"This baby’s got to break in a big way"

Written by Gerardo Del Real
Posted April 16, 2018 at 4:01PM

There’s two types of capital that drive the resource space: institutional capital and retail capital.

The usual order of things is that the institutional capital, the so-called “smart” money, positions itself early, picking the best names with the best management teams at bargain prices.

Then it simply waits for the retail money to recognize the trend, come in, and bid share prices up.

The "simply waiting" part is the hardest part for the retail investor and the reason why most retail investors don’t buy low and sell high.

All around, there are signs that commodity shares — especially in the junior space — present one of the most compelling risk-reward propositions in the equity markets and the smart money is taking notice.

A new survey by private capital tracker Preqin found that fundraising is on track for a record year in the mining and metals sector.

In February, Orion Mine Finance — considered to be some of the smartest money in the business — closed on the largest mining-focused fund in five years, and the second biggest fund dedicated to the sector in history.

The New York-based firm closed on its Fund II after securing $2.1 billion including a co-investment vehicle.

Frik Els of Mining.com recently reported that Orion has completed six deals for approximately $830 million.

Preqin's 2018 Global Natural Resources report also went on to report that 13 funds are currently in the market targeting the mining sector, seeking a combined $4.9 billion from limited partners which include sovereign wealth funds, public and private pension funds, foundations, and family offices.

If that weren’t enough, trade wars, military strikes in Syria, a U.S. president with the temperament of a five-year old — a bratty one with a Twitter account at that — and instability throughout Europe are all now very permanent parts of the investing landscape.

Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, recently spoke at multiple conferences giving his perspective on stocks, inflation, the dollar, and gold.

His presentation raised concern over the $2-$3 trillion in new treasury issuance that will come as a result of a rising deficit in the U.S. without a recession.

He noted that inflation was rising in the U.S., Germany, and even Japan.

When it came to the gold price, he outlined why he believes the dollar is likely headed lower which, of course, will be bullish for gold.

“We see a massive base building in gold. Massive. It’s a four-year, five-year base in gold. If we break above this resistance line, one can expect gold to go up by, like, $1,000,” he said during the 2018 Mauldin Economics Strategic Investment Conference.

He also repeated something I’ve been trying explain to you for months. In his words “one way or the other this baby’s got to break in a big way."

Those of you familiar with my views know the levels we need to breach before a breakout to the upside. $1,376 an ounce and then off past $1,400 we go.

The gains for the juniors will be incredible.

Right now, retail money simply doesn’t care. It’s why the next leg of this bull market will be a powerful one and, for many, life-changing.

I’ll repeat what I’ve said many times in recent months: this is the time to be adding to your favorite junior stocks.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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