“These are sobering times,” Michael Kosowan told a Cambridge House audience in Vancouver on January 20th. Michael has worked for Rick Rule at Sprott Global Resource Investments Ltd. for 13 years and is now located in Sprott’s Toronto office. Like Rick, he has made a fortune for himself betting on contrarian ideas in bear markets… But Michael has a warning about 2014 in his speech below…
There has been a collective exhale as the mining sector began 2014, marching into the New Year with a strong up move in gold and high hopes of a recovery.
Although there have been a few bright spots as gold reached $1,275 by January 26, the ‘bonfire of the juniors’ has yet to occur. Endangered companies fight tooth and nail merely to survive.
There are just too many companies out there with too little cash. According to John Kaiser, a mining analyst who has been following the sector for over 25 years, 1,025 companies out of a possible 1,770 trade below 10 cents a share while 817 of these companies have less than $200,000 left in capital.1
So What’s Coming?
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In September 2011 the Gold Bugs index, the HUI stood at 630 as gold prices peaked, since then both have trended lower with the HUI losing about 65% of its value. The bottom has been called a number of times and after such a dramatic decline its difficult not to think that we are there now. However, as we all know the timing of any investment is crucial to its success and that is exactly what we are trying to do here, trying to pick advantageous entry and exit points. If you would like to know which stocks we are buying and selling please join us at ‘Stock Trader’ our premium investment service.
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