The Discovery Of The Decade—On Sale

Dear Reader,

I have a stock pick for you this week, and breaking with tradition, I’m going to give you the name and ticker, rather than just tease you with the story.

Since recent events may accelerate payback, I want you all to have a chance to evaluate our research—and results, if this play works out the way I think it will.

Please consider this Daily Dispatch a “free sample” of our work.

But first, a word of encouragement, since recent volatility in our market has many investors wondering if this really is a good time to be buying.

Sell in May, Rue the Day

Long-time readers know that precious metals tend to exhibit a seasonal pattern to their price trends, with summer weakness that leads to strength in the fall, as Jeff Clark noted in his March 10 Daily Dispatch.

Add to this the fact that mineral exploration in the Northern Hemisphere, especially in Canada, enters a sort of hibernation during winter months and then reawakens in the spring. With winter drill programs already announced, we typically see less news flow starting about now until well into the summer.

These variables combine to exacerbate the “sell in May and go away” conventional wisdom regarding the broader stock markets, as many brokers and promoters in our sector take their holidays during these relatively quiet months. Sometimes, even with stable or rising metals prices, shares in great companies can drop over the weeks and months just ahead, simply due to the lack of Push. Here at Casey Research, we call this Shopping Season, and it seems to have arrived early this year.

It is never safe, however, for metals speculators to head for the Bahamas and ignore the market for months; there’s always the possibility of a sudden black-swan event that kicks precious metals into a higher gear earlier than expected.

Further, individual companies can and do buck the trends all the time. That’s especially so if they’re working on a discovery that could deliver game-changing results at any time, working in a country where water doesn’t freeze in January, or working underground, where seasons are irrelevant.

What If Prices Go Lower?

Imagine that you were offered a brand-new Ferrari 458 Italia at a 75% discount during an economic downturn.

Even those not into high-maintenance cars would have to think about it—it could potentially be a very profitable trade.

Now suppose you bought the car, garaged it, cared for it, waited for the car market to turn around—and then the market got even worse for a while, and you saw the same car offered for 50% less than you paid for it.

While you might regret that you didn’t time the bottom right, would you conclude that the Ferrari was worthless?

I think you can see where I’m going here. Unless desperately short on cash for some extremely urgent need, nobody would sell our hypothetical Ferrari at a great loss; they’d simply wait out the downturn, no matter how long or painful. Whatever else might change, the Ferrari remains a Ferrari.

Just as, whatever else happens in the economy, an ounce of gold remains an ounce of gold. And yet, when it comes to the best-of-the-best gold stocks in the junior mining sector, investors seem increasingly willing to make the mistake of dumping valuable companies, simply because they are on sale. The error here is confusing price and value—and recognizing such errors before the market does is the essence of successful speculation.

1 2 3 4
View single page >> |

This article is from Casey Research's informative daily e-letter. Get the Daily Dispatch in your inbox and stay in the loop on the ever-changing energy, gold, and technology sectors, as ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.