There’s a reason gold stocks move so much in a bull market: the market is tiny. The global gold market has a combined capitalization of about U$225 billion – the entire gold business is smaller than a single company in the S&P’s top 30.
That means when generalist capital rotates in, there aren’t a lot of places for it to go. And so a lot of dollars pile into a few places. Where are those places? To start, generalist capital interested in gold goes to gold-backed ETFs and the biggest of the major miners.
That’s clearly underway already. Last week the SPDR Gold Shares ETF, which is the biggest of the gold-backed funds, saw $1.6 billion in inflows, including the biggest one-day haul since the fund started in 2004.
Miners are also moving. In the last month the NYSE Arca Gold Miners Index is up 25%; half of those gains happened since the Fed meeting on June 19th
Gold-backed ETFs and major gold miners remain preferred destinations throughout a gold bull market. But other kinds of companies soon get attention too.
Next in line are mid-tier miners, single asset operators, developers, and optionality plays. Those are all self explanatory aside from the last category.
Optionality plays are companies with large assets that would not make a lot of sense to mine at low gold prices but that make tonnes of sense once gold rises. That move – from not economic to economic – is a game changer for the asset and therefore for the company.
As such these stocks outperform in a rising gold market. They’re called ‘optionality’ plays because they are like buying options – they are a call on a higher gold price.
I’m introducing one such company today. I think the Maven Metals portfolio is already well positioned for a rising gold market, but it lacked a stock chosen specifically for optionality.
In her letter, Resource Maven explains what she is buying and selling, and why. Maven has bought into several of the markets best - performing stocks well ahead of the curve. She regularly identifies exciting new exploration opportunities and manages the inherent risk by selling some into speculative gains. And the mine builder and operator stocks that form the basis of the portfolio give strong, ongoing leverage to the rising prices of gold and silver. She has your precious metal bases covered.
The change is terrific for two reasons: it's current and concise. I suspect it really isn't that much harder for you to do since you always have opinions on the companies anyway. For me it provides current assessment without having to wait for an occasional update.... Another comment on your service is that you cover way more companies than I want to invest in but that provides me with a selection. I've always considered advisors as desperately needed filteres in the dog eat dog investment world. Keep up the good work
Hi Gwen: I was going to write a couple of days ago because I had not received anything regarding my subscription, so was happy to receive this yesterday.
I guess it was sometime in 2017 when I first subscribed to the Maven Letter because I was very disappointed with where my _____ newsletter subscriptions were going. I have been very pleased with both the style and contents of the letter, it reflects my interest in the junior market. I was really pleased with your excellent piece in the last issue regarding PP's and "free trade dates". But, more than anything I thank you for the Premium Service. It is a service that is excellent. In the past year we have had a number of issues that have soared and others that have been just great. There has only been one that disappointed, but even on that one I managed to almost break even and still have the warrants. Many thanks for a job well done.