Issue link: http://resourceworld.uberflip.com/i/712968
a u g u s t / s e p t e m b e r 2 0 1 6 www.resourceworld.com 5 e d i t o r ' s c o m m e n t s E l l s w o r t h D i c k s o n ellsworth Dickson, Editor-in-Chief email: editor@resourceworld.com t: 604 484 3800 | 1 877 484 3800 F or some time Resource World has noted that many quality mining stocks were so low in value that there was no use in relying on fundamentals to figure out what they should be worth. Between generally falling commodity prices, a slowdown in China's industrial activity and a relentless overriding negative investor sentiment, mining stocks suffered a multi- year downturn. That is now history as many quality mining stocks have increased in value 200%, 300% and more. Mining analyst gurus such as Sprott's Rick Rule encouraged mining stock inves- tors to acquire quality mining stocks when they were ridiculously low priced. He added that when the tide turned it would be "explosive". He was right. "We are in the beginning of a bull market," he said at a recent resource investor conference. He also noted that the greatest fear that inves- tors should have is themselves; that is, how they pick stocks and when to buy and sell. It was February when the action started. Some mining stocks like Golden Arrow Resources are up 500%. Indeed, after four years of suffering, gold and mining stocks are the hottest investments on the planet. The Top 10 performers on the S&P/TSX Composite Index for the first half of this year were all mining companies. Here are some of the reasons for the pre- cious metals stock recovery: • Mining stocks were oversold • Ridiculously low quality mining stock prices set the stage for a comeback • Exploration and mining companies can now raise funds (more private placements at higher dollar figures) • Tremendous demand for gold by some countries and individuals • Fears that US monetary policy is not working; printing more money delays pain and devalues dollar in relation to gold • Quantitative Easing has not generated economic growth • US debt is unserviceable • Fear of US dollar collapse • Brexit fears generated uncertainty • European economies and banks are in trouble • Various political uncertainties • Gold is perfect hedge for the above problems Credit Suisse is of the view that gold could reach US $1,500/oz in early 2017 while other analysts are more bearish and think gold could fall below $1,000/oz. Silver, being both money and an indus- trial metal, has different fundamentals. Some forecasters are predicting it to rise to between US $25 and $32/oz by year end. So far, it has done well and is holding at around US $20/oz. Some mining analysts like copper and zinc for mid-term investments. Since it costs more to produce uranium that what it sells for, with 509 nuclear reactors planned, ordered and proposed plus 62 under construction, as well as Japanese reactors coming back on line, a rise in the price of uranium and uranium stocks is inevitable – just not next week. So now the questions are: Is this ris- ing mining stock valuation situation sustainable, will it plateau or will there be a temporary correction? Unless you are a nimble trader, "irrational exuberance" stock valuations are pretty dangerous as they can't last. However, many quality mining stocks, while having 200% price increases, are still below prices of a few years ago. There looks to be still some "rocket fuel" left. n Mining stock bull run looks to have legs