As investors in the very volatile precious metals sector it would be very easy to make the decision to sell and get out of the market as you/we have now re-cooped our capital and hopefully everyone has profits as we write this piece. So, is it time to sell?
We are of the strong opinion that we are still in the early stages of the coming big move in the junior mining shares. That said all investors need to understand that it is reasonable to take some money off the table from time to time. No one knows the magnitude of this move and it is wise to stay on top of things and if that means selling a little early, so be it.
With many stocks now hitting 12 month highs looking at charts with only a 1 year horizon is providing little insight. So, we are now looking at charts with a 5 year time horizon, why? Do you remember the big rise in the shares of the juniors back into May 2006? We want to go back and use these prices and charts going forward.
Many of the companies which we follow are still selling for pennies compared to their 2006 highs while the companies now at much stronger with improved properties and fundamentals. This is just another sign, in our opinion, that the juniors are greatly undervalued relative to their past performance and relative to the current price of gold and silver which are making new highs nearly everyday.
To put this into perspective, back in May 2006 gold was around $725 an ounce and silver at $15.
One of our favorite little silver company's shares hit a high of C$1.90. In the last two years the shares have been down below C$0.10 and yesterday closed at only C$0.40. The company is now much stronger with production and still selling at only 25% of its previous high and this with the price of silver up substantially as well. We believe it is only a matter of time before the markets give recognition to these undervalued companies.
Frankly, our minimum target prices for many of the juniors are their highs reached back in 2006 and that's just for starters. Once those previous highs are exceeded only the markets will know how high we can go. At some point we believe the 'mania phase' will kick in at which point all shares will explode in price including those old dogs and cats which many investors still have in their portfolio's.
The only losers will be those investors who decide to sell too soon. It is imperative from now forward for investors to closely monitor their portfolios. You must be prepared to make some sound decisions and lighten up on some positions which perform well while at the same time having the patience to stay with the shares and the markets as long as possible to capture some outrageous gains in the coming months. Our mission is to assist subscribers with this challenge.
To rap up let's show a couple of charts which reflect the great underperformance of the Canadian Venture Exchange to both Gold and Silver. To us, both charts reflect that we have a long way to go to catch up with excitement and performance of the shares and of course, the warrants trading on those shares back in 2006-2007.
We are being given the rare possibility of a once-in-a-lifetime-opportunity, what will you do with it?
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