Is This a Great Time to Buy Junior Mining Stocks? - Mike Swanson (05/11/2017)
A lot of people are saying that gold is going to collapse now, because it rallied up to $1,300 an ounce and has been falling off of that level.
But as I explain to Jim Goddard that move MUST be interpreted with the bigger trend in gold to understand what is happening.
Right now though gold stock traders are becoming incredidly despondent.
I'm getting emails from people asking if they should sell!
My answer is that I AM NOT SELLING!
And I am planning on doing MORE BUYING!
However, there is something happening that is messing people up.
One of the big gold stock ETF's is disintegrating and has gone below it's December lows.
Look at JNUG.
JNUG isn't only below it's December lows, but is now even below the lows it made in the Spring of 2016!
It's a total disaster.
Now one reason JNUG has declined is because it is a triple ETF that is supposed to go up at three times the rate of gold stocks when they go up.
This means that it goes down big time too though.
But it is worse than that, because these triple ETF's all have massive daily decay factors that make them lose money overtime.
And I have told people NEVER to buy JNUG and labeled it as a toxic ETF as a result.
But there is now something else happening.
GDXJ is also becoming a broken ETF.
There is nothing wrong with GDX, but GDXJ is having problems too and people are dumping it ahead of a June rebalancing period that is causing GDXJ to be forced to sell some individual mining stocks.
Those stocks are dumping just because of this problem while most gold stocks are doing ok really.
Take a look for instance at IDM Mining, which I do own:
IDM Mining is simply consolidating while JNUG is collapsing.
Most junior mining stocks are doing fine and setting up for eventual breakouts.
People need to avoid JNUG and even GDXJ and buy individual mining stocks.
That is the big lesson.
I talked about the overall market trend in the interview, but this JNUG situation is something to now avoid if you have been trading JNUG in the past.
There is no reason to buy JNUG ever again when you can buy individual mining stocks that will go up just as much and don't have the JNUG problems!
So no I do not think people should sell mining stocks, but JNUG owners probably should get out of it and move that money into real stocks.
Now I do not think gold and mining stocks are about to surge and go up straight from here...
But I do think they are lining up for a LONG-TERM signal in the coming weeks or months that will signal a new massive rally that will leave almost everyone behind.
That is the situation we are watching and ready for in the Power Investor group while everyone else is nervous.
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