The Next Mining Crash: What to Do

I hope you followed my suggestions in last week’s column concerning gold and silver. If you did, you should be sitting pretty. Gold has plunged as much as $42.70, or 3.2 percent in just a week.

Silver, platinum and palladium are also getting hit, just as I warned, with more losses to come.

But that should be music to your ears. Why?

Because that is how bull markets are built. They climb higher, then selloff, then climb higher yet again. Rarely, if ever, do real bull markets go straight up (or real bear markets go straight down).

It’s just one of those things that most investors never understand, mentally or emotionally.

And it’s one of those things that even most traders don’t figure out, because most of them don’t have the necessary experience especially with their own money on the line.

To me, a trader is not a trader unless they have had at least 15 years’ experience with their own money on the line. Anything short of that is a rookie.

But that’s beside the point for today. There is more carnage coming in the precious metals — and it’s already causing the next crash in the mining sector.

Most miners are about to be toppled over again.

Yes, you heard that right. With very rare exceptions, most miners are about to be toppled over again. They’re likely to give up as much as 100% of their recent gains, if not more.

But also keep in mind what I said last week and in other published works: It is never the first move up that determines whether or not you are looking at a real bull market.

Instead, what is almost always the all-determining factor is the first pullback.

How much does it pullback? How fast does it pullback? What is the pattern of the pullback? Are previous resistance levels now becoming support?

Price fluctuates, all the time. Thing is, most analysts, investors and traders do not have the patience, objectivity, or experience to analyze price — the language of the market — no less the timing element …

Which is precisely why the majority of investors, traders and analyst are wrong the majority of the time.

Am I tooting my own horn? I guess I am, in a way, and pardon me for doing so. But I am sick and tired of all the inexperienced analysts and talking heads who are out there … and how much money it costs innocent investors.

I’m not always right either, but over time, my track record is considered by many to be unparalleled. Especially in the precious metals and mining sector.

How important is the first pullback? Well, just consider the following:

 It was the first pullback that allowed me to be one of the first, if not THE first, to predict the great 11-year-long bull market in gold way back in 2000.

That empowered me to accurately call virtually every major turn in the precious metals market since then …

 Including gold’s major pullback in 2008, when I screamed buy, buy, buy, just before gold took off from $650 to $1,921!

 And that also gave me the ability to warn you that a failed rally attempt in September 2011 signaled a brand new bear market for gold, just two weeks after gold hit $1,921!

Analyzing the first pullback that comes after a major rally … or, conversely, the first rally in a potential new bear market …

Is a major component of the many models I use. So you can bet your bottom that I am watching the metals — and the miners — like a hawk right now.

Because if the pullbacks pan out as I expect them to, then I’m going to be all over many of the best remaining miners in the world for my subscribers, with companies such as …

Miner A: This core, diversified portfolio includes companies like this, a senior miner with over 90 million ounces of proven gold reserves.

At a gold price of $1,250, that’s an asset base of more than $118 billion.

What’s more, buying shares in this company gives you great leverage on the price of gold. It’s almost like buying gold at just $15.51 an ounce — at an 98.73% discount to today’s gold price.

My year 2020 target: An easy quadruple.

Miner B: Another gem of a miner I’ll soon be recommending has only about 9 million ounces in gold reserves, yet those reserves are currently valued at a mere $1.66 per ounce!

Talk about leverage. When you buy this producing senior miner you are effectively paying $1.66 per ounce of gold, a whopping 99.86% discount from today’s gold price.

My year 2020 target: A quintuple.

And that’s just for starters.

In fact, if you are a Real Wealth member, you’ll be getting the details on these two miners in the March issue, publishing on Friday, March 18.

Until next week, best wishes,

Larry

P.S. You can avoid the biggest blunders investors make with actionable information. My new Supercycle Investor podcast connects the dots between global crises, economic cycles and your investments. Listen for free and let me know what you think of the show!

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 46

cyrus March 16, 2016

Dear, as you recommended DUST buy , should we stay with it or not? thanks, cyrus

March 16, 2016

miners have been tanking for a long time and so did dust. these leveraged etfs appear to be flawed instruments and do not work as intended.

J Sanderson March 16, 2016

If the miners have started a new bull market, I doubt that they will take 2.5 months to correct and let people in on the next up leg. I see your next low is due at the end of May. Bull market corrections are typically sharp and quick to flush out those already in and keep those out on the sidelines.

Mark March 16, 2016

Wow.. Hard to believe all these negative comments. While it is true that I don't follow EXACTLY the recommendations as I have been waiting for this market correction for a couple years but holy smokes. I have regained all the losses I had following Mike and Martin last year with your reco's. If anyone is down big from Larry's suggestions then you are over playing your percentage allocations. This last GLD put has been almost as awesome as your UVXY plays. Keep it up Larry, I'm with you all the way.

RAGNAR1 March 16, 2016

what happened to the mobs of Europeans desperate to buy us stocks for(ha ha ha)'safety"(?)

RAGNAR1 March 16, 2016

this market is going nowhere until you get rid of trash stocks like db,chk,fcx ,shld ,rig,btu etc

March 16, 2016

so if we get rid of these stocks, you're saying the market will go somewhere?

