In this short but powerful interview, well known analyst Marin Katusa from Casey Research shares three key insights. First, people should hold physical gold (PHYS) because gold is money; it is an insurance policy. Second, the mining sector will see a lot of juniors (GDXJ) disappear, but the survivors will perform extremely well. Third, one of those small gold companies is revealing a multimillion ounce project in the ground.
(1) Holding gold is like an insurance against the massive liquidity that is created not only in the U.S. but in all major countries. People should hold gold because gold is money. All fiat currencies (paper based / promise based money) did end up in a disaster. Recent examples include Germany's hyperinflation. In those periods, however, gold has always held its value as true sound money. Listen here (duration 2 minutes)
(2) The natural resource sector, which includes gold and silver mining companies, seems to be stuck in a downtrend. Marin Katusa believes it is part of a natural cycle as there are too many junior exploration companies. He says: "The sector itself loses about ten billion dollars a year, looking for gold and trying to produce gold."However, the companies that have real and many ounces in the ground will do extremely well. As an investor, you need to look for the miners that are smart, have an excellent management team, enough cash, and projects with a lot of ounces in the ground. Now is the time to start picking excellent companies on discount. "Most people get very discouraged in this market, but the smart money is getting very excited."
(3) One of those small but extremely promising gold companies is Brazil Resources (BRI.OB). Marin Katusa calls it a screaming buy. It already has a multimillion ounce potential in its existing flagship project, but it has a very promising project that goes under the radar; it is called Artulandia. Brazil Resources is a gold miner with a high intrinsic value because of its multi-million ounces potential. The management team has almost 20% of the company, which is very rare in the resource sector but shows commitment. Listen here (duration 2 minutes)
Disclosure: I am long PHYS.