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In Part I of this series, I told you about the five traps that ensnare gold and silver miners, leaving their investors holding the bag.
Now, let me give you the names of the 10 mining companies I wouldn’t touch with a 10-foot pole! If you own their shares or warrants, dump them and don’t look back.
| Barrick Gold – ABX |
| AngloGold Ashanti – AU |
| Newcrest Mining – NCMGF |
| Endeavor Silver on the TSE – EDR |
| Great Panther Silver – GPL |
| Paramount Gold – PZG |
| Rubicon Minerals – RBY |
| Richmont Mines – RIC |
| Nevsun Resources – NSU |
| Fortuna Silver – FSM |
They’re too heavily indebted … their total cost of production is too high … they’re starting to rehedge their gold and silver reserves and resources … or they’re suffering from a mix of all three.
For reasons I’ve thoroughly documented in my recent online seminars, the next leg of this massive gold market will carry forward into 2016 — another three full years. But to take advantage of it, you must avoid these traps.
You can do that with a nicely diversified portfolio of cream-of-the-crop miners. Let me break them down for you in two categories.
The first category is what I call tried-and-true performers — for your core portfolio. This small, select group of companies includes both rock-solid junior miners with low production costs, good properties, and good management — plus some key senior miners that have successfully avoided the traps most others are now caught in, and that will do well in the months and years ahead.
This core, diversified portfolio includes companies like this senior miner with nearly 19 million ounces of proven gold and nearly 40 million ounces of resources.
At a gold price of $1,250, that’s an asset base of $32.9 billion. What’s more, buying shares in this company gives you great leverage on the price of gold. It’s almost like buying gold at just $175 an ounce — at an 86% discount to today’s gold price.
My three-year target: A 393% gain.
This core portfolio also includes another gem of a miner with a whopping 89 million ounces of gold worth $111.3 billion, giving you even greater leverage. Why? Because buying its shares gives you an interest in its gold reserves at a mere $78 an ounce — a massive 94% discount from today’s already-low gold price.
My three-year price target: A 294% gain.
The second category of mining shares to buy is what I call “high-octane performers.” They are more speculative but still have solid business models.
I’m talking about a select portfolio of junior mining companies with high betas, which means their share prices swing dramatically, opening up multiple trading opportunities. You get in before major rallies, then step aside before intermediate declines — and then do it again, aiming to compound your profits over and over.
Companies like this one, producing silver at roughly $11 an ounce — about 55% of what you’d have to pay to buy silver bullion today — even after factoring in all costs.
Or this junior gold miner, sitting on as much as 19 million ounces of gold at a total ownership and production cost of just $262 an ounce — like buying gold at a 79% discount.
Or a third miner, sitting on as much as 53 million ounces of gold. This company is especially appealing because it doesn’t have to worry about the increasing costs of mining or anything else for that matter. Its primary business model is simply to sit back, let others do the hard work, and collect a stream of overriding royalties.
Also included in this second portfolio should be leveraged mining ETFs, where you can trade a whole basket of mining shares with a simple click of a mouse, getting out near the tops of rallies and getting back in near support.
As you might expect, once you’ve selected the right ones, timing is critical with these shares.
And right now, my timing indicators — the very same indicators that enabled me to call the bottom in gold at $260 back in 2001 and every major move since — are now virtually screaming that we’re about to get a major new “buy” signal in these shares, even before we get a major new buy signal in bullion.
For our first major purchases, I’m eyeing three stocks that, in gold’s first phase up, posted gains of 1,577% … 3,742% … 11,186% respectively.
That’s enough to turn a modest $10,000 investment into $167,700 … $384,200 … or even $1.1 million. Will we be able to catch the exact top and exact bottom of massive moves like these? No. But even if we don’t, we could still be looking at some big-time profits.
Best wishes,
Larry
Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader.
Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.
