I think the gold markets have bottomed. I think they bottomed last summer
So says Rick Rule, the best-known natural resource investor in the world last month.
There is some room on the individual balance sheets after four years of deleveraging, which means that we are seeing a bit of pick up in consumer spending. But what we aren’t seeing is a pick up in individual income, and the idea that we can have a consumption led recovery without an increase in individual incomes seems to be problematic to me.
-Rick Rule, CEO Sprott US Holdings
Who’s opinion am I more interested in when it comes to macro economics:
Its overwhelmingly investors because they are the people who actually put their money where their mouth is.
Rick Rule is especially interesting to follow because of his 30 years of experience as a specialist mining investor.
In fact the quote at the beginning of this post is taken from an interview Rule did with Mining.com last month.
There is no reason for most of the juniors that are listed to exist. You know they are sort of vapour exploration companies. And it would be useful if they went to listings heaven. But that hasn’t happened yet.
Junior Gold Miners ETF (NYSE: GDXJ)
Certainly a quick look at the junior gold miners chart above with the price making multiple lows since July last year warrants taking seriously.
I ran a quick screen through using ADVFN to specifically look at gold mining stocks that are selling for 30% or less than tangible book and a debt to equity ratio of 0.20 or less and came up with:
- Lake Shore Gold Corp (AMEX: LSG)
- Freegold ventures Ltd (OTC: FGOVF)
- Claude Resources (USOTC:CLGRF)
- Rochester Resources (USOTC:RCTFF)
These asset-backed stocks are one way in which you might start to research potentially undervalued junior gold miners but keep in mind Rule’s warning about many of the them not yet going to listings heaven.
Another way in which you could take advantage of the bear market in gold juniors is to use ADVFN‘s ‘more like this’ feature:
Clicking the ‘more like this’ link will mean that ADVFN will give you quite a long list of stocks in the same industry as a stock you are looking at, a list from which you can work through in your search for stocks with a large margin of safety.
So if you are looking at a gold mining stock then ADVFN will take you to a list of other gold mining stocks.