RAGNAR1 March 16, 2016

WHEN THE COMPANIES (AND MANY OTHERS)GO BK THE RETURN OF VALUE

John S. March 16, 2016

The critical people on this thread are out to lunch. I have made excellent money following Larry's advice. The only time I lose money is when I neglect to follow his advice.

John S. March 16, 2016

Larry: I have a question. In the above article you mention a couple of miners that will quadruple or quintuple by 2020. If gold goes from its present price of 1228 to 5000 during that time as you suggest it will - that would be a quadrupling of the price of gold. Are you saying that these two miners you mention will just match the increase in the price of gold despite their being so undervalued? Quadruple means 4 X the price. That would mean that if one of these miners was currently priced at $10 they would go to $40 by 2020. I would think they would have more upside than that. For most miners a quadrupling of price would just bring them back to their previous highs. Please advise.

David March 16, 2016

Larry said "quintuple" which is five times not quadruple which is four times. I do agree that there would be a greater upside.

Geo March 16, 2016

Another Trump voter. Angry, miserable, looking to blame others for their problems. No one is perfect but following Larry's advice has saved me a ton in the PM market when I almost listened to the perma-bulls like that crook Schiff.

aj March 16, 2016

it's not just Trump voters who are angry, Bernie's are too. We seasoned citizens are probably the most disgusted of all, because we remember when the small fry got a better deal than they are now. The stories of how great America was, that were repeated to us often, have turned out to be mythology, or worse, propaganda. They called Reagan the great communicator, because he got people to believe their debasement was actually going to be good for them and the country.

RAGNAR1 March 16, 2016

there has not been ANY flow of eu money into into us stocks. the market is overvalued and even they aren't stupid enough to buy it.

March 16, 2016

the market is not cheap. the easy money to be made in this bull are behind us, but new opportunities await those with smart money. you, sir, are obviously smart money.

March 16, 2016

it's simple, folks. buy low, sell high. everyone knows to buy real estate when it's cheap, but forget one simple rule with stocks - buy low, sell high.

Ted F March 16, 2016

The world is full of people who love to panic. The stock market drops, they sell and buy gold or bonds. Either of those markets fall they sell and buy the other, stocks take off, sell and buy. Stocks drop again sell and buy. Now the question Larry: Over the last seventy years the stock market has been up over any given five year period, 1941 was the end of the last five year period when that did not hold true. What has the bond and metals market done in any given five year period, is it usually up, down or stable?

Bob Schubring March 16, 2016

I'm betting that the real action will be when Saudi Arabia tries to beat up on the Shale oil industry a bit harder, by dumping more underpriced oil on the market...and their only remaining option, to pay for the costs of a price war on oil, is to sell off bullion reserves. At some point, even the ultra-extremists among the Saudi hierarchy, will figure out that they cannot afford to throw away gold, just to exclude US competition in the oil market, and when that happens, Chinese buyers will bid the price of gold (and oil) back up a bit. However, it's not clear just how stupid these secretive Wahhabi extremists actually are...and their followers are probably even dumber. So they will require a convincing demonstration, that giving away stuff at below-market costs, makes the giver poorer, and the recipients richer. China will accumulate some more gold, on Saudi tomfoolery. Saudi will see the mistake and stop selling off gold. Gold and oil prices will recover. The gold price that will trigger the shift in Saudi public opinion, is unknown. They have to experience selling gold into a price pullback, to figure out that this is a dumb idea and decide to stop dumping their gold and oil. So we watch, wait, see where the bottom falls, and buy in. Sounds like a plan to me. And I'm looking forward to reading Larry's research on miners...if gold goes up by a factor of four, and some miner with a debt load swings from selling gold into a falling market (to get cash to make loan payments), to selling at the market and getting a profit, it's pretty easy to see how a 4x move in the price of gold, could turn into a 5x move in the company's stock value, because the bank who lent them the cash, will have proportionately less of the mine's gold reserve spoken-for as collateral, and those reserves instead become part of shareholders' equity.

David March 16, 2016

The Saudis' plan to put the shale industry out of business backfired. The owners that had to get out sold at a loss selling their assets at a lower price than they bought it for making production costs lower for the new owners.

James Connolly March 16, 2016

15 Years trading is a very long time indeed. A Day is a long time when your under pressure. 4500 Days doing anything is a really long time. You would want to get good at what your doing if you do it for 4500 Days.

March 16, 2016

it is absolutely 100% obvious that the miners are overvalued. why? the answer is very simple - because gold is overvalued. the bottom in gold is a ways off.

william dolan March 17, 2016

THE WORLD IS IN A GAS BAG!Everyone can divide there assets by 20 and get realistic about what you own. WILLIAM

John T March 17, 2016

what cool-aide have you been drinking??????

