Forget GDXJ – Follow The Real Money Into Gold, Silver And Juniors

Silver Doctors / The News Doctors invited me onto their weekly SD Bullion Metals and Markets show to discuss why both the technicals and fundamentals are setting up for an unexpected rally into the summer in gold, silver and the mining shares, specifically the juniors.

Subsequent to our recording, the weekly Commitment of Traders report released Friday showed that the bullion banks continue to cover their net short positions in both gold and silver rather aggressively and the hedge funds are unloading long positions and piling into the short side.  Historically, this has been a set-up for big moves higher in the sector.  The hedge funds chase momentum and they are almost never right in the precious metals sector.  When they pile into short positions, like they are now, it’s always a valid contrarian indicator.  We also discuss why the “summer doldrums” in the precious metals sector is no longer a valid seasonal play.

Another contrarian indicator is the negative sentiment connected to the GDXJ ETF.  Adam Hamilton wrote a non-compelling critique of GDXJ and made the assertion that GDXJ was diverting the flow of capital away from junior companies that deserve to get funding. The problem with this analysis is that retail investor buying of junior mining stocks on the secondary market is not a source of capital for junior mining companies. The secondary trading of stocks is not a source of capital for any stock, for that matter.  ETFs are a “derivative” of the secondary trading market and thus are also not a source of capital for companies.

Junior mining stocks get their capital from new share issuance or from direct investment by strategic investors.  If Hamilton bothered to call on the companies themselves rather than take quarterly filings and throw numbers into a spreadsheet as his primary tool of analysis, he would discover that many junior exploration CEO’s would tell him that they are getting a lot interest from strategic investors. Furthermore, many junior mining companies with investment-worthy stories are having no problem raising capital  through primary share-issuance, notwithstanding the recent turmoil connected to GDXJ. GDXJ is a derivative security. Derivatives are a source of fees for their issuer/sponsors, not a capital raising conduit for companies.

The Mining Stock Journal focuses on the emerging junior exploration mining companies that are seeing an elevated level of investment interest from sophisticated private investment funds and from strategic investors.  These are the stocks that offer the greatest upside-potential in the junior segment of the sector – not the larger-cap, developed companies in the GDXJ Trust.  The latest issue features a company with a potentially prolific gold property that is in negotiations with a strategic investor.  Two juniors featured in the Mining Stock Journal were acquired recently.  Looking at companies one-by-one, not en masse, is how you find the potential home run stocks.  You can learn more about investing in these opportunities here:  Mining Stock Journal information.

Here’s the download for the latest SD Bullion weekly show:  MP3 download  and here’s the podcast:

Phenomenal movement lately with one of your stock picks, Dave, and I have no doubt it’s still in the first inning of what will be a very long game. Superb. Thank you! – subscriber “Mark”

3 thoughts on “Forget GDXJ – Follow The Real Money Into Gold, Silver And Juniors

  1. The only way that gold and silver will rise is if the rule of law is restored and the criminals that are manipulating the prices are jailed. Otherwise, the price will be rigged 20 years from now just like it is today. With all due respect, Dave, when you and others are hopeful that the price will rise that is just wishful thinking.

    1. You would have issued the same criticism in the 1960’s when the London Gold Pool was holding down the price of gold using
      physical gold from the BoE, the Bundesbank, Fed, etc. That cartel failed just like the cartel using paper to hold down the
      price of gold will fail.

      Those who do not learn from the past are condemned to repeat it…George Santayana

  2. Further to Mike’s comment. I hear your pain Mike but the manipulation will eventually fail. I hope it isn’t 20 years but I suppose it could be. It may be a few more years but it isn’t far off. I believe that it will all come tumbling down at their feet during the next recession, whenever that is. It will be Armageddon-like in its severity.

    Anything can happen to turn the tide. For instance, Trump knows that Fort Knox has no gold and he wants a return to the gold standard to end the insanity of Trillions of dollars of debt that can never be paid back. It’s an uphill battle, even for him but he is moving in the right direction and anything can happen either way. He may even be able to prevent (or at least slow down), the inevitable collapse of the dollar. If he succeeds, the case for holding a lot of gold, is reduced.

