“You can have a bull market with flat demand
or even declining demand if supply is not there.”
Legendary Investor Jim Rogers
- Devastation, an unmitigated disaster, the worst bear market in half a century.
- Petropavlovsk, a leading Russian gold miner once valued at more than $3 billion, was forced to tap shareholders for emergency funds after seeing its stock fall 99% over the past 5 years…
- BHP Billiton, the world’s largest publicly-traded mining stock, is cutting $4 billion next year from capital expenditures. Rio Tinto, the world’s 2nd-largest public mining company, is cutting $1 billion this year, and Glencore plans to cut over $800 million.
- China state media recently reported that over the next three months, 100,000 mining employees will be laid off from just one company.
- Home to the junior mining companies, the TSX Venture Exchange is down 85% in nominal terms and 90% in real terms.
A famous resource entrepreneur, Keith Neumeyer, who created two billion-dollar companies — First Quantum Minerals, started in the 1990s’ resource bear market, and First Majestic Silver founded at the precious metals bottom in the early 2000s — recently started a new mineral bank company, First Mining Finance. He stated that this is a once-in-a-lifetime opportunity, because in normal times, gold is purchased for about $50 to $100 per ounce in the ground. In July, his new company paid less than $9 per ounce for about a million ounces. And last month, they announced two new transactions, paying $8 and $6 per ounce!
To put this into perspective, in January, New Gold paid $83 per ounce of gold when they purchased Probe Mines. In February, Centerra Gold paid $47 an ounce when they bought Premier Gold. Neumeyer, in a recent interview with us, said that buying gold for less than $10 an ounce is really something he’s never seen, and he’s set to do it three times in a three-month period.
The smart money is getting in: Ray Dalio, George Soros, and Carl Icahn are all making big entries into the sector. Stanley Druckenmiller is entering, too, who from 1981 to 2010 had an annualized rate of return of 30%, without a single down year!
Last quarter, Mr. Druckenmiller reported to have over 20% of his portfolio in gold, a new position that was absent in the previous quarter’s filing. His purchase of $323 million dollars’ worth of gold is twice as large as his second-largest holding. When it comes to the mining sector, there is blood in the streets.
- One Canadian mining company who is in the iron-ore business is now selling Australian eggs to China.
- A Brazilian mining company is getting into the haircare business.
- Others have left mining altogether, in search of greener pastures in the medical marijuana business.
- U.S. Global Investors, a popular mining investment company, just launched an airline ETF…
Marin Katusa, of Katusa Research, who’s known as one of the world’s most disciplined stock pickers in the world, noted that the junior resource market is completely dysfunctional.
A great example he notes, was a two company acquisition being done by a stock that himself, Rick Rule, Doug Casey, and the Sprott group are large shareholders in, First Mining Finance announced that they would purchase Gold Canyon Resources for a share ratio of 1-to-1. With First Mining trading for about 40 cents, Gold Canyon still trades at 28 cents, a 30% discount, when the fact is in a matter of a few weeks, Gold Canyon shares will be converted to First Mining stock and will see an automatic conversion, with a potential 40% gain for investors buying shares today in October 2015. Mr. Katusa stated that he bought a million shares and the price didn’t budge, even baffling a pro like him. Same goes for PC Gold; the stock is set to be acquired in weeks for 30% higher than it is trading for today.
It’s an easy gain for investors, but the sector has been left for dead and is hated, a classic sign of a major bottom. FutureMoneyTrends.com will soon be releasing some of the top junior mining companies to own right now.
Looking at the actions of Ray Dalio, George Soros, Rick Rule, Eric Sprott, and other legendary investors. NOW is the time to enter the metals and mining shares. To learn more about a unique opportunity that exists due to a brutal bear market, visit FutureMoneyTrends.com/gain
