Why The Chinese May Buy Undervalued Junior Miners


Recently we were treated to a high profile wedding between the Chinese CNOOC and the Canadian Nexen.  This deal attracted all of the attention of a society page nuptial.  However, it doesn’t take long for news to grow stale.  Most investors get distracted by the volatility.  Here at GST, we plumb fathoms beneath the news of the day in order to discern the roiling undercurrents that one day will surface.

At this very moment, Chinese investors are utilizing a novel approach buying natural resource assets as the U.S. dollar and long term treasuries are possibly on the verge of a major decline, leaving the Chinese overweighted in this risky sector.

The U.S. is on the verge of a major election.  The next U.S. President will have to inherit a record debt, high unemployment, global geopolitical turmoil plus the Fiscal Abyss.  See article from 7-25-12 where we called the recent top on treasuries by clicking here.

We are in period where we may see major capital from emerging economies enter the junior mining arena as prices reach record discount valuations despite gold and silver 70-80% above pre credit crisis highs.

It may be a good time to acquire and diversify by buying gold, silver, platinum, rare earths, uranium and mining investments during these pre-election jitters as uncertainty grips the markets causing a normal, profit taking correction.  

Treasuries and the dollar are trending down with the 50 day moving average providing resistance.  On the other hand, gold, silver, platinum and copper are all trending higher as the 50 day moving average continues to accelerate higher.  Copper and platinum have already made healthy 50% retracements, while gold and silver could continue to build a base for its next move higher possibly after the election.

The world is rapidly changing and we may be setting up for a major move after the election in not only gold and silver, but also platinum, rare earths and uranium miners.  Especially monitor the small cap junior miners which are priced at decade lows as investors continue to flee risky US debt and a devaluing US dollar.  Remember buy straw hats (junior miners) in winter.

Interested in taking a free trial of my premium service?  Click here.

Interested in subscribing?  Click here.

Professional and Accredited Mining Investor? Click here

No Comments Yet.

Leave a comment

You must be Logged in to post a comment.