The Tide Has Turned

After a rough year, the 2015 Vancouver Resource Investment Conference was predictably smaller than the 2014 edition. Despite that and the grueling volatility of 2014, the mood of the crowd seemed significantly more optimistic to me.

So I asked my audience—a group of several hundred saints who got up way too early on a Sunday morning—how many of them thought gold had bottomed. About a third of the audience put their hands up. I asked how many thought that if the bottom wasn’t behind us, it was somewhere near ahead of us, and another third put their hands up. Then I asked how many were sure that gold was going much lower, and one single individual raised his hand.

A year ago, gold was in an upturn as well, but less dramatically so, and investors were more cautious about saying that the bottom was in or even nearly so. This year, it was a good two-thirds of the crowd. Granted that it was an unscientific sample, I still found it quite striking after last year’s bloodbath.

But what really got my attention was when I asked how many in my audience saw the 2014 meltdown as an opportunity, had money to invest and wanted stock recommendations. I was very pleasantly surprised to see that almost half the crowd put their hands up.

Whether the tide has truly turned in the precious metals market, it clearly has in the set of investors I met in Vancouver.

And there’s good reason to think that they are not alone. As of Friday’s close, gold is up about 10.5% since last November’s low. At the same time, one stock in our portfolio has risen as much as 96.96% since its November low, and many more of our picks are up by substantial double-digit percentages.

That doesn’t prove that they can’t go into reverse again, as they did last year. True enough—but last year there were also opportunities to take profits early in the year, before the bear returned with claws fully extended. We actually ended the year modestly up, extreme volatility notwithstanding. So if 2015 turns out to be “as bad as 2014,” we’ll actually make money, and that’s not too shabby in a bear market phase.

I may be going out on a limb (again), but frankly, I don’t expect that. Europe is in so much trouble, China’s growth is slowing, and I don’t believe the US’s funny figures, so I expect gold to do very well this year… potentially explosively well, if the global financial system receives any more shocks like the short sharp shock the Swiss just delivered.

This Swiss event is particularly important precisely because it came from the Swiss. They have no interest in hurting their trading partners but simply could not afford to continue pegging the Swiss franc to the euro. I expect players like Putin to rock the boat—and I’m sure he will again this year, more than once—but this was a seismic shock right from the heart of Europe.

Meanwhile, Greece is contemplating the first-ever disintegration of the EU, and the Colder War is heating up again in Ukraine. Makes one wonder how much higher the international spot price of gold might be if it were priced in euros instead of dollars.

Not that things are much better in the USA, where the president has just proposed a new form of eating the rich.

In short, if the financial world looks as increasingly chaotic to you as it does to me, the logical conclusion is to be bullish on precious metals. I believe that’s what we’ve been seeing since mid-December.

What about other metals? Well, I’ll tell you that other than precious metals, the metal I’ve heard about the most at the show has been tungsten. The buzz isn’t much to go by, however; I can’t report a compelling case for this particular industrial metal to see sustained or increasing prices while others are falling. If I’m bearish on the global economy, it’s hard for me to be bullish on any industrial metals or other minerals. Still, the vibe suggests tungsten as a resurging flavor of the day. I’ll be looking into this further.

What about the precious metals space—what do I like there? I like growing producers that have shown they can make money in even the worst of recent quarters. And of course I like large, high-margin, advanced exploration projects, many of which are still on sale. I’m scraping up some more cash to invest personally, and this is where I plan to focus.

For those already all in or even overexposed, my recommendation is even simpler: hold on. The last couple of weeks have shown that our market is far from dead. Instead, there's a large amount of money on the sidelines, waiting to be convinced it’s safe to get back in the water. By then, prices will be higher and the chance for profits reduced, so I’m looking to act sooner rather than later.

Of course, I could be wrong, and the bottom yet ahead—that’s why we call it speculation. But for my money, I’d much rather invest in a market that has been mauled by a bear for years and offers opportunities in companies that are objectively undervalued than one that’s been defying gravity and probability for far too long.

Your strategy is yours to determine, naturally, but this is the way I see it. Just as naturally, I encourage those interested in my specific recommendations in the nearest term to try out the Casey International Speculator, with our money-back satisfaction guarantee. But whether you do or decide to go it alone, your own conclusions based on the facts outlined above should determine your strategy and investments. Good luck.