David Erfle: Gold Often has a False Move Before the Big Move
David is a newsletter writer and he brings us his insights into today’s market. He is a skeptic when it comes to the junior mining sector. He became involved in the resource market in 2003, shortly after losing a good portion of his investments in the dot.com crash. Those lessons helped him look for sectors that are undervalued.
He feels that “The merger of Barrick and Rand Gold is very good for the sector. At sector tops and bottoms there is a lot of merger and acquisitions. This is very encouraging.” He likes the Rand Gold model along with their criteria for acquiring companies which he also uses when examining mining companies.
He advises his clients where to be based on the market cycle. Currently, he is staying away from optionality plays. He likes early age exploration with plays good management teams, targets, and properties.
Gold priced has been hit hard recently by the US Dollar Strength. Unfortunately, the recent bearish dollar has had minimal effect on the price of gold. He says, “Were in a very toppy stock market. It’s advisable to take a wait and see attitude with much of your holdings in cash.”
The Fed removed “accommodative” from their statement Wednesday and shares sold off on the GDX. Leading up to the meeting things were starting to get bullish, but now it appears there is potential for a double bottom in the gold market.
David describes the services he provides in his newsletter, why it’s different, and how he is geared towards making his subscribers money.
Talking Points From This Week’s Episode
• Big mergers lately are very encouraging.
• Majors need to acquire juniors to rebuild their reserves.
• Feels the bull market started in 2001.
• You should have a large cash position but hold some gold assets.
David Erfle founder of www.juniorminerjunky.com is a self-taught mining sector investor. He stumbled upon the mining sector in 2003 as he was looking to invest in a growing area of the market. After researching the gains made from the 2001 bottom in the tiny gold and silver sector, he became fascinated with this niche market. So much so that in 2005 he decided to sell his home and invest the entire proceeds from the sale into junior mining companies. When his account had tripled by September 2007, he decided to quit his job as the Telecommunications Equipment Buyer at UCLA and make investing in this sector his full-time job. He has survived two bear markets, witnessed incredible sector changes and had to alter his investment philosophy numerous times to adapt to changing market conditions