Tuesday, May 19, 2009

What's in store for miners?

I've posted two charts to give investors an idea of what to expect as the gold bull unfolds. The first chart is First Solar. This company is a great example of what transpired during the final stages of the energy bull (although it's hardly over BTW).

FSLR tacked on over 1100% during the final manic run into the top last year. Now I want you to keep in mind that the public never came into the energy sector. You never heard the guy next to you at the bank bragging about how many shares of XOM he owned.

No, this bull came and went without the participation of the masses and it still managed to take oil up over 1400%.

The second chart is a chart of Dell. This is a perfect example of what can happen when the public goes into an asset class hook, line and sinker. Dell went from a split adjusted price of .27 to almost $60. That's about 20,000%.

Folks there's nothing more emotional than gold. When the public gets gold fever, and they will get it, we are going to see the same irrational moonshot from many of the mining stocks.

I can tell you right now there are going to be some junior miners that are going to have charts that look just exactly like that chart of Dell.

The bull is still in the early stages. I suspect once gold closes back above $1000 the public is going to start to take notice.

Those that can hang on to the bull are going to have the ride of a lifetime. Those that think they can trade something like this are probably going to throw away the opportunity of a lifetime.

Warren Buffett didn't become the second richest man in the world by trying to trade KO or AXP. That's not how billionaires are made.

Billionaires are created by getting in on a secular bull market early and holding on for dear life.

I'll leave you with a quote from Izzy Friedman:

"You can’t make big money, unless you think big money." Others have said it as well – you can’t achieve that which you can’t conceive. In the world of investments, if you can’t imagine something happening, like a stock or a commodity going up many times in value, then it is highly unlikely you would buy and hold such an item if it did, in fact, go up many times."