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We’re in the midst of a counter-trend correction for gold and gold stocks especially.
If you’ve bought gold or gold stocks over the last couple years, you’re sitting on minimal gains – if any. Gold stocks themselves are down ~30% from their highs of September 2011 – and that’s after a somewhat disappointing performance in the preceding year.
These types of counter-trend corrections tend to last longer than most bulls would like. If you’re feeling the pain, just try to understand that all bull markets experience these types of draw-downs. Tell yourself it’s a normal part of a strong bull market.
When we’re at this point, it’s exceedingly easy to walk away.
But I urge you to resist the temptation. Now is arguably the best time in a decade to buy gold stocks – and gold isn’t such a dog either.
My colleague Tyler Laundon – editor of our commodity research service Pay Dirt – agrees with me.
And he’s urging his readers to dip even deeper into their discomfort zones, and to buy gold investments in what is usually perceived as the most risky sector of the market.
I’m talking about African gold companies.
As Tyler wrote at the end of 2012, “We tend to hear more about the negatives than the positives since this is what captures the media's, and our own, attention.
“It's far more fascinating, albeit disturbing, to read about genocide in Rwanda than that Kenya's Nairobi Securities Exchange is up 29% thus far in 2012.
“Or that the three African nations of Guinea, South Sudan and São Tomé and Principe are the three fastest growing economies in the world, with estimated average growth rates through 2017 of 16.3%, 19.9% and 31.5%, respectively.
“Don’t me wrong, there are a lot of issues in Africa that would exist with our without growth. But the positives for investing in Africa are overwhelming in my opinion.”
Tyler has been telling his readers about African gold companies for the past six months or so because he knows that some of the last undiscovered “elephants” (giant gold deposits) left in the world are likely in the still-underexplored regions of Africa’s gold belts.
If that type of opportunity sounds too risky for you – then you’re absolutely right. But if you’re not prepared to deploy capital in sectors and places that “appear” risky, then you aren’t likely to realize the types of huge gains that are ONLY possible in these sectors and places.
Frankly, even most gold investors are likely to avoid Africa. It’s the same story we’ve heard over and over again – perhaps best popularized by Joseph Conrad’s novel “Heart of Darkness”, and re-popularized by Francis Ford Coppola’s film “Apocalypse Now.”
The idea, of course, is much older than both the film and the novel – which is that people genuinely and instinctively fear that which they don’t know or understand. But as Tyler points out – many parts of Africa have arrived and are growing faster than any other part of the world.
Further Reading:
Resource expert Tyler Laundon expects an upside breakout in gold stocks to resume any week now… Right now, the two African companies he expects to lead the charge are cheap and offer outstanding upside… with only modest risk. Get the full story here to learn more about these gold stocks from “The Heart of Darkness.”