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How To Make 120 Percent In One Month Trading Gold Stocks

September 30, 2010 by  

How To Make 120 Percent In One Month Trading Gold Stocks

While most investors are fretting about unemployment and weak housing reports, a bonanza is happening in one tiny area of the market…

It’s an area that doesn’t worry about housing reports… and it hasn’t been hampered at all by the 6 percent decline in stocks since April. It’s an area that maybe one investor out of a thousand follows.

That area is "junior" gold stocks… and the returns this sector is generating right now are extraordinary.

These "junior golds" are the bloodhounds of the gold business. They are tiny companies (typically under $250 million market cap) that scour the world looking for the next big deposit of precious metals. When one of them finds a huge deposit, shares can absolutely skyrocket.

For example, in 2005 Esperanza Silver made an amazing discovery called San Luis. And with each hole the company drilled, it found more gold. Here’s what happened to the stock…

Esperanza Silver Corp.

As you can see from the chart, shares of Esperanza soared from $0.25 in summer of 2005 to more than $4 by early 2007. That’s 1,500 percent in just over 18 months.

Believe it or not, this kind of climb happens often. A good discovery (gold or otherwise) blows the lid off these shares. Here are some other recent examples:

  • Ventana Gold went from $0.14 a share to $12 in 12 months.
  • Canplat jumped from $0.27 a share to $5.28 in six months.
  • Hathor rose from $0.47 a share to $4.34 in seven months.
  • Underworld Resources went from $0.13 a share to $2.64 in six months.

The junior gold industry exists because major mining companies do little of their own exploration. Big mining companies prefer to let thousands of these tiny companies do the work of looking for big deposits. Then they simply swoop in and buy the small company.

To give you an idea of the extreme difference in the size of juniors versus large miners, consider a junior gold stock with a $30 million market cap versus giant Newmont Mining, which sports a $30 billion market cap. Newmont is 1,000 times bigger.

Now that gold is well above $1,000 per ounce, large gold stocks are finally enjoying a solid increase in cash flows… and shares in big gold companies like Newmont are up 15 percent 30 percent this year (while stocks in general are flat). But the juniors are ringing up much larger gains…

For example, last October I recommended buying shares of a tiny gold exploration firm called ATAC Resources to readers of Phase 1 Investor, an exclusive trading service. ATAC has found a potentially huge gold deposit in Canada’s Yukon Territory. Recent drill results have been positive. This news helped send ATAC up nearly 120 percent in August… and up 540 percent since my recommendation.

ATAC isn’t an isolated case, either. Another gold stock we’ve held in the Phase 1 portfolio is tiny AuEx Ventures, a gold prospector like ATAC. A potential buyout sent AuEx shares up 80 percent in August. Many other junior golds are up 30 percent to 50 percent in the past few months.

These extraordinary gains are an example of what can happen when folks get just a little interested in this sector. As legendary mining speculator Doug Casey often points out, the gold stock sector is tiny compared to most other sectors… so if there’s a big rush to own gold stocks, "it will be like trying to siphon the contents of the Hoover Dam through a garden hose." Since folks are interested in buying all things related to gold in general, the juniors are really flying, thanks to their small size.

I can’t guarantee you these sorts of gains will continue all year. All I can say is gold is the strongest uptrend anywhere in the world right now. It’s a trend that benefits from worries over government debt and the soundness of paper currencies. I can also tell you uptrends in gold stocks can last longer than most people would believe.

That’s why I recommend all investors become interested in gold stocks right now — and stay interested in the coming years.

Good investing,

Matt Badiali
Editor, S&A Resource Report

P.S. While super-small junior golds are simply too small to recommend to a large audience like readers of my S&A Resource Report, we are still making extraordinary gains in gold and silver. I’ve prepared a short video that details how you can get in on these gains right now. Click here to watch it.

Scott B. Williams

has been exploring wild places and seeking adventure on both land and sea for most of his life. He has written about his experiences in several books, including On Island Time: Kayaking the Caribbean, and is the author of the survival books Bug Out: The Complete Plan for Escaping a Catastrophic Disaster Before It's Too Late, and the recently released Getting Out Alive: 13 Deadly Scenarios and How Others Survived. More of his thoughts on survival topics can be found on his blog: Bug Out Survival.

