Early 2000 was the last time the the Amex Gold Bugs Index (HUI) / SPX ratio was as low as it is now. That bottom occurred as the tech/dot.com bubble was popping. Oh, what a coincidence. By many indicators, the current stock market bubble will likely pop soon and it looks like the precious metals sector is on the cusp of a massive cyclical bull move.
While the micro-cap junior exploration stocks are by far the cheapest segment of the mining stock sector in terms of potential risk/reward, investor distaste and market inefficiency occasionally feeds prospecting mining stock investors an expected “golden nugget,” if you will. Fortuna Silver is a current example. Chris Marcus invited me onto his Arcadia Economics podcast to discuss why I put a strong buy on FSM in July when the rest of the market was dumping the shares:
I recently found another “golden nugget” large mining stock contrarian play the December 12th issue of my Mining Stock Journal. This stock should be an easy double over the next 6-12 months. You can learn more about this mining stock newsletter here: Mining Stock Journal information.
Several mining stocks had been in freefall mode since ~2012.
But, like most other industries, as wealth, capital and assets continue to concentrate in the hands of a few, and M&A’s continue to create corporate behemoths (and even similar ownership amongst “competing” corps), effectively eliminating true market competition, P/E is rising.
This is the same cause for the current everything bubbles.
More supply in the hands of a few, creating “scaricities”
Never mind the jobs lost to consolidation.
Just know that history in the U.S. has shown P/E rises due ro M&A’s to be short lived.