Things are starting to move in the junior mining sector, it's the beginning stage of a bull market. The market fundamentals are greatly improved and a major breakout is looking imminent and some big investment plays are starting to happen. As the Nasdaq turns down investors are looking to protect their assets. The US dollar is also starting to correct, this could cause a major move out of the dollar into the gold silver safe haven.
The move from oil to renewables has major investment implications especially for lithium. Watch out also for moves in graphite and uranium. There are plenty of gems in the mining stocks entirely overlooked by the mainstream investment market.
Palisade Radio Host, Collin Kettell: Welcome back to another episode of Palisade Radio. This is your host Collin Kettell. On the line with us today- happy to have back, my good friend, Jeb Handwerger. He is the Publisher and Founder of GoldStockTrades.com. Jeb, welcome to the program.
Publisher and Founder of GoldStocksTrade.com, Jeb Handwerger: Hey Collin, I am so glad to be here today with you.
CK: Yeah and it is a good time to get you back on. We are recording this on Friday, Feb 5th. We are going to release this just two days from now. But the market is showing some interesting action today which is really highlighting what we have seen in the beginning of 2016 so far and that is, of course, the change in what we have been seeing the past few years.
You are starting to get some of the junior miners to uptick. Gold has been seeing a safe haven bid at least the last week. It has been $5, $10, $15 up a day. Then the big thing is its stocks, the global equities are starting to really crack and show weakness, something that started to emerge in the second half of 2015. Jeb, I want to ask you about the changing of the tide right now and if you think that this is a blip or it is something that is going to continue and what our listeners can expect for the rest of 2016?
JH: Yes, Collin, thank you. That is an excellent question. We are going through a very exciting time right now. Important developments are taking place right in front of us in the junior mining sector. We have been waiting a long time for this. This has been a very tough bear market - five years. You guys even put out this amazing chart at Palisade Research that showed the length and duration and the decline in this bear market as being historic, something that really we have never seen in this past generation or a few generations.
This is really a quite exciting time for us investors who study history and who study prior bull markets or the beginning of bull markets in the venture, in the junior mining exchange. People who have studied this such as people at Palisade Research and this work that I do on GoldStockTrades.com, we understand that the beginning stages of a bull market, like what we could be seeing now in the juniors, are extremely powerful. It is the early stages where you can see these gains. Because there are so many investors on the side that have been so beaten up by the bear market they cannot believe that it is changing and it is changing right in front of our very eyes.
The GDX yesterday broke the 200-day moving average for the first time in a few years. Many investors still feel that this is just a blip and that is going to continue down. That is what happens in these beginning stages of bull markets. But investors, resource investors, that follow Gold Stock Trades, we have been in this bear market planting the seeds for this change of tides as you mentioned. We have done a few interviews planning to discuss about this change of tides and we are beginning to see that now.
Just look at the top highs on the TSX: Agnico-Eagle Mine (NYSE:AEM), Oceana Gold (OTCPK:OCANF) and McEwen Mining (OTCPK:MCEEF). It is turning quickly, hitting new 52-week highs, and the miners we are seeing leading the tide, leading this 52-week highs. We are hearing incredible moves fundamentals that are driving this. We heard this past week news coming out of Gold Standard Ventures in Nevada that the major gold producer, Goldcorp (NYSE:GG), is investing $16 million. This is great news for investors such as myself and investors that invest in Nevada junior gold miners because this is a clear signal that Goldcorp is coming down to Nevada. It used to be Newmont (NYSE:NEM) and Barrick (NYSE:ABX) controlled Nevada. Now Goldcorp is making a run into Nevada.
I think there is going to be a lot of interest in Nevada exploration assets because these big miners they see that there is going to be a supply shortfall in a couple of years and they got to find these resources. They got to find these new discoveries. They are now coming to the juniors which we are already positioned in and what we are positioning ourselves for many months. This reminds us of the recent deal, this Gold Standard Ventures deal that we settled with Goldcorp a few months ago. We saw with one of our long term featured companies, Integra Gold (OTCQX:ICGQF).
Integra Gold announced the $14 million deal with gold producer, Eldorado Gold (NYSE:EGO), who is leaving Greece and coming to Quebec. That is quite exciting for Gold Stock Trades subscribers that have been following Integra Gold for many years. Also, important financing is taking place. Fission Uranium (OTCQX:FCUUF), you heard, over $80 million investment from the Chinese nuclear to invest in Canadian Athabasca, the PLS discovery. That is huge news for our sector. That is going to trickle down into our juniors.
