Published February 04, 2017

Weekend Edition: Is It Too Late to Buy Gold Stocks?

Editor’s note: With gold and gold stocks rallying right now, you may be asking yourself one simple question… “Is it too late?”

To answer this, we turn to our gold stock guru, Louis James. If you’re hesitant about entering the gold market today, this essay is a must-read…


Deep under a mountain, but so high up in the Andes that I could barely breathe, I found one of the best money-making opportunities I’ve seen in my entire career.

I was in an old mine tunnel. The ore was massive sulfides of lead and zinc, with high grades of silver. These sulfides sparkle brightly in your miner’s lamp, like chandeliers. Usually, you see a narrow vein with a little of this stuff sprinkled in it. You look up to see it in the ceiling of the tunnel, or slashing a wall.

Not this time. The entire tunnel—a good four meters wide by four meters tall—was blasted through a zone of massive sulfides so thick, it all sparkled in my lamp. The walls, the ceiling, the floor, everything. It was like walking through a field of stars.

On the old mine posts, I could see the assay numbers left behind by the old-timers: 9% lead-zinc, 12%, 15%—with hundreds of grams per tonne of silver. The rock had more than $500 in contained metals in some places.

I asked the mine geologist (who was my guide) how anyone could leave so much value behind. He told me that the old-timers were only interested in the highest-grade core of the deposit, which ran to more than a kilo of silver per tonne.

The speculation was that not only could these high-grade (by modern standards) remnants be mined, but that more bonanza-grade silver and gold could be found as well.

That potential was made very real to me when we returned to the surface. I could see that the rock alteration visible on the mountain above the vein was repeated up and down the valley, showing the location of other veins. Many had been worked in colonial times—the mine has a history that goes back more than 400 years—but there were plenty more to explore.

The vein is called Animas. It’s part of the Caylloma mine camp in Peru. The company is called Fortuna Silver Mines (FSM, FVI.TO). At the time, it was an exploration company that had just bought the mine with its 7.0 million ounces of silver in historical mine reserves for $7.55 million. Experts were skeptical that a little explorer like Fortuna had what it took to put Callyoma back into production and make money.

This was back in January of 2006. I could see plain as day that the mine was a cash cow just waiting to be given the attention it deserved, surrounded by enormous blue-sky potential. I wrote a report saying so while still in the field, and Casey Research founder Doug Casey recommended the stock at C$1.15 in an investment alert on January 27.

Now, here’s the thing: the stock had been trading for less than C$0.20 for years. At C$1.15, it was already up more than 500% for those in before it became obvious that the gold and silver bull market underway was real.

So, I had to ask myself: was I too late?

What if we put a “Buy” on the stock only to provide exit liquidity for the early birds? What if Fortuna fell on its face in the transition from exploration to production? That’s actually a very common outcome. What if we were being the new “stupid” money, chasing after a stock that had already risen to ridiculous levels?

If I had let such fears stop me, we would have missed out on what happened next.

Fortuna doubled within two months. We were able to take profits on March 29, 2006, at C$2.38. The stock came within kissing distance of C$7 in 2011. It gave much of that up in the multi-year bear market that followed. This week, it closed at C$8.10 (Jan 31, 2017).

That’s more than seven times the price of our initial recommendation—and the company is still adding new value today.

The point of this story is not to brag. In fact, there were many ups and downs, we took profits along the way, and we were in and out of the stock.

The point is that back in 2006, when I was asking myself if I was being stupid for recommending a stock that was already up 500%, I chose to drive forward looking ahead, not in the rearview mirror.

This is critical. If I had let how much the stock had already risen paralyze me, we would have missed out. Instead, I made the decision based on the huge value the company was clearly set to deliver. We took the plunge.

As the great Canadian philosopher Wayne Gretzky said: “I skate to where the puck is going to be, not where it has been.”

And the point of this is that smart people thinking about investing in gold and silver today are asking themselves the same questions I was asking myself in 2006. Gold has risen 15% from its low of $1,053 per ounce late last year to its current level of $1,211. Silver’s already up 13% this year.

“Is it too late?”

My answer is no.

I understand that it’s hard to put money into stocks that have risen sharply in recent months. Many of our stocks are up more than 100%, 200%, and even 400% since their lows. But that’s got more to do with how oversold they were than what is likely to happen next.

In seeking to skate to where the puck is going to be, we look for value to be added ahead. It’s just as when I made the call on Fortuna back in 2006. All of the companies I currently recommend buying in International Speculator have huge value to add.

This is true even if the price of gold does not continue rising.

It’s true even if precious metals retreat towards recent lows.

Actually, if gold and silver did correct sharply before heading higher again, that would be the best thing in the world for those just getting into related stocks. It would create great buying opportunities. At this point, this may actually be likely. You want to be ready to take advantage of it.

I’m excited about the work I’m doing now. It’s not enough to have a portfolio of winners in hand. I’m traveling more than I have in years, scouring the world for new opportunities.

I knew this day would come during the down years. Now that it’s here, I’m having a ball putting all I’ve learned from Doug and many of the best geologists in the world to work on my readers’ behalf. I may wear out another pair of boots, but it will be worth it.

I think we’re all about to make a pile of money.

I realize that I’m singing my own praises here, but what I’ve just said is true. And if you’re not already an International Speculator subscriber, I hope you’ll join me for the adventure ahead.

I believe you will be very glad you did.

Sincerely,

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Louis James
Editor, International Speculator


Editor’s note: Louis recently came across another massive money-making opportunity, just like Fortuna back in 2006. In fact, he believes this is the world’s richest gold mine in the making

And one small, publicly traded small cap owns the rights to this deposit. When the news reaches the mainstream by April 2017…shares could go parabolic. Early investors stand to make 1,000% or more.

You can learn all about this rare opportunity by watching this brand-new presentation.