Venture Exchange - The Bull Market Is Starting in These Gold and Silver Stocks

The Bull Market Is Starting in These Gold and Silver Stocks
By Matt Badiali
February 23, 2009

The chart below is one of the most devastating things to ever happen to commodity investors:

This is the past three years in the Toronto Venture Exchange. Over 1,000 mining companies are listed on the "Venture." Mining companies make up 65% of the index. Energy companies make up another 15%.

You can think of the Venture as the Dow Industrials of small resource companies. It's an excellent gauge of what's happening in the business of exploring for resources like copper, oil, diamonds, and precious metals.

As you can see, the past few years have been brutal for this sector. The Venture lost 80% of its value in about 20 months. It's the worst crash the index has ever suffered.

So why the historic crash? Well... many of the stocks in the index don't have any assets to speak of. Most are just a management team, a balance sheet that bleeds cash, and a desk full of unsuccessful drill results. They're simply lottery tickets the public can buy and sell to each other.

Pick a Venture Exchange winner and you won't have to work for five years. Pick a loser and you're wiped out. And as I'm sure you remember, 2008 was much more "wipeout" than "win."

Now here's where it gets exciting: After such a gigantic decline in the Venture, people can't stand the thought of owning small mining stocks. When the public can't stand the thought of owning an asset, it's creates huge values for contrarians.

I think that "value" point is here for many of the stocks on the Venture. I think the bull market in gold and silver will continue. And I think a handful of these small resource companies will return hundreds of percent over the next few years.

Before you go out and buy a Venture stock, remember most of these stocks have unproven management and little in the way of assets to provide a "floor" for the stock price. They're losing lottery tickets.

But for my favorite stocks on the Venture, now is an excellent time to buy. You have some great companies with more cash on their balance sheet than market value, sitting on incredibly valuable real estate. I think a few big drill results could ignite another bull market in the best companies.

The single most important aspect of evaluating these little mining companies is management experience. You want to own the companies run by folks who've found big discoveries in the past. You don't want to finance someone else's learning curve – it gets expensive.

To make it easier for you in 2009, use this list of companies as a springboard for your research. I've been researching this sector for years now, and these guys are some of the best:

Company	Market Value	Cash	Management of Note
Fortuna Silver	$71 million	$39 million	Simon Ridgeway
Mag Industries	$45 million	$119 million	Bill Burton
Atacama	$27 million	$48 million	Lukas Lundin
Linear Gold	$22 million	$19 million	Wade Dawe
Miranda Gold	$14 million	$8.8 million	Ken Cunningham
Intl Enesco	$5 million	$12 million	G. Arnold Armstrong

A Distortion in the Gold Market Could Make You 200% This Year

Why You Must Start Buying Physical Gold Today

Remember... there's a lot of junk on the Venture. And not all the stocks on this list are going to be winners. But the 2008 washout gives you a chance to buy some of the best gold and silver hounds in the world for the cash on their books.

Keep this list handy, watch for discovery news, and get ready for hundreds of percent gains in the next few years.

Good investing,

Matt Badiali

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•	Do-it-yourselfers push auto-part retailers O'Reilly and AutoZone to new highs