets are manipulated. That's what Alan Greenspan thinks his job is, to manipulate the markets. If you believe in conspiracy and manipulation, you are saying you think Alan Greenspan is a Master of the Universe, in complete control. And that's about as likely as pigs flying.
We are in a gold bull market. And I'll point out what someone else should have said long before now. BUY THE DIPS. In the gold market, the stocks tend to lead, then gold catches up, then the stocks start crashing even while gold is still trying to inch higher. Then gold follows down. BUY THE DIPS, you had your chance in the last couple of weeks, did you take it?
Gold stocks have come down a lot since late July when there was one peak and mid-Sept where there was another peak. If you were astute enough to take profits at either point, you would have been able to pick up some real winners cheap in the last three weeks. Many stocks were down 50% and more.
I hold a core position of gold shares. And I hold a lot of other shares I trade. This way I never miss one of those $50 up moves. (And hell, they might happen someday) and I keep picking up small profits.
You will not hear much from me when all gold stocks have been moving higher for months, I hate talking about stocks when everyone wants them. But when no one loves them any more, I take pity on them. Stocks have been unloved lately and you should have been backing up the truck. When they double or triple, sell some, I can't tell you the perfect time, no one can. Sell something when you have profits. And don't deal on emotion, buying or selling for emotional reasons is a sure way to lose money.
Here's some of the lately unloved but still worth having stocks I watch.
(1) NovaGold (NRI and NLGLF) will be announcing a new resource in the next couple of weeks. The amount of gold they have at Donlin will surprise everyone in the industry. Except me. There is a bond issue on the ballot for Tuesday for the state to build an all weather road from the barge site on the river, 18 miles to the Donlin Creek prospect. Expect it to pass easily and it is just one of many milestones on the route to a 1 million ounce + per year mine at Donlin Creek.
Also NovaGold will be putting Placer Dome on 90 day notice as they complete their $10 million dollar exploration at Donlin in the next week or two. As soon as they announce the notice, NovaGold becomes owner of 70% of a very large deposit. Placer Dome does have a back-in right which they may or may not exercise. Either way it's a good deal for NovaGold and the market will run the stock higher when Placer Dome announces their decision just because it removes an uncertainty.
(2) Lakota Resources (YLA and LOKRF) announced a stock split effective later this month. When's the last time you heard of a gold stock splitting other than a reverse split? Lakota continues to creep along making new high after new high. They have a bunch of gold properties in Tanzania including one next to the property Barrick bought from Sutton. The gold deposit runs right on to the Lakota property. Expect to hear about a new drill program shortly.
(3) Gallery Resources (GYR) is in the midst of a interesting drill program at Bruce Pond in Newfoundland. I like Gallery and I like their chances in Newfoundland. Someone is going to do very well up there and I suspect it may well be Gallery. It's low risk, high potential stock.
(4) Desert Sun (DSM and DSUNF) is also starting a drill program announced on October 24 (but not on their website yet). Theirs is in Brazil on the Jacobina property which already has a 3.6 million ounce resource identified. President Stan Bharti intends to increase the resource to at least 6 million and hopefully 10 million ounces. At a higher price of gold, they may well start up their on site mill and begin production of gold. This is another fairly low risk, high potential stock which has not backed off very much from a yearly high.
(5) Candente (DNT and CDOUF) has programs in Newfoundland and Peru. This company has my vote for the management with the highest potential for finding a large gold deposit. The stock has made a giant correction from $.65 down to the lower $.30s. It's a low risk buy around Canadian $.35.
(6) American Bonanza (BZA and ABZGF) currently selling for Canadian $.13, down from a yearly high of $.25. They are one bureaucratic signature away from beginning a decline this fall. Expect to hear about them going into production early next year. I have a piece of the ore from Copperstone. It's beautiful. To reduce the time and cost of going into production, they are going to run a front end gravity separation plant on the ore. It will be 2-3 years before they go into full production. This is another company where I really like the management.
(7) Silverado (SLGLF) (maybe they should be called Golderado) has begun work at their Noland Creek deposit north of the Arctic Circle in Alaska. They won't begin to wash the material until next summer but they are in production. The stock shot up from $.04 to about $.60 before settling down to around $.40. Correction's over, buy the dips. They have another mine near Fairbanks and a mill which the market doesn't value at all. If gold heads for $400 as many (including me) believe it will soon, the market will wake up to the incredible leverage offered by this company. And it's run by really nice people.
(8) Western Copper (WTC and WCOPF) (should have changed their name to Western Silver) was supposed to have announced a new resource in September. They have a giant silver and zinc deposit at Penasquito in Mexico. When they have finished defining their resource, they will be one of the biggest silver mines in the world. They announced drill results recently and have put off the new resource until this drill program is complete. I'd guess you can look for a new resource to be announced in the next six weeks. As with NovaGold, the new resource will take almost everyone by surprise. The stock has been as high as $4.28 this year (where I took profits) and now sits at $2.70. (Where I intend to buy more).
There are dozens, maybe hundreds of other good sound gold and silver stocks around. There has been a healthy bull market and a perfectly normal correction. BUY THE DIPS. This bull is a Stealth Bull, the very best kind with lots of life ahead of it. When your postman tells you about the gold shares he bought, sell yours, you won't need to hear from me or any of the so-called gurus. Or when you have made a real nice profit on your trading shares. Remember, you don't marry gold shares, you just hold them for awhile. Learn how to take profits. And then BUY THE DIPS until the market gets crazy. It will, you can count on it.