John T March 17, 2016

You obviously haven't been following GDX and GDXJ recently ?????

cool March 17, 2016

cool

Jedd March 16, 2016

I know Armstrong's Socrates computer mentioned that if gold makes a low past 2016 there is a good chance it will do down through to 2024 - yikes. Although it said it's unlikely, that's the first time it's brought the premonition to the table. Everyone is waiting for the next leg up in gold, will many be disappointed? Since the world is moving towards electronic money gold could indeed become a barbarous relic?

Karin March 16, 2016

Hi guys! I'm from Sweden, and as you all know, we are all blond, blue eyed and pretty stupid. Here's what I don't get: If the service provided here is as bad as some of you say... why do you keep reading? Karin

David C. March 16, 2016

Excellent post Karin, you omitted attractive for most Swedes I know.

John March 16, 2016

For the fun of it.

John T March 17, 2016

We don't say we use it, just read it

James Connolly March 16, 2016

My older sister didn't do her first days of work till she was in her 30s think of how long a space of time that is. It's a woman's world at the end of the day.

Beverly March 16, 2016

Listen to Larry.

Michael Jane White March 16, 2016

1. Please tell your fellow analysts that the USNavy has such a far reaching ability that Uruguay is a ridiculously stupid place to have property, money or anything else much less your family. Remember that this government backed the British in keeping Falklands. 2.NAFTA is nothing more than a way the British Commonwealth of Nations to have free rein over the North American continent through Canada all the way to Mexico and back to the Hudson Bay region. Guess how many nations are in the British Commonwealth? Please be advised that the banking community was never so powerful as when they reestablished entrance into England after centuries of being negated entrance by the Plantagenet family for control of the exchequer and use by the sovereigns. Re: William and Mary's invasion by the dutch statholder backing and the Portuguese finance minister of the time. 3. General Andrew Jackson temporarily negated these banking "families" dominance in our financial control as had Alexander Hamilton until his assassination(duel) by Aaron Burr et al. CHILDREN GET A LIFE AND STOP BEING A BUNCH OF MR. ROGER'S NEIGHBORHOODIES!!! It's all about sovereignty, eminent domain, not individual liberty. Get real. The American Mythos has been scandalously misused, abused and led around by the nose to make all of us look ridiculously undereducated.

John March 16, 2016

Michael Jane, did you not take your meds today?

bob March 16, 2016

lol the HUI just made a new high on dovish fed comments gold is going to $1400 before a major correction.

bob March 16, 2016

miners are not overvalued they are at historic lows still even after the huge rally since Jan.

Russ March 16, 2016

What is the all-in cost to mine the 98% discounted gold by the time is sold? What is the profit that ultimately accrues to shareholders? It matters not if the in-ground gold is free.

RC March 17, 2016

Larry, I enjoy reading your columns about metals, Gold and Silver. I am a retired old veteran with very little money to invest. I can not afford to pay the high price cost of your service to buy very high priced stocks that you mention most of the time. I have been buying Silver 1 oz Eagles for many years and a few 1.00 Metal stocks. My question is, do you have a less expensive metal service that is not priced so expensive that only the rich and famous can afford it?

Mark March 17, 2016

What was yesterday in the great scheme?

John T March 17, 2016

it is telling you that Janet Yellen and the crooks at the FED have no idea what they are doing

Dave March 17, 2016

My year 2020 target: An easy quadruple - Dangerous man,. no guarantees in investing Larry!

Desimon March 17, 2016

The west might be moving to electronic money but the rest of the world is not and won't be because economic power has shifted in their direction and with it the precious metals reserves the west holds. Electronic money will be soft currency, rather like the chinese who started out with a 2 tier currency, the domestic currency being only traded amongst its own population. So there you go and anyone that believes gold will have little value when moving to an electronic currency has no knowledge of history or idea of monetary theory and should shut up, sell their precious trinkets and bullion and put their money where their mouths are. Electronic currency will epitomise the decline of the West's industrial base and now that Russia and its allies are flexing and demonstrating their superior military capabilities the West will no longer be able to use force to slow it down. Look at google maps, particularly of the middle east and do so from a southern perspective: all the war torn countries are by shipping lanes. Compare the land mass, population and resources of the West to that of the rest of the world or if you so wish the land of electronic money to that of gold and ask yourself the outcome. Payback time is coming to these colonial countries and electronic money will be the mark of their populace's servitude and poverty. p.s. Michael Jane's commentary was spot on

Sam Lupowitz March 19, 2016

Guys. What's the bottom line? Gold is going way up, or way down?!?!

CUZIN ERN March 19, 2016

A horse race has a number of the one that turns out to be a winner, just think a while before you make your bet???

denis stay March 19, 2016

Hi Larry! Read every word that you send me. I'm curious why you don't rec. scaling in on gold. I thought the GDX at 12 and change would have been a good spot to put 10 to 20% of your gold allotment. KEEP THE COMMENTS COMING!!!!

P Brain March 19, 2016

My best advice, Listen to Larry, he is a pro in the Gold game, all the negative comments come from all those 'Investors' who misread all of Larry's comments in the past, and lost most if not all of their money, then they take it out on Larry or their wives, Larry does not have a crystal ball and therefore cannot get it spot on every time, but one thing is sure, he is not very far off the mark when all the other 'Experts' have tried to knock him down.