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July 5, 2015

How To Spot Hidden Gems in Mining Stocks

By Chris Vermeulen

The Time Has come again to own a few very special situation resource stocks that I believe will sky rocket in value over the next few months.

I have not owned any junior exploration companies since 2011 when the top was formed in the sector, and in fact I shorted miners early this year for some decent gains.

But I believe now is time to add a few small positions to my portfolio which should provide big rewards during a time when the overall equities market and financial system are about to struggle.
From being involved in the precious metal market since 2001 I have seen numerous exploration companies succeed and even more fail. But what is important to understand is that each of these winning companies had the same core things working for them.

Characteristics among Successful Exploration Companies:

  1. Properties located in a proven resource rich zone
  2. Properties explored and have proven value in the ground
  3. Low-cost operation and logistics for transportation ore and supplies
  4. Management team which proven track record of success
  5. Market timing – completes exploration for being acquired or starts producing just before a resource bull market.
These core characteristics are what allow companies to emerge as buyout targets and get acquired or become low cost producers. Both of these outcomes can generate a substantial increase in share value.

While junior producers can generate more share value growth than that of a company being acquired, they typically take more time to mature and become known.

But, junior exploration companies who have fully explored their properties and know the value being stored in the ground through the use of drilling and a PEA, provide a much different type of potential reward to its shareholders.

When these tiny, unknown hidden gems are acquired, investors tend to see the share price gap higher to the purchaser’s value and stay there, to generate gains of 6x or more return on investment in many cases.

Recently I shared my junior oil exploration stock I own with my followers. It is becoming a producer as we speak and the next couple weeks are going to be exciting. Its share price has surged from 6 cents to 24 cents and the crazy part is no one knows about it yet.

Also a few weeks ago I shared two junior gold and silver exploration companies which will become producers. One should start producing within a couple weeks, another is still a few months out, but when they do I expect share value to rise substantially.

In a couple days I will share with you another stock I personally own. This is a silver stock and provides a different type of investment opportunity than normal. This type of play should be in your portfolio for the coming resource bull market I expect to start later this year.

Get My Hidden Gem Stock Picks Free: www.GoldTradingNewsletter.com

Courtesy Chris Vermeulen

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters. © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle


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