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  • CJ

    I don’t know where this guy gets his “facts” but, despite the dow bottoming 13% below it’s April high, it is only off 3% as of the date of this writing, and has been on a nearly constant climb since July. I wouldn’t call this a 6% decline… so how much more in this is exaggerated?

    • BigBadJohn

      since 2008 I have made over 20% in the stock market, granted some of my biggest gainers have been in gold mutual funds.
      If you are interested in dabbling in precious metals check out EFT’s and let someone else diversify for you.

      GLD GDX or SLV

      • Al Sieber

        Most EFT’s don’t have the precious metals to back themselves up if every one took delivery of their metals.

        • Al Sieber

          Check out: Resource World .com. for Junior Exp. Co.

        • BigBadJohn

          Agree, most of the most profitable do not hold gold at all, they are the junior miners mentioned in this article.

          Another thing to think about, I was reading another financial newsletter and their conclusion was that gold was not walking lockstep with the weakening of the dollar as everyone preaches. What they noticed is people apprehension factor has a larger influence on the price of gold. The more people are scared by the future, the higher the price of gold.
          Read what you will into that, but if people start feeling better about the future because of midterm elections or jobs start coming back- whatever – the price of gold will weaken.

          • Al Sieber

            BBJohn, i agree with you there, it’s kinda, wait and see. we could see $1500 gold by years end, and then time will tell.

          • s c

            BBJ, don’t wait for gold and the dollar to ‘walk in lockstep.’ For many years, Uncle Scam has done his worst to artificially depress gold prices.
            Uncle Scam knows that he’s pissing up a tree, but he has no choice in the matter. He has chosen the traitor’s path.
            The dollar will eventually implode, and the masses will then have to admit that a paper dollar is a scam. Uncle Scam does this to please his masters. In no way can Uncle Scam claim to be trustworthy. He is a criminal by his own choice.

  • jtrailroad

    i have sislver dollars i feel on byuying more of them do to Obamacreenew rule or tax on buying gold.

  • Al Sieber

    Sorry but, I’ve worked for Junior Mining and Exp. companies for 34 years and hardly seen any production come from our Exploration projects. it takes 10 years from discovery to production after all the permits etc. a lot of this easy money is nothing but scams. I’m sure some of you heard about the geologist who accidently fell out of a helicopter after “salting” some samples. buy physical gold only.

    • James

      Let’s remember that after the stock market crash of 1929, and the ensuing depression, people withdrew their money from failing banks, en masse,and demanded that it paid in gold or silver. This caused all federal banks to fail, and when FDR took office, he had possession of gold outlawed, using as an excuse that there wasn’t enough gold to cover all the paper currency in circulation. FDR is President Obama’s hero and will probably do the same. For that reason I would suggest buying silver, in the past two weeks it has incresed in price 6.7%. That’s better than any stock dividends. However, buying precious metals doesn’t increase one’s wealth, it preserves it.

  • FreedomFighter

    Metal prices skyrocketing seems great until you realize its being driven by fear, fear of stocks crashing, fear of the dollar going into an inflation spiral, fear of war, fear of uncertainty in the future — all being shoved down our throats by a gang of thugs in DC bent on self enrichment, power and communization/enslavement of Americans to goverment. We stand in the doorway to chaos.

    The shedemon-toad Pivens is smiling again.

    Laus Deo
    Semper Fi

    • Richard Pawley

      Of course there is some truth in this but if you look at the value of today’s dollars compared to say 1980 when gold hit $850, then in 1980 dollars today’s price is actually around $490. Some believe EFT’s are the first place that government’s will go when it’s time to seize gold again. They may, however, be a good place to go to for a while, then get out and take your paper profits and start stockpiling those things that will cost an arm and a leg in a few years. Gold is no longer cheap as it was for so many years but it is not as high as it is going to go. There is still less than one ounce for every person on earth and central banks are no longer selling like they once did (OK, maybe a little, but not tonnes as they did each year a few years ago). Also the new gold coming out of the ground appears to be less each year, just like oil. A good rule is moderation in all things.

