Your metals team has just returned from the Casey Research Recovery Reality Check conference in Weston, Florida. I think the quality of the speakers was perhaps the best ever. There were clever tales and insights aplenty, but I’ll cut to the chase for investors in the metals and mining sector: The correction we’ve been experiencing was discussed at length, and while no one is sure when it will bottom, legendary investors in our sector are buying now.
Some say my calls to buy the best of the best mining stocks in the midst of a continuing share-price decline evoke a fear akin to what one feels trying to catch a falling safe. It may help to know that investors today are buying alongside Rick Rule of Sprott Global, John Hathaway of the Tocqueville Fund, and Doug Casey, of course – among other legendary resource investors.
I interviewed Rick in Florida, as you may have seen in last week’s Conversations with Casey. We both have a sense that the meltdown in our sector may well get worse before things get better. The “sell in May” conventional wisdom could collide with an already bearish sentiment and truly rustle the whole resource-sector herd to the share-price slaughterhouse.
We Should Be So Lucky
I’ve said that before: we should be so lucky as to get another 2008-style buying opportunity – and that’s what we’d have if the market melts down from this low point.
I’ve also said “buy low and sell high” so often, it’s starting to sound like I’m stuttering. It sounds easy, but it’s not – if it were, everyone would do it, and there’d be no profit in it. Contrarianism 101: You have to buy when others are panicking and there’s blood in the streets. That means you have to master the fear and do the opposite of what everyone else is doing.
Email from some unhappy readers whose recent share purchases are down have made me wonder if they thought we were joking or merely being rhetorical about this. The whole idea behind the tranche buying system we advocate is to take advantage of downward volatility, and the objective of placing stink bids is to capture “stupid” prices. I meant exactly what I said: we offered guidance on lower prices because we believed a major correction was a distinct probability. Well, here it is.
I see the buying opportunities shaping up with fear and excitement. My fear is not that our speculations won’t work out: rather, it’s that – as happened in 2008 – too few investors will have the courage to follow through on their contrarian ideals. The excitement, of course, is that we face truly spectacular contrarian opportunities.
“When Will the Pain Stop?”
A friend, reader, and fellow speculator who attended our conference asked me half-jokingly when the market would bottom. He knows I don’t have a crystal ball, but the way he phrased it was interesting: “When will the pain stop?” It was delivered with a smile that showed he understood the long-term trend we’re betting on remains solid; when you believe in a better future but suffer pain in the present, you don’t want your life to end – you want the pain to stop.
I said I saw the slaughterhouse potential mentioned above, and that I was hoping for a chance at phenomenally stupid prices on great companies. However, any number of factors could reverse the market’s current fear-dominant sentiment back to being greed-dominant again. Scary news on the geopolitical front – just one potential black swan among many – could send gold shooting north in short order. With many gold companies severely undervalued, that could bring greed back to the forefront with a vengeance.
I also interviewed John Hathaway (coming soon to an inbox near you), who said he thinks we’re close to the bottom now. Gold stocks are already undervalued and he’s buying.
To Read More CLICK HERE