Junior Stock Investing: Managing Risks & Seeking Reward
Newsletter writer Stewart Thomson addresses the question:How can resource stock investors manage risk and enjoy the big potential for reward?
Excitingly, today's U.S. jobs report disaster is accompanied by minimal upside action in the stock market and incredibly awesome action for gold, silver, and a myriad of miners.
Here's a look at the phenomenal gold price action via the GLD-NYSE ETF:
As I noted during the formation of this majestic congestion pattern, it looks like something that Michelangelo sculpted.
Now there's a massive breakout that's being followed up with a possible bull flag. Oscillators are overbought, which is 100% normal during these kinds of spectacular breakouts.
In a nutshell, pullbacks will occur, and they are to be bought!
The excitement could soon intensify and here's why: Next week features the release of both the PPI and CPI inflation reports. If they come in hot, stock market money managers are going to get very concerned.
They are already beginning to buy gold stocks on dips, and what lies ahead could see them intensify their actions.
Rising inflation and rising unemployment were the death knell for the 1970s stock market . . . and rocket fuel for gold, silver, and the miners.
Here's a look at a stunning CDNX vs Dow chart:
The Dow is an index of the 30 most solid companies in America and yet compared to all those behemoth companies, the junior miners look like an unstoppable freight train!
Here's another key CDNX chart:
I've dubbed this as one of the chart greatest charts in the history of markets, and the greatest in the history of junior resource investing.
The biggest problem amateur gold bug investors have right now is staying invested in the trend. While it's very important to reduce market risk by booking partial profits after a run, selling to "call a top" is not wise in such a stupendously bullish situation as exists today.
Partial profit booking simply helps ensure the investor is working more with the market's money than theirs.
Here's a third key chart for investors to focus on:
This one showcases the CDNX versus gold, and it's what I call another technical work of bullish art.
When many CDNX stocks have fallen 99% in value (and many have), it's very conservative to project "Ten baggers, 50 baggers, 100 baggers, and more!" as the norm for performance in the coming years. That's not an aggressive projection at all. . .
Which is why it's so important for investors buying now to stay the course with their core positions.
What about some current "hotties"?
Well, here's a look at one of them: Metallis Resources Inc. (MTS:TSX.V).
Metallis has an interesting operation in Idaho and even more interestingly, it's blasting up from an immense base pattern that stretches back over the past five years.
Another fabulous stock in upside breakout mode is Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DE), and here's the chart:
The company is focused on a hot silver prospect in Colombia, and the triangle base breakout suggests their focus is going to reward investors with a quick upside rally to the area of the 88-cent high.
For months, I've been relentlessly urging investors to get positioned for a gold stocks cycle inversion event, where, rather than slipping from April to October, the miners do the opposite, and stage a de facto moonshot.
The term "moonshot" is a relative one; the senior miners have done incredibly well, with a few up 100% from that April launch.
Many of the smaller "raw" CDNX juniors are scoring 500% (and more) gains against government fiat currency . . . and, quite frankly, they appear to be doing it easier than taking candy from a baby. Further, I'll dare to suggest that this performance is only a warm-up act for what will be a long-term gold bull era show!
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Important Disclosures:
As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Outcrop Silver and Gold.Stewart Thomson: I, or members of my immediate household or family, own securities of: None. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: None. I determined which companies would be included in this article based on my research and understanding of the sector.Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.
Stewart Thomson Disclosures
Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualified investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
Are You Prepared?