This Gold & Silver "2009 Boom Signal" Just Flashed Again!

Key Concepts

Precious Metals Bull Market
Gold and Silver Performance vs. Mining Stocks
Institutional Money Rotation
Mining Stock Profitability
Fed Rate Cuts
US Dollar Strength/Weakness
Oil Prices and Mining Costs
Exploration Companies vs. Producers
Dilution in Mining Stocks
Jurisdictional Risks in Mining
Risk-Off Holdings

Divergence in Precious Metals and Mining Stocks

The video highlights a recent, unexpected trend where both gold and silver prices finished the week down, while mining stocks, which typically follow precious metals, experienced an increase. This divergence is presented as a significant indicator within the precious metals bull market, reminiscent of March 2009, which preceded a substantial upward trend for gold and silver leading to their peaks in 2011.

The speaker posits that this pullback in physical metals is not a sign of the bull market's end, but rather an indication of institutional money rotating profits from physical metals into mining stocks. The expectation is that mining stocks will catch up and eventually outperform physical gold and silver as their profits rise due to higher precious metals prices once they break out of their current consolidation phase.

Factors Influencing Mining Stock Performance

Current Bullish Outlook for Mining Stocks

Profitability: Many mining companies are extracting gold at approximately $1,600 per ounce. This cost is significantly lower than the current market price of gold, which is around $200 per ounce above the average annual price for 2025. This disparity is attracting significant interest and leading to record profitability for many mining stocks.
Institutional Investment: The speaker notes that institutional investors are beginning to scale into mining stocks, reinforcing the bullish sentiment.
Metals Price Outlook: The underlying driver for mining stock performance is the anticipated rise in precious metals prices. The speaker reiterates his long-held view that rate cuts and a weakening US dollar will continue to fuel upward momentum for gold and silver.
Fed Rate Cuts: With a high probability (over 90%) of a Fed rate cut in September and an expected 5 to 7 rate cuts by the end of next year, the market is entering a new phase. These rate cuts are expected to solidify a new price floor for gold, potentially above $3,000 per ounce, and act as "jet fuel" for silver, which the speaker believes will not fall below $30 per ounce again.
Silver's Explosive Moves: Historically, silver has experienced explosive upside moves once the Federal Funds interest rate reaches its bottom during cutting cycles. This pattern was observed in the early 2000s, during the 2008 financial crisis, and in 2020. This trend directly benefits mining companies by increasing the prices of the precious metals they extract and sell.

Historical Performance and Risks of Mining Stocks

Outperformance of Physical Metals: Since its launch in May 2006, the GDX mining stock ETF has returned 60%, while silver has returned 178% and gold has returned 412%. This historical data suggests that physical gold and silver have outperformed mining stocks over the long term.
External Market Forces: Unlike physical metals, the value of mining stocks is influenced by other market forces.
- Oil Prices: Oil prices constitute 15-20% of a mining company's all-in sustaining costs. A significant drop in oil prices (from $120/barrel in 2022 to just over $60/barrel) is a major reason for the current outperformance of mining stocks. However, any geopolitical disturbance in the Middle East that drives oil prices up could negatively impact mining company profitability, a risk not present with physical metals. The period from mid-2020 to early 2022 serves as an example where rising oil prices hurt mining company profitability despite strong gold and silver prices.
- Company Mismanagement: Mining stocks are also exposed to the risk of company mismanagement, which has been a recurring issue in the sector over the past 10-15 years.
- Jurisdictional Risks: Nationalization of mines by governments in countries where mining operations are located poses a significant risk, essentially leading to the confiscation of mined resources.

Decision on Selling Physical Metals for Mining Stocks

The speaker definitively answers the question of whether he would sell his gold and silver to buy mining stocks with a "no."

Risk-Off Holdings: Gold and silver are considered his "risk-off" holdings, serving as a hedge against other riskier positions in his portfolio.
Separation of Funds: He maintains separate funds for mining stocks and physical precious metals.
Short-Term vs. Long-Term: While acknowledging that mining stocks are likely to see significant gains over the next two years, particularly smaller producers, he views physical gold and silver as long-term, failsafe investments and insurance policies against catastrophic financial system events.

The Future of Mining Stocks and Smaller Producers

The speaker believes the biggest gains in the current metals bull market over the next two years will be made in mining stocks, specifically smaller producers. These companies, often listed in the GDXJ ETF, are still far from their 2011 highs and have the potential for substantial growth (10x or more), especially with potential acquisitions by larger miners paying a premium.

He emphasizes that while he owns mining stocks and has seen significant gains (over 100% since July 2023), investing in them requires knowledge and careful consideration of who to listen to.

Why Sponsored Mining Stock Videos Are No Longer Produced

The speaker explains his decision to stop doing sponsored mining stock videos, citing the significant risk level associated with them.

YouTube Monetization: Making videos about gold and silver on YouTube does not pay well. The speaker reveals that YouTube has paid him less than $3,000 over the last 28 days.
Sponsorship Value: A single sponsorship from a mining company can provide as much income as two to three months of YouTube revenue. He has declined over $100,000 in sponsorships in the past year.
Distinction Between Exploration and Production Companies: A crucial distinction is made between exploration companies (holding land but not yet mining) and producer companies (actively mining and generating revenue). Many companies seeking sponsorships are exploration companies.
Dilution Risk: Exploration companies often fund their operations by issuing new shares, a process called dilution. This means that as more shares are issued, the value of existing shares decreases. This is compared to adding water to Coca-Cola – it looks the same but is diluted.
Misuse of Funds: The speaker notes that funds raised from new shares can sometimes be used to support the lifestyles of company executives, which is more common than people might think.
Ethical Considerations: He would not feel comfortable taking sponsorships knowing that even one person might take a risk on an investment they don't fully understand and subsequently lose money.

Reliable Information Sources for Mining Stocks

For those seeking reliable information on mining stocks, the speaker recommends:

His Patreon Community: Where he shares his own mining portfolio, a mix of large and small producers, which has seen over 100% gains since July 2023.
The Daily Gold (Jordan): He highly recommends his friend Jordan's service at The Daily Gold, emphasizing that Jordan is not paying him for the recommendation. He trusts Jordan's insights, especially given the potential for investors to make poor decisions during a bull market.

Conclusion on Exploration Companies

The speaker warns that while some exploration companies can experience massive gains (50x, 100x), over 90-95% of them end up losing 90-95% of their value. He stresses the importance of understanding what you are investing in to avoid significant financial losses.

The video concludes with a call to action for viewers to like, share, and subscribe, emphasizing the importance of taking care of oneself and each other.