Richard Kaiser is the founder and president of Yes International, a 25-year-old investor relations firm that specializes in stocks listed in the secondary markets. He acts a conduit of communication between the companies he works for and their investors.
He has vast experience representing, in particular, mining company stocks.
He’s seen a lot in the past quarter decade and he has noticed an interesting bit of information about apparent mining stock trends.
"Generally speaking, every 3 to 5 years or so – sometimes longer, sometimes shorter – it seems to me that we see something of a purge in mining stocks, in the secondary / OTC markets at least,” Mr. Kaiser said.
“Mining stocks emerge and disappear generally along the course of a cycle. The good ones tend to weather those cycles and the weaker ones go away. It’s really quite interesting.”
We gathered some data to see if a trend could be identified. A chart of the Barron’s Gold Mining Index (BGMI) closing prices since 1971 certainly resembles the roller coaster Mr. Kaiser describes:
Note the peaks and valleys over that period of time: The peaks seem to happen, on average, about 4 years or so, as Mr. Kaiser stated.
So, where are we and what does that mean in terms of history? Mr. Kaiser’s opinion is:
“It appears – and I have to stress that word ‘appears’ – that we may be at the bottom of a long valley in a cycle. I can’t say for sure, of course, but it certainly looks to me like the cycle is beginning to head upward.”
”Small exploration mining stock like ACRL could be good opportunities with a potential new ‘BULL’ market in precious metals.”
Now, Mr. Kaiser himself “gets” that there are a myriad of other factors at play here that could affect the prices of these stocks as a group, or individually, one way or the other. “If I could find a cycle or pattern that emerged every time with perfect regularity, I’d be a much wealthier man”, he says.
Still, it must be said that the past has presented an interesting scenario. Note also that, today, we seem in an extra-long valley – one of the longer ones – and, while this is certainly NOT meant to be investment advice, this may be an indicator that these types of stocks are something to discuss with your financial advisor.
[Note: this chart was generated by Sharelynx Gold, World Gold Charts generator of the BGMI index since 1971; source: http://www.sharelynx.com/chartstemp/free/fchart-BGMI.php]
