What I Learned From The Indiana Jones Of Investing
I must say, I really enjoy what I do.
#-ad_banner-#I’m fortunate enough to be able to analyze some of the most interesting companies, and detail that analysis in my premium newsletter, Maximum Profit. This allows me to mix my two favorite hobbies: investment analysis and writing.
I thought I couldn’t ask for anything better… That is, until I met StreetAuthority’s very own Dave Forest.
If you’ve never had the chance to read any of Dave’s premium analysis, then you’re missing out. Not only does he offer incredible in-depth research you can’t find anywhere else, but you also get some of the best stories. I like to think of him as the Indiana Jones of the investing world.
Seriously, just look at this excerpt from a recent edition of his premium advisory Scarcity & Real Wealth:
| I’ve doused my boots with rancid-smelling liquid — intended to ward off deadly coral snakes that lurk in the pools and swamps where I was treading. I’ve climbed to mountain peaks near 10,000 feet — where the lungs start to put up serious resistance to any physical activity. I’ve subsisted on little more than canned sausages and stale bread. Been lost in dense jungle, spoke Spanish as best I could to get through, and used it to try to learn whether the areas I was in might hold other dangers I wasn’t aware of — either animal, vegetable or mineral. All of this is par for the course in the mineral exploration business, which is what I was doing these past few weeks in the eastern mountain ranges of Colombia. |
Welcome to a day in the life of Dave Forest, Chief Investment Strategist of Scarcity & Real Wealth.
Frankly, this kind of dedication to boots-on-the-ground research is why I always pay attention to Dave’s views on commodities. Many analysts are content to sit behind a desk, analyzing spreadsheets and opining about commodities to their readers.
Dave lives and breathes it.
He understands these markets inside and out. In November, for example, he made a call to his readers, telling them to buy a junior mining stock that has since returned more than 37% in less than three months.
As I was digging through his most recent newsletter he brought up some interesting views on the gold market (along with other metals) that really piqued my interest. For readers who aren’t familiar, Dave has been overwhelmingly bullish on the gold sector as of late.
Now many investors know that the commodities sector is a boom and bust industry.
For the couple years, it’s been a bust.
A good gauge of resource stocks is the S&P TSX Venture Index — it tracks hundreds of small energy and mining firms. As you can see from the chart below, since peaking in 2011, it’s now down more than 70%:
The last time resource stocks were this hated was after the financial crisis. Nobody wanted to be invested in commodity stocks and rightly so. It was a tough time for everybody in every corner of the market.
But as Rothschild said, “The time to buy is when there’s blood in the streets,” and right now blood is running through the streets of the commodities market.
The boom and bust nature of the commodities market makes it tough to navigate, but if you can find the right companies, then you can make double-, even triple-digit gains in a short period of time.
For example, during the last bear market, had you bought Market Vectors Junior Gold Miners (NYSE: GDXJ) you would have made 146% in just over a year. Or look at Silver Wheaton (NYSE: SLW)… In two years investors in this silver royalty company pocketed gains in excess of 600%.
Put simply, it’s times like these that savvy investors dream of. It makes the tough times become a faint distant memory.
You can see from the chart below that the last time we hit this level was 2009. Commodities went on a tear shortly after — surging more than 240% over the next two years:
While it could certainly go lower, I don’t expect it to go much lower.
Here’s why…
Worries about global GDP growth and a long bull market in the United States have investors nervous. When investors become skittish, they run for safety and buy up “safe” assets like T-bills and gold. Gold is already up nearly double digits so far this year and silver is up 16% year-to-date.
You can see the uptrend in gold prices recently:
If gold makes a run up to its 2011 price of around $1,900 an ounce, then we could see similar gains in the small resource miners that we did last time sentiment was this negative and the S&P/TSX Venture Index was this low.
The point is, gold looks to have hit its inflection point. Myself, Dave Forest and many other experts agree on that.
So how do you make money from this? Well, look to the experts, and honestly there’s no one better than Dave Forest of Scarcity & Real Wealth. He’s a trained geologist, who has funded, and even ran a few mining companies.
Lately he’s been loading up on a handful of small gold miners including the company I mentioned earlier that’s up 37% since he recommended it in November. Dave just put together a new report, “The 2 Top Junior Resource Picks to Buy Now,” where he gives away his two most compelling mining plays. If you’re interested in getting your hands on the names and ticker symbols of these two stocks, or learning more about Scarcity & Real Wealth, you can follow this link.