Gold Mining Shares: Don’t Make This Stupid Mistake

Investors are a funny breed, they do the most unnatural things and the most contrarian trades at the worst possible times. Investing is one of the most expensive hobby’s as one loses money instead of making money. That’s what we see with gold mining shares today … again.

Few investors seem to understand how to make money at the stock market, they forget that investing can create enormous amounts of wealth. Now is the time for gold mining shares to make investors rich, but no one wants to take the bite.

This is the proof.

Gold mining ETF GDX jumped 65% the last 12 months, but at the same time investors pulled out more than $0.5 billion. The Market Vectors Gold Miner ETF has $6.6 billion in assets, so investors pulled out 7,5%.

So investors are selling their winners!

But it gets worse, … One gold miner ETF is seeing significant inflows. It’s the Direxion Daily Gold Miners Bear 3X Shares (DUST), which is down 88 percent.

Not only are investors selling their winners, they are buying the losers. So how do they want to make money?

On the other side, this is good news. When other investors are making stupid mistakes, you can take advantage of it. This means it’s still early in de gold mining bull market. This is the perfect root for a long term ride up.

Gold mining shares: Need more proof?

Stan Druckenmiller, right hand of Georges Soros and mastermind for bringing down the British pound, is very negative for stocks but he is loading up his truck with gold.

Kenneth Rogoff, Harvard professor, chess grandmaster and author of the widely acclaimed book This Time Is Different, just sent shock waves through the global elite by recommending that emerging-market central banks buy gold to diversify their portfolios away from dollar holdings.

JP Morgan’s Private Bank is also recommending its clients “position for a new and very long bull market for gold.” This bank is only open to wealthy clients with at least $5 million of investable assets.

And last but not least, every analyst covering gold mining shares is telling investors to wait for a pullback before jumping in. They want to see a correction after the big jump forward. But the problem is … we don’t see a pullback, do you? Let’s take a closer look.

When sentiment is this negative, stocks keep on rising without a significant correction. Probably the HUI-index can still rise to 300 before investors are waking up and will be jumping on board. Until we hear that sound, gold mining shares can keep blowing of the minds for the smart investors, the ones that do understand investing can create enormous amounts of wealth – just like legendary investor Jesse Livermore said: ‘Be right and sit tight’.