When we talk about speculating in gold stocks, the stocks and companies that undoubtedly come with the biggest risks - but also the biggest returns - are the junior exploration gold stocks.
Gold may have started the beginning of the year on a stronger footing but the junior gold stocks are still lagging in performance and the general sentiment towards them is still muted.
It appears as though the overall picture for junior gold stocks - apart from the high grade discovery stories that burn bright for a select few companies - tells us that we are back to trading sideways again, waiting for higher gold prices to help push sentiment and awareness back into this forgotten sector.
As usual, for anyone that has been investing and speculating in the precious metals space for a number of years, patience is once again required.
When we look back to the early part of 2016 - when it looked as though the rise in all gold equities would continue without pause - it appeared as though contrarian investors were finally going to get thoroughly rewarded for all their patience.
The party started, but it didn’t continue for the entire year and beyond as most contrarian investors were expecting.
It wasn’t, unfortunately, going to be that quick and easy.
So perhaps now is a good time to take a look at a few successful investors who have been in this kind of investment scenario before.
Back in October last year we spoke to Brent Cook and talked about the exploration side of gold stocks and the investment thesis behind these stocks.
One key point to mention is that by talking to a successful industry player like Brent - who has gained a range of valuable insights after going through multiple cycles within the resource space - we will be able to form a clearer vision as to what may come next.
Younger investors who have not yet gained that experience could do worse than listen to an industry veteran who has stayed successful despite the current downturn and apathy surrounding the gold space. View the entire interview here.
Another successful investor and speculator we have had on Palisade Radio multiple times is Rick Rule. Rick has a lot of investment and speculation advice for anyone who is interested to listen and take note.
Last summer Rick told us how the bull market for resources was still intact and even though the market was maybe considered ‘boring’, to Rick this simply meant a buying opportunity for investors. View the entire interview here.
So if past is prologue, then the junior gold stocks may just be on their way to another day in the sun - where the potential returns seem unbelievable in todays investment environment.
Overall, we can conclude that for the gold stocks and for the metal itself, we still need patience.
And because of this, we can probably say - that we are near a potential bottom - and in general being near the bottom often leads to great gains if you have the patience to stay with the investment or trade.
And, of course, if you have the bravery to buy when others are scared.
Until next time, happy contrarian investing.
The Palisade team
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