      Big Bad John has a point, that if everyone is celebrating a great conservative turn-out in the mid-term elections in another month that could cause gold to a take a hit, but since it is unlikely that real jobs are going to re-appear anytime in the next few years, it will only be temporary. Of course this is only of concern to traders who buy and sell. The smart ones make money no matter which way prices go up. I tried that once but I’m not that smart. Sadly, the 111th Congress which has been a Democratically controlled congress since it’s inception in 2006 has spent more money than we have gold in the US TREASURY.
      In fact JUST THE DEFICIT they have incurred since they took over is more than we have gold and we have (supposedly) more than anyone else in the world. The point is that when the dollar finally crashes it will mostly likely not be alone. All paper money through out the world is eventually going to crash, although I cannot give you the month and the year. I said so in my politically incorrect book last year and the only thing that has changed is that the world situation and the economy of the US have gotten worse. (Pretend it is better if you wish. I know some who do but I don’t have the time to educate them. The stock market going up doesn’t make the economy better. It just means the market is soaking up some of all the money that is coming in from elsewhere. The old rule of the stock market is to never have more there than you can afford to lose). The talking heads on TV say things are getting better, but if that is all you know you are to be pitied.

      Remember to register. That closes next week in most states. While it does make a difference who gets elected and who gets kicked out next month, the days of electing someone to represent us and then believing they will just do so are over. Congress musts be watched like a hawk and that is why Lieberman and others want the government to have the power to be able to shut down the Internet like the government does in Red China. Of course they say it is for other reasons. In case of a real emergency does anyone thing they will not do it anyway? Government as big as ours can pretty much do whatever they want at first. There are a lot of people in the world (and some in Congress) who hate the American way. Some want to change it into something totally alien and others want to destroy it. Does anyone know what the current odds are on having WWIII break out for real within this decade? The odds makers in London offer bets on things like this and I was just curious.

      • http://PersonalLibertyDigest DQuiney

        Mr. Pawley is correct the days of electing someone and thinking they will represent us are over. They, politicans, are boughty out by the Federal Reserve, private banker, accelerating the erosion of our rights and one world govt. . The Federal Reserve does not pay federal or Stat taxes. Why? Article 1 Section 8 only authorizes congress to coin(print) money. The Federal Reserv in essence is an illegal business(loan sharking). Everyone reading this on your computer- google federal reserve and see the truth for yourself. Executive Order 11110 is the REAL reason why President Kennedy was assissnated, the executive order abolishes the federal reserve; but it has never been enforced. Why? Why is the findings of President Kennedy kept secrety for soo long and not made public? The federa Reserve, is the reAL ENEMY AGAINST THE AMERICAN PEOPLE!

        • vicki

          Further evidence that the Fed Reserve is the problem is in the refusal of our own Congress to audit the fed. Lets put more and more pressure on them both now and after the election.

          http://www.downsizeDC.org/etp/campaigns/112

          • s c

            Vicki, in the near future, doubters and the uninformed will realize that Congress uses a hands-off approach in Fed matters because the miserable bastards and bastardettes who infest Congress know who contols the Fed.
            Not being able to get re-elected would be the least of their problems if they suddenly decided to grow spines and use what little they have between their ears. They are literally “owned” by those who mastered the paper wealth scam.
            In politics, when you learn who the real boss is, the sheep can piss and moan all they want. Control trumps responsibility, and oaths of office are worthless (Obummer is a prime example of this generational problem).

        • BrotherPatriot

          Mr. Pawley…indeed, once a gain a fountain of information & ty for your work.

          DQuiney…indeed correct as to why JFK was killed. Both him & Abraham Lincoln tried to free America from the leech’s who own the Central Banks and who keep us in bondage…with intention.

          Vicki…ty for the informative link & spot on.

          Amsel (Amschel) Bauer Mayer Rothschild, 1838: “Let me issue and control a Nation’s money and I care not who makes its laws”.

