One of my favorite gold companies just poured their first ounces of gold from a mine that’s been in the works for a decade. It’s an exciting time after a long gestation.
And I believe this first pour and continued production will kick off a massive revaluation in the market.
I’ve written extensively about this day…
And I know that just a couple of days ago, I urged you to trim your positions if you’re sitting on substantial gains.
It might seem like a departure or an inconsistency to urge caution in general while being bullish on a specific company…
But if you can hold these two ideas in your head, you’ll be a superior precious metals investor:
1) Gold and silver prices have gone ballistic and are due for a pullback – which could be severe.
2) There are gold and silver miners selling at a MASSIVE discount to their assets at $3k/oz gold and $50/oz silver.
To the layman, these two ideas are diametrically opposed and one (or both) must be untrue.
But if you’re going to be a successful investor in this space, you need to focus on value, not price. You are not in control of price movements. But you are in control of the price you pay for the value you get.
And in any market, someone mindful of the value they’re paying for will succeed.
Consider one of my all-time biggest success stories: in 2015, during the absolute bowels of the bear market in silver, I recommended SilverCrest Metals at 12 cents a share…
SilverCrest sold for just a $100 million market cap – but I knew the value of the company was closer to $600 million. A potential 6X gain if price met value.
While silver moved sideways for 9 years, SilverCrest soared 8,358% – far above my fair value estimate…
My point: you don’t need the metals to be soaring in order to make profits. You need to buy value at a discount and have the patience to see a miner go into development.
If you’re correct, the market will eventually reward you.
We’re in a similar boat with my favorite gold stock right now.
It’s selling for under $3/share – and my fair value estimate is over $15. That’s a 5X if the market JUST values this company’s assets fairly.
As we saw with SilverCrest, even in a flat market, sometimes the market pushes a company far above its fair asset valuation.
You’ll drive yourself crazy trying to understand why the market deeply undervalues assets at times, only to massively overvalue them at other times.
It’s an inscrutable, impossible question. And it doesn’t matter. It’s not in your control.
But right now, the ability to own a productive mining company BEFORE the market’s revaluation is here.
That won’t last. The next big catalyst is Q1 earnings.
That’s when everyone will see the value in this company’s new production.
Don’t wait…
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio