Gold Miners Upside Potential
Even though Marc Faber prefers physical precious metals than precious metal stocks, he is long some gold miners such as Novagold (NYSEMKT:NG) (TSE:NG) and Ivanhoe Mines (TSE:IVN). Marc Faber wrote:
Investors have come to the conclusion that mining companies are badly run. I recently attended two board-meetings (Nova Gold and Ivanhoe Mines) at which the management of these companies was present. In both cases I was very impressed by the management and the other board members.
Novagold (NYSEMKT:NG) (TSE:NG) is a very safe way to play an increase in the gold price whereas Ivanhoe (IVN CN) is the more speculative play, he said. He also shared that he owns both stocks.
Marc stated: Furthermore, investors simply do not appreciate the enormity of what nightmarish business the mining industry really is. Regulation, royalties, environmentalists, corrupt government officials, politics, disillusioned locals, etc. are some of the huge headwinds, and increase the cost and the time of developing a mine incredibly. You want an easy life, by all means go, and work for Goldman Sachs or another investment bank, which is heaven compared to the mining industry – no matter how unpleasant the working environment on Wall Street might be. Of course, the most important and probable reason why he likes gold miners is because they are cheap.
In his previous report, Marc shared that mining companies have very huge upside potential. Gold Miner ETF (GDX) or (GDXJ). According to him, one should always hold diverse portfolio of assets such as: properties, equities, bonds, precious metals. But today, Marc Faber sees mining companies as one of the only few asset class left with very big upside potential. He also noted that mining stocks such as Newmong, Barrick are acting well and their price action probably reveal something. In his new report he also added as good acting stocks: Novagold (NYSEMKT:NG) (TSE:NG) and Ivanhoe Mines (TSE:IVN). Even though he prefers holding physical precious metals, he recognizes the probable upside potential of mining stocks – gold miners etf (gdx).
Marc Faber Reads the Belkin Gold Report
For investors interested in gold mining stocks, Marc shared that he reads and likes the Michael Belkin’s Gold reports. Belkin is a a very good friend Marc, and he writes”
The Gold report, is the first new product in 23 years of the Belkin Report. It’s affordable, $1,000 per year subscription, designed to bring my institutional forecasting service within the reach of individuals, for gold shares. The reason I’m doing this is – my work suggests that depressed gold shares offer a tremendous opportunity after a 3 1/2 year bear market, with many down >80%. So I’m taking a major stand. I think there’s the opportunity for doubles, triples, etc. just for starters when gold and silver mining shares begin a sustained rebound”
Excerpts from Belkin Gold Report April 2015:
Gold mining stocks have been through a wrenching 3 1/2 year bear market. The GDX gold mining etf is down -70% from its Sept 8, 2011 peak. Many individual gold mining stocks are down 80%-90%. Our long term model forecast points up. We’re always looking to buy low and sell high. Gold stocks are negatively correlated to the stock market and they should come into fashion as the stock market goes out of fashion. When individual gold stocks are down this much, they can have big percentage bounce back rallies in a short amount of time.
The GDX gold mining etf is +8% ytd, it’s been quietly rising while the S&P500 has been drifting. We recommend taking advantage of the opportunities in the depressed gold mining sector. Our model looks for individual gold stocks that have the potential to rally significantly.
This week’s picks Several stocks on our recommended list have had 10%-40% upward moves over the last several weeks. Alamos Gold +10%, Turquoise Hill Resources +19% and ST Barbara +43% (see accompanying charts). This is exactly what we expect to see in the gold sector as big money managers (institutional clients of the Belkin Report) begin to accumulate positions in depressed gold stocks. We expect to see many more such rallies in the gold stocks on the following recommended list in the months ahead.
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