How to Make Money Investing in Gold Shares
Dear Reader,
What most don’t understand is that it’s really not about the assets or commodity these companies are working on.
Your potential gain is not going to be determined by the projects or the move in the underlying mineral.
The reality is that all of these junior resource stocks that are sub-$1 billion are extremely speculative.
Seeing a sector that can move up or down 50% off of no news and for no other reason than volume is what gives the junior resource space the reputation of being both a lottery ticket sector and a money graveyard.
To truly make astonishing gains in the junior resource space, you need to realize that this should really be considered the research and development space for the larger mining giants.
The sector as a whole is very inefficient, and mining stocks as a whole make for a horrible long-term investment.
It’s extremely cyclical, though, so if you can get in at a low and back the right management team, you can make a fortune.
These junior resource stocks under $1 billion are entirely about the people who run them.
The math is much simpler than most think, and it’s why most investors don’t end up making any money in the space.
Professional geologists, institutional investors, and rookie investors get sold on the asset, but the real secret, if you ask people like legendary investor Rick Rule, is the management team.
Shockingly, it’s really just a few groups who are competent. The vast majority of the people running these companies are not going to yield any real value to their shareholders.
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Here are the criteria we have when it comes to backing any company in the resource sector.
1. We ONLY deal with owners. If you’re invested in a company where the management team gets rich from their salary, you are almost certainly going to lose money.
I only want to partner with people who make a fortune because we make a fortune!
This means we are looking for management teams who write checks into their companies, who buy shares on the open market like we do, and who own meaningful positions in their companies.
Take Keith Neumeyer, for example. He’s bought millions of shares of First Mining Gold on the open market, and he doesn’t even take a salary! That’s called being all-in!
Amir Adnani is another great example. He owns 8% of GoldMining Inc. He’s the 2nd-largest shareholder after Rick Rule, Doug Casey, and Marin Katusa’s fund.
2. They have a proven track record.
How many people have they made rich?
For most people in the sector, if they’ve had any success, it’s for a handful of people: themselves and close friends.
Forget about those guys. How many strangers have these people helped? How many investors were rewarded with their last company?
I don’t care if they drive a nice car or have a big house in West Van… How many investors drive nice cars and live in beautiful houses because of their efforts?
Always partner with the proven winners.
As an added value, proven winners can make phone calls to fund their companies so that they can survive even the worst bear market in 40 years, with their stocks leading the entire sector on just a whiff of a bull market!
The geologist who has made a discovery can always get more funding to explore.
3. The unicorns of the space.
In every industry, in all parts of our lives, there are the naturals.
These are the Michael Jordans of the world, people who were born to do what they do.
I love getting to know the people we back because you truly can find out what they are made of.
We don’t want to partner with people and companies who just see this as a job or a short-term part of their life, even a stepping stone to another career path.
I want to partner with people who, even when they have $100 million in their checking account and are 80 years old, want to keep doing this. And most importantly, they are good at it.
In order to successfully run a junior resource space, you have to have a great balance, with a team of experts.
All of these stocks face political risk, so you need people who can flourish even in the worst of political climates.
You need charismatic people who can both charm the locals and bring in new shareholders.
Outside of the actual end-game, which is selling your company to a major, everything in between is about trading volume, so you had better make sure the people you back understand how to market a public company.
Marketing prevents dilution, gives the companies a stronger currency (share price), and also makes the stock more inviting to larger institutional investors who need a certain amount of liquidity to make an investment.
We also want real killers when it comes to negotiation because these people are out buying real estate… And in real estate, you make money on the buy.
Summary: We suggest 5 to 10% of your portfolio be in speculative investments, like junior resource shares.
This sector is currently in the early stages of a very healthy bull market, so we are big buyers.
If you decide to buy a stock we suggest, remember that these are not day trades.
These are early-stage research and development natural resource plays (junior miners) that really need at least 2 to 3 years to become value targets for a larger company to take over.
Safe investing!
Best Regards,
Daniel Ameduri
President, FutureMoneyTrends.com
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