I am quite excited about this time. I am quite excited about the fundamentals that are taking place. I am quite excited about the technicals that are taking place. There are a few pockets within the junior resource sector that are even outperforming and have been outperforming the entire market over the past year or two and that is the clean energy especially the lithium sector which has had an enormous run over the past couple of years.
CK: Yeah, that is true. Jeb, I want to ask you how long have you been involved in the mining space?
JH: Well, I started in the mining space in the late '90s after the 20-year bear market. That was when the dot coms was soaring and everyone was becoming a day trader. That was when I began to study the junior mining sector in the depths after the post Bre-X era.
The 2000-2007 period was just phenomenal for junior mining investors such as myself. I began going to the shows, the New York Hard Asset show probably late '90s, 2000. This is not the first cycle that I have seen down. I do remember the time when these charts were just basing back in the late '90s and breaking out. Guess what? Looking at the charts now it has just pulled up Agnico-Eagle Mine's chart, Richmont Mines (NYSEMKT:RIC), Oceana Gold, McEwen Mining, Barrick, Newmont. These are companies that are basing and breaking out into new 52-week highs. It must be on your attention now to get involved in the mining sector which just had a five-year downturn; it is very cheap and just beginning to possibly make a big breakout.
CK: Yeah, well, you just answered my second part of the question there. Maybe we can touch on it a little bit more. A lot of our listeners remember the 2002 - 2007 bull market. It was one for the history books for anybody involved in the micro caps and junior space, even just investing purely through open market purchases. It would have been difficult to make less than 15 or 20 times your money. If you got involved, as many of your subscribers do, and yourself, of course, in private placements, helping the fund, the companies directly and benefiting from warrant exposure. Many people made fifty to a hundred times their money. It was really exceptional timing and it is exciting to think that we might be entering something similar again in 2016 that could go on for a few years. What do you think, Jeb?
JH: Since the beginning of trading in January you look at the capital repositioning and you see investors moving out of stocks and you are beginning to see the NASDAQ is on the verge of turning over; it is already breaking two-year lows. Meanwhile, the juniors are just beginning to break out and we are seeing new 52-week highs in the minors. This is very similar to what I remember back in 2000, and there is this relationship between the tech sector and mining.
Right now a lot of money over the past few years has gone into these tech areas and has abandoned mining. But now we are beginning to see this rotation of capital. This could be a very exciting time for the investors who have been positioning for this turn because the markets has been turning over not just at the start of this year, but already the technical data show that momentum is beginning to decline and beginning to wane even this past summer before the obvious correction.
But now the Dow is beginning to plunge below that obvious support where we had that last correction. Investors are beginning to really be concerned that the rallies ending in the general equities. We have had our second major correction in less than six months and smart investors, high net worth investors, they are looking to preserve capital. They are looking to protect what assets they have. One of the ways is looking at hard assets and that is through precious metals, that is through rare coins, and that is through having a portfolio of high quality mining stocks and junior mining stocks.
The Dow is beginning to really turn over as well and the US dollar was way overbought. Right now I would not be surprised to see a major move out of the dollar into gold and silver as a safe haven. We are seeing competitive devaluations all over the world now. We are seeing what happened to the Chinese markets and the yuan devaluation. We are seeing negative interest rates all over the world and precious metals, in terms of dollars, are still, to me, the best bargain out there.
CK: Yeah, with 2016 coming and potentially this big up move in the mining space just starting there is a saying that when the wind blows hard enough even the turkeys will fly. There are a couple other similar sayings. What that points out is if you are in the sector and you are in a bull market you are probably going to be making money. But picking good stories with good management and things that the market will get interested in will always outperform. But one that has been particularly important has been in the bear market of the last three or four years.
You know I lean on you at times to find what you are looking at in terms of the most interesting deals out there. You have had a pretty good track record, better than most, especially considering the market cap of these companies that we both invest in. It has been difficult the last three or four years. But what is a couple of the stories that you can highlight for our listeners on successes even in the bear market?