    When the next recession comes along, the criminal banksters will be busier than a one-armed paper-hanger, plugging the multitude of holes in the corroded hull of their financial barge that is taking on water in a big way, and will be desperate to keep the sieve floating, and they won’t have much time to monkey-punch gold. They will not be able to print their way out of the next collapse.

    Consider this one amazing fact about gold. Anytime, Anywhere in the world, no matter what condition the economy is in, GOLD is instantly redeemable for cash. NOBODY doesn’t accept gold! You must also remember that cash, on the other hand, is irredeemable. Go ahead. Try “cashing” your cash at the bank. It is simply a bad check. They will be rolling over laughing.

    As long as you see big signs at pawnshops and payday loan pirate companies which are everywhere saying, “WE BUY GOLD”, is a signal that NOW is the right time to be buying gold and silver. Eventually, the mainstream Johnny-Come-Lately masses will suddenly flock to gold when the “tipping point” occurs, which will be as a result of a black swan or a shift in sentiment for a multitude of reasons.

    When that happens, it will come on suddenly and vigorously and the price will surge and a mania will begin. The mainstream news and financial advisors will all say, “BUY GOLD” and the pawnshop signs will change to say, “We SELL Gold”, and the mania will continue and develop into a bubble and eventually collapse. You want to be the last seller at the instant the market tops and the price drops.

    Once the mania happens, it is the time to start selling some of your gold into a rising market, the same way that you bought it in the past, a little bit at a time, every day or two, and average your selling price upward. Buying and selling gold by averaging, relieves you of the anxiety caused by trying to time the market.

    Whatever failings gold may have, try and remember that the CRIMEX is violently persecuting gold for a reason. It is a threat to their counterfeit money system because it is the perfect form of money. The degree to which they are bashing gold tells me that us “stupid” goldbugs are right.

    Most of the people are right most of the time but wrong at the wrong time. This is the time to have faith and double-down. Even if you never make a paper profit, you can be comfortable in the knowledge that when you are finally proven right, you will be right in a HUGE way. Even if the price drops precipitously, it will NEVER go to zero and it is always liquid. Just keep averaging down.

    Besides, where are you going to take your money and go off to, if you bail out of gold? The best way to fight the bankster pirates is to keep buying physical gold. Every day if possible and use dollar cost averaging to your advantage. Never sell until it is the right time, and even then, NEVER sell all of your gold.

    If you buy a little every day, no matter what direction gold takes, your cost basis is never much different than spot. I use my Goldmoney (Bitgold) account to accumulate gold in small daily increments with a recurring daily purchase of only $15 (minimum 1/4 gram), which is charged to my Visa card. It is only 1% over spot with FREE storage in any of 8 Brinks vaults around the world and comes with a Bitgold MasterCard, if you want to spend your gold like cash.

    That is $450 a month of new gold and every 3 months, I have another ounce. I just set it and forget it and once a week, I send $150 to Visa. When my account reaches another ounce, I take delivery and keep going.

    Unfortunately Goldmoney only sells gold, unless you open a wealth holding in their “wealth holding” where you can buy all 4 metals. But you need much more money and which can only be wired.

    For silver, I recommend Own X (formerly Silver Saver), who have a similar platform as Bitgold, except without a PM backed prepaid MasterCard.

    Another advantage of Goldmoney is the ability to borrow up to 85% of the spot price value of your holdings. Interest is FREE for the first month and 1% per month thereafter. Can’t beat that. This solves the dilemma of having money tied up in gold that produces no interest income.

    The ability to borrow most of your money back while you still own the gold and the potential for windfall gains and have a store of value in a gold savings account, removes many of the arguments and obstacles against holding gold.

    This is hedging both positions with a vengeance. You can have a decent gold position and borrow most of it back at a decent interest rate. You can even use the loan to buy more gold for leverage. And you can have multiple loans.

    Hope you are encouraged to hang on. Now is not the time to get cold feet. The bastards know that they are demoralizing us and pushing us to wear down and sell it to them for dirt cheap while the market is low. They want to squeeze goldbugs until we pop. Their goal is to get all the gold, cheap and they know their counterfeit money is worthless. They want the gold for free.

    If we all band together and never sell, the price will go up eventually and they will go bankrupt. Gold and Silver Reigns Supreme as Non-Inflatable Money.

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.