Our concentration in the International Speculator, at the moment, is mining. It hasn't always been that way, nor will it be in the future. But it's been the best possible place to be for the last five years, and I expect that will remain the case for about the same time going forward. Simply, the trend is our friend, for a number of reasons. Among those is the well-established progression of market phases: Stealth, Wall of Worry, and Mania.

The mining market was in a stealth bull market from about 2000 to 2003, a time when nobody but the pros (and readers of the International Speculator and a few similar publications) even knew, much less cared, that the sector even existed. The stealth phase is when the easy and lower-risk profits are made; in those days a good number of companies we recommended were selling for less than cash, giving us all their other assets for free. Back at the time, there were very few people who had the knowledge, or courage, to buy shares in an industry that had been in a generation-long bear market.

We transitioned into the Wall of Worry stage in 2003. At that point, metals prices were perking up, and some observers realized that early investors had already made a killing. As is typical for this stage, over the past few years we have seen a smattering of reports out of major brokerage firms talking about the sector from a "pros and cons" point of view that run something like this:

The metals are going higher because of demand pressures from China and India and supply constraints from the dearth of exploration for a generation... No, they're going lower because their prices have gone too far, and they're selling way above production costs -- and China could blow up even while U.S. demand sags with a recession.

But wait, maybe the increasing atmosphere of war will increase both supply bottlenecks and demand. Yes, but this war won't be material intensive, with lots of tanks and planes... OK, but massive inflation is in the cards, and the smart money will run to raw materials. No, there's a chance of a credit collapse, and it would crush pricey commodities. Besides, it's mostly recent hedge fund buying that has driven them up...Well, maybe to some degree, but the fact is that world inventories are at historic lows... blah, blah, blah.

You've heard the arguments. But all the while, the mining stocks keep moving higher. And because of their immense internal leverage, many are quite underpriced relative to the metals they produce (or hope to produce). So, we're still in the Wall of Worry phase. When will it end? Hard to say. But my guess is fairly soon. Then we should enter the Mania phase.

All great bull markets end in a mania. It's interesting to contemplate why this is; books have been written on it. In essence, however, it's a matter of psychology and economics. Psychologically, when people see others making a killing, they can't help but join the party. Especially if there's a credible reason why it's a good idea. The nice thing about this gold bull market is that the story of why gold is going up not only tells very well, but very few investors (in today's world) have actually heard it. That means almost nobody owns gold. And that's good, because it means the only thing they can do is buy it.

The coming mania for gold stocks will, I suspect, be extraordinary for a number of reasons. One is that, due to the huge bull market in common stocks from 1982 to 2000, absolutely everyone who has any spare capital at all has opened a brokerage account. They all got involved in the Internet and tech frenzy and saw that it was possible to make money in the stock market (even though very few actually did). They're primed for another go at getting rich quick.

Meanwhile, economically, the conditions are right for a mania in gold stocks. The government has no option but to continue a massive inflation of the dollar. And inflation inevitably does two things, among others: 1) create a speculative psychology among the public, as they search for some way to beat the debasement of the currency, and 2) direct people's attention towards hard assets. And in terms of market value today, most mining stocks aren't even micro-caps. They're nano-caps.

The world's total market valuation of publicly traded gold equities adds up to only about $150 billion, or just .0033 of the $45 trillion combined value of the world's equities.

When - not if - even a fraction of the bigger investment pie starts to shift toward gold stocks, these stocks should move at least as explosively as the tech stocks did. My feeling is that what we'll see in mining stocks over the next few years will be something for the record books.

What's next for precious metals? What are today's hottest resource stock speculations? You can find out today with a 30-day risk-free trial subscription to the International Speculator today. Getting started will take just a minute, after which you'll receive full access to all of Doug's current recommendations, special reports, archives and much, much more. Click here to try the International Speculator today!