JH: Well, we will soon see as this bull market takes off you will start seeing in a bull market, as you said, even the crappy junior miners will go up with the top quality ones. Sometimes the crappy ones will even go up even higher, but the real skill for an analyst is being able to predict the outperformers, the winners in a horrible bear market. That is where you can really separate the quality analysts, the top notch. In a tough bear market that is where you see where someone can shine.
For years I have been preparing my subscribers for this dramatic shift from oil to lithium and this was in the depths of a bear market. Back in 2014, I highlighted about the Tesla (NASDAQ:TSLA) Gigafactory; could be a major catalyst. We were realizing that there was this big shift happening that could happen, going off of the internal combustion engine into the lithium ion battery sector. Right now we are seeing that leading the market and it has been leading the market over the past couple of years the lithium sector.
In 2014, one of our recommendations, Western Lithium (WLCDF), was the number one listed company in the entire OTCQX. That is the junior mining lithium company. In 2015, I would not be surprised if you see another one of our key recommendations, Pure Energy Minerals (HMGLF), be a leader on the TSX venture. We are outperforming other sectors as well.
There is a major shift happening for clean energy right now and right now it is benefiting these lithium stocks. But I think that soon it could benefit some graphite companies and it can benefit some uranium companies that are significantly undervalued. But investors should keep on monitoring this new electric era that is transforming portfolios over the past couple years and subscribe Goldstocktrades.com, sign up for my newsletter. You will hear about more stories, energy metals, clean energy, precious metals. This is where the value is. This is where the greatest returns have been made over the past couple of years and I believe will continue to be made over the next few years.
Last year was a record year for investments in clean energy and renewables. I really believe that this area is going to help the entire junior mining sector come back to strength in the entire TSX venture. Please keep an eye on it in 2016.
CK: Yeah, speaking of clean metal technology and critical metals, one of your biggest successes that I remember in the last couple years is Nio Corp. (OTCQX:NIOBF), which is a company I am invested in. I mean underlying how important management is you just got rock star CEO there in Mark Smith who has been instrumental in the past with getting Molycorp (OTCPK:MCPIQ) in the production. I remember just a year or two ago you made a 700%, 800% gains there. It is a really exceptional timing in a bad market for most of the rest of the mining space, Jeb.
JH: Yeah, Collin, that was an exceptional story. I spoke about it maybe three or four years ago at PDAC. It was my top pick. Back then I was laughed at. I was told I was crazy. Other speakers spoke after me and said there is no need for niobium, there is no need for lithium. There is plenty of lithium. There is a monopoly. They laughed at it. They laughed at lithium. They laughed at niobium. They laughed at Nio Corp. Back then it was called Quantum Rare Earths Development.
But, you know what, the reality is that you find quality assets, top quality assets like Nio Corp has. They got a top quality management team that came in about a year and a half or two years ago. Now it is really moving towards production in Nebraska. That is so amazing to see when you are able to find these gems in the junior mining market that are completely overlooked by the mainstream and you can pick up shares for hardly anything. I mean when I first recommended it was about 12.50 cents when I first highlighted it. It went to up $1.80. It hit a high of $1.80 earlier this year. Now it is moving towards feasibility and towards production, so it is great to see success even in this difficult bear market and to stay positive and to focus on the winners, top management teams, top assets, and to ignore all this noise that you are getting from the media. Eventually, this long term, the patient, the strong investors in the junior mining sector will win. Hang in there. There are winners out there like Nio Corp, like Western Lithium, like Pure Energy, and keep on researching. Keep on learning.
CK: Well, Jeb, I really appreciate you coming back on the program. For any of our listeners that have not checked out Jeb's website yet it is www.goldstocktrades.com. Jeb also speaks at several of the conferences annually so you will probably run into him if you head out to one of the upcoming metals and mining conferences. Jeb, thank you so much for coming back on the program.
JH: Thank you so much, Collin.
Jeb Handwerger is an author, speaker and founder of Gold Stock Trades. He studied engineering and mathematics at University of Buffalo and earned a master's degree at Nova Southeastern University. In 2014, Jeb was the first to highlight the top two performers of the Best OTCQX 50. Handwerger began investing in junior mining equities in the late 90s, avoiding the dot-com crash. In early 2009, at the depth of the credit crisis, Handwerger began the Gold Stock Trades website for investors to become more aware of exciting developments in the mining and natural resource sector.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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