The dirty little secret of the last gold bear market!

[Read newsletter online]( TRENDS August 27, 2017 Dear investor, Many stock market participants are wary of gold mining stock. And to be clear, this is quite normal: this sector collapsed with 85% peak-to-trough, during the last bear market. Have a look at the complete carnage, caused in the period 2011-2015. Down 85 percent; That’s just enormous, for any index. So what happened, really? Of course, gold companies were leveraged to the hilt. The price decline of gold, which started in 2011, caused havoc throughout the complete industry. - Major producers yielded instant losses, - mid tier developers grinded to a complete halt - and junior explorers went bust in droves. In such a boom-and-bust cycle, stock prices would normally be cut in half. And indeed, that’s what we see saw in the first part, of the collapse. The Gold Bugs Index – HUI – dropped from a peak over 600 points, to around 300 in the midst of 2013. But the carnage didn’t stop there. In the years following the first collapse, the HUI lost again over 2/3 of its value, dropping from 300 to 100. What happened here? Sure, the price of gold dropped further from $1,300 to below $1,100, but this alone doesn’t explain the large ongoing correction in the gold mining sector. The dirty little secret here is: shares outstanding (SO)! While the sector was struggling to keep its head up, the management of the industry giants had no better idea to compensate themselves, other than to produce large amounts of extra shares. Over the complete period, peak-to-trough, the components of the HUI-index generated 30% extra SO. This comes on top of the gold price correction, and the damage from lingering losses. At the time, the sector seemed to be its own worst enemy. But, there’s light at the end of this tunnel. Not only is the price of gold sloping higher, since the bottom of 2016. Also, the inflation of SO seems to be hitting the brakes. A few years ago, it wasn’t unusual to see year-over-year increases of SO by +5%! More recently, the rate of change in the SO has dropped to 1% or less. Still, gold mining companies are producing extra shares, but they are mostly used to pay for acquisitions, and less for compensation. An expensive lesson shareholders in this industry had to learn, during the last big bear market. So when the rate of change in the SO could grind to a halt, while the price of gold could breakout here any moment, prepare for brutal price increases in this beaten down sector. You already got a little taste of what could happen, when this thing starts melting up. In the beginning of 2016, the HUI shot up with almost 200%... in just six months! (see chart above, again) And still, the HUI is up over 100% from the dead lows, in 2016. Just like other commodities breaking out from the multi-year downtrend, the gold & silver mining sector is setting itself up for many years of aggressive price moves, all the way up to the highs of 2011… and beyond! Remember, our price target for the HUI still stands at 1,200 points, when the gold price crushes its old highs of $1,920/oz. That’s a sixfold increase, from current price levels. Make sure you are positioned in the [BEST GOLD & SILVER STOCKS]( out there. We have our [PREMIUM SELECTION]( of this sector, lined up in the Gold & Silver Report. You’ll find best majors, mid tiers, and juniors in this report. And our analyst team does a close follow-up of all these positions. Be sure to sign up to the Gold & Silver Report, if you want to maximize your profits in gold & silver shares. And while you are at it, don’t forget to profit from our temporary END OF SUMMER (EOS) DISCOUNT DEALS: [EOS 12M COMBI: $249 (normal price: $399)]( [EOS 24M COMBI: $299 (normal price: $499)]( Make sure you sign up for these majors discounts, as they will end in the next few days. Kind regards, Secular Investor Copyright © 2017 Secular Investor [Disclaimer]( - [Unsubscribe](