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The Junior Mining Shares Are Being Accumulated

|Includes:AAU, EMXX, JNUG, Pilot Gold, Inc. (PLGTF)

…Likely by smart money. With hedge funds piling into the short side of gold and silver futures - and likely shorting and naked shorting junior mining shares aggressively - it "smells" like the smart money is starting to flow aggressively into the junior mining shares.

My colleagues and I have noticed over the last 10 or so trading days that more often than not, the leveraged mining stock trusts are trading higher in the last few minutes of trading on big volume spikes. Today is a textbook example (click on the graph to enlarge):

(click to enlarge)Click to enlarge

The graph above is a 1-minute chart of JNUG, which is 3x the GDXJ junior miner share trust. You can see the big volume spikes and the move higher in the last 20 minutes, but especially the last couple of minutes. I would surmise that the last few minutes included short-covering by the hedge funds.

I've also noticed that junior miners with very high short positions, Allied Nevada for instance, have been popping up on any given day with no related news or apparent fundamental reason. Last Friday was Eurasian Minerals, EMXX. This week there have been several. This is both smart money accumulation and short-covering.

The junior mining stocks are the best stock market investment opportunity that I've witnessed in nearly 30 years of studying, researching, trading and investing in all of the markets. Note: I said "stock market" investment opportunity - clearly there's been plenty of hard asset/business opportunities that have been way better than stocks. Pilot Gold (research report available) announced superb drilling results on one of its projects in Turkey and the stock popped 5% today.

I have three stock ideas posted in my "Buy My Research" link. I just added the DenaliGuide technical analysis (link above). Nick is the best technical analyst I've come across in a long time. He understands the fundamental side of the mining business, which is rare for a technical analyst. His technical approach is no-nonsense - i.e. he doesn't impose meaningless geometric shapes on chart patterns nor does he wax on about "waves" - "oh wow, this is a C-wave dude…" He studies price/volume patterns and relationships and draws on similar analysis in related sectors like energy and commodities. He also adds humor in his presentation.

Nick offered to provide technical analysis for the stocks on which I publish (buy or sell). His work is completely independent of what I do and the conclusions I reach. Currently we've posted his piece on Almaden Minerals (NYSEMKT:AAU). At some point these technical "tear sheets" will only be available in my research reports.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: The fund I manage has long positions in AAU, Pilot Gold, EMXX and JNUG