E 'Tis The Season: Christmas Shopping For Gold Miners

With the holidays around the corner, not only are retail companies giving discounts, but equities are on sale. This article contains three facts that alone will compel investors to be attracted to the pessimistic, hated, and disgusted mining sector. Mr. Market seems to have drunk too much eggnog.

I. Introduction 

When an equity price goes down, the investor with weak nerves sells and tries to salvage what he or she can. But the intelligent investor reexamines his original premise of why he bought that company in the first place. If nothing has changed from the original thesis and the fundamentals are still intact, then the strong investor will not sell, but add to his position.

This is the most important difference between the average investor and the intelligent investor: the intelligent investor has to be strong when everyone is weak. The intelligent investor must lend capital to companies that everyone else is afraid to.

You profit by others' denial of facts. For instance, the mass opinion of Russian ruble devaluation is a social disaster, a political reality, and a speculator's fatality. There is little argument that there is an obvious bias against Russia from American media. In fact, there was recently headline news how Russia was selling its gold holdings. Yet, further investigations showed the contrary. Not only did Russia silence the gold selling rumors, but informed they had actually bought 600,000 more gold ounces. With so much of the focus anti-Russian and anti-ruble, investors are blindly staring at the forest without seeing the trees. Following the OPEC (specifically Saudi Arabia) decision to push down oil prices and Chinese rampant currency swaps and the BRICS (Brazil - Russia - India - China - South Africa) nations forming their own investment banks, the petro-dollar is under heavy stress. 

Seize the day and grasp the rare opportunities laid out in front of you. 

II. Strong Dollar and Steady Gold Price

Investors have been aware of the strength of the US Dollar lately. As this further adds to the notion of ongoing global currency wars, with countries taking turns devaluing their currencies for the crude expectations of boosting exports, one can rationally expect the Federal Reserve with its disgust towards deflation to eventually begin another round of quantitative easing. But no matter the causation of events or the illogical sequence of how the US dollar got here, a stronger dollar is what investors presently have to work with. 

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Disclosure: This  is my opinion and information is to the best of my knowledge.

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Peter Epstein 4 years ago Contributor's comment

well thought out and articulated article. Thanks Adem!