          • Vicki

            Welcome. We should all go there every day and send a letter on at least one of the campaigns

            http://www.downsizeDC.org

  • http://LibertyAlerts Thomas Cieslik

    Tell your readers about your great pick BQI..Oil sands a couple years ago. Great Pick!!! NOT!

  • Truth

    Lead, copper and storable food are good buys also.

  • http://PersonalLibertyDigest DQuiney

    Hello. Wake up. If the people do not want inflation, recessions, and depressinons then we have to abolish the Federal Reserve, private bankers who print money and loan it to the govt, at interest. Our income tax payments then go to pay down this debt(defecit) which will never be done because the debt is more than the income tax payments sent in.See Article 1 Section 8 of the U.S.Constitution, authorizing only Congress to coin(print) money. The Federal Reserve is an illegal business that does not pay Federal or State taxes. Why do they not pay TAXES?

  • Gordon in Texas

    OK. I think we all agree that the Federal Reserve is anti-American and they are all bad little boys and girls. The chances of the American public ever changing this system, such as ridding us of this parasite we call the Federal Reserve, are pretty slim. Instead of continuing to walk into the same wall, walk around it. There are ways to beat the same system that was designed to be used against us.

    I agree with Al Sieber regarding buying gold or silver. If you’re going to invest in gold or silver, buy the physical asset. Physical assets are more difficult to track and easier to hide if the government ever wants again to confiscate gold “for the good of the country.” EFTs of precious metals are easy to trace and manipulate by the government (translation: confiscate). And from what I’m reading from sources that actually get their hands dirty, investing in Junior Mining and Exploration companies is still a crap shoot.

    The dollar is taking a beating and many of us are preparing for the worse, but this country has been here before and, with the right leadership, it can recover. Doing nothing is unacceptable; yelling that the sky is falling is, in a sense, creating an atmosphere of panic, which sells a lot of books. Want to really make a financial killing? Write a book.

  • guyb

    Fear is what the controllers want form all of us. They cut the water to farms in northern calif and it kill off that food supply. As they pay big corp farms not to grow they can then control the food supply and that means control of you and I. In the end,the metals will be held by the big boys,the food by the big boys and all the control will be the big boys to use as they want to. It boils down to control. When was the last time anyone auditted fort knox to check on Americas gold supply? They will not let that happen…. Bottom line is, People need to wake up and try to be as self sufficent as possible. Grow your own garden to supplement as muh as possible. If you buy silver,go with silver pre 1964 dimes as they are broken down into spendable portions already.We really need people(elected officals )who love our country and will create and stick to a balanced budget minus about 100 billion a year and use that 100 billion a year to buy down our national debt. We also need to start drilling for our own oil and stop letting the middle east control us.

  • Jim

    GPXM is moving up lately….

  • http://gmail i41

    If the marxist muslim moron mule and The National Marxist Democrat Communist Party smuckswork quit impeding oil drilling here and putting in pipelines here in the USA. We could be out of debt to China and have money in our own banks, and not be under the pedophile goat wranglers from the middle east. The green crap of idoits thinking electric cars and giving 50 billion to the UN to buy the bush burgers in 3rd world countries to have energy effeint stoves and refrigerators. There isn’t a democrap that isn’t a marxist communist in the beltway or the country or even on this site. That must be why muslims and democrats are on the same brain wave frequencies, both are congential liers, both a pious pervs, and both want one world crap, wheather it is religion or a dictatorship of total control over ever aspect of your life and what you do.

  • everett

    exploration gold mining stocks seems very risky, as hardly one hole in the ground out of 100′s becomes a real mine.

    good luck picking a winner, best only in bull market i think.

    MANILA EXPLORATION co. has been seeking buried gold treasures for some twenty years. this treasure hunting outfit’s agreement says would share findings with all loaners to keep projects going philippinetreasure.com

    anyone know their latest chances for recoveries? they say they now got a real japanese burial team old officer as guide. like to know what u know of their prospects, which could be only an balance guess.

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