The following five junior mining stocks are 10 baggers,
through just the first half of the year. These are the best performing junior
mining stocks on the Toronto Stock Exchange, as they have posted gains of
1,000% or more over the past six months!
These junior gold and silver miners are generating
significant wealth for investors that had the courage to buy when there was blood
in the streets. An investment of $100,000 in any of these stocks six months
ago would be worth over $1 million today!
Gold and silver corrected and consolidated for over 4
years, leaving many gold bulls questioning their investment thesis. But
precious metals bottomed in December of 2015, with gold bouncing off the
$1,045 level and silver bottoming around $13.65.
Both gold and silver have been off to the races during
the first half of 2016. Gold is up nearly 30% and silver up 42%! As we
predicted, mining stocks have been the best performers, offering leverage
of more than 4 times the gains seen in gold and silver bullion.
Larger mining stocks often outperform during the early
phases of a bull market cycle in precious metals. This is because institutional
money pours into the safer, larger cap mining stocks at a much faster
pace than speculators jumping into junior mining stocks. But after this
initial move, quality junior mining stocks tend to catch up and surpass the
gains of their larger counterparts. Starting from a much smaller base, their
have the potential for much higher percentage gains.
But you have to do you research and select junior miners
very carefully. You also have to go against the herd and be willing to buy
when others are fearful. Smart gold investors understand economic cycles very
well, such as the one below. With stocks and real estate and frothy levels,
2016 has been the ideal time to buy beaten down mining stocks at deep
discounts.
Despite these massive gains in gold and silver mining
stocks, I believe they still have much higher to go. I am not looking into
any magical crystal ball, but simply comparing the duration and magnitude of
past bull market cycles to the current one. No matter if you are looking over
the past 15 years or back to the 70’s, the data suggests this bull market in
gold and silver is in the early innings.
The chart below shows the HUI gold bugs index vs. the
price of gold. The ratio has averaged around 0.32 over the past 15 years.
Anything above this level suggests that gold stocks are overvalued
relative to gold. Anything below this ratio suggests that gold stocks are
undervalued relative to gold. While the current ratio has doubled from lows
around 0.10, it is still well below the median line at 0.32. This suggests
that gold stocks remain undervalued relative to gold and should continue
offering strong leverage for the foreseeable future.
Once this ratio climbs above 0.32, gold stocks will
no longer be offering such clear value. They may continue to outpace the
gains in gold, but at a slower pace until the ratio climbs above 0.50. At
this point, investors may want to consider booking paper profits in mining
stocks and allocating these funds towards physical gold and silver bullion.
Using this strategy, I believe the average investor will end up with
significantly more physical bullion and total wealth than via purchasing
bullion alone and holding it. This is why we recommend a large allocation of
mining stocks during the early phases of a precious metals bull market cycle.
Top 5 Junior Gold and Silver Stocks for 2016
So, if you are ready to start investing in junior mining
stocks, here are some of the top performing junior gold stocks and junior
silver stocks in 2016. I imagine many of the stock picks on this list will
also make the list of best junior miners for 2017. The gains listed here are
over the past 26 weeks, as of July 15, 2016.
#1) Rupert Resources (CVE: RUP or RUPRF) +3,500%
Rupert Resources is a Canadian based gold exploration and
development company that is listed on the TSX Venture Exchange. Rupert holds
an option to acquire the Pahtavaara gold mine, mill and and claims to a land
position of 124km2 in the highly prospective Central Lapland Greenstone Belt
in Northern Finland for a total consideration of US$2.5 million.
Pahtavaara is located some 35km by road from the town of
Sodankyla. The deposit was discovered in 1986 and since operations commenced
in 1996 the mine has produced 350,000oz of gold, with peak annual production
of 37koz/a. The operation is currently on care and maintenance but subject to
its decision to exercise its option over the property, Rupert Resources
intends to commence a comprehensive exploration program to extend reserve
life from the current estimate of 1.5 years to over 5 years and delineate
further resources from the enlarged licence area before recommencing
production.
#2) Gold Mountain
Mining (CVE: GUM) +1,200%
Gold Mountain Mining Corporation is exploring and
developing the 100% owned Elk Gold Project, located in southern British
Columbia, 45 km southeast of Merritt. The Elk property is a significant
past-producing gold asset with excellent infrastructure. A Preliminary
Economic Assessment (PEA) completed in 2012 reported that the project has
good potential to support a viable open pit mining operation.
#3) West Red Lake Gold Mines (CNSX: RLG or OTC: HYLKF) +1,200%
West Red Lake Gold Mines Inc. is a Toronto based company
focused on gold exploration and development in the prolific Red Lake Gold
District of Northwestern Ontario, Canada. The Red Lake Gold District is host
to some of the richest gold deposits in the world and has produced over 30
million ounces of gold from high grade zones, including 18 million ounces
from the nearby Red Lake Mine and Campbell Mine operated by Goldcorp. West
Red Lake Gold has assembled a 3100 hectare property which has a 12 kilometre
strike length and 3 former producing gold mines.
#4) Silver Bear Resources (TSE: SBR or SVBRF) +1,020%
Silver Bear Resources is focused on the development of
its wholly-owned Mangazeisky Silver Project, that includes the high grade
Vertikalny deposit (amongst the highest grade silver deposits in the world)
located 400 km north of Yakutsk, Russian Federation. With the support of its
key Russian shareholders, Silver Bear is entering its second phase
construction with the objective to target silver commissioning by the end of
2016.
#5) Colorado Resources (CVE: CXO or CLASF) +1,060%
Colorado Resources Ltd. is currently engaged in the
business of mineral exploration for the purpose of acquiring and advancing
mineral properties located in British Columbia and is also seeking
opportunities in Southwest USA and Latin America. Colorado’s current
exploration focus is to continue to advance: the KSP property optioned from
SnipGold, located 15 km’s along strike to the southeast of the past producing
Snip Mine; its 100% owned North ROK property, located 15 km’s northwest of
the Red Chris mine development, both located in northern central BC.
Summary – How to Maximize Profits from Gold and Silver
Miners
These are the five best junior mining stocks so far in
2016. Is it too late to buy them? Will they continue higher at such a
blistering pace or are the gains over?
This is precisely the type of research that I perform
gold subscribers. I will update this list on a periodic basis, perform
due diligence on each company and make buy/sell recommendations for Gold
Stock Bull Premium Members. You can try our
service for just $95 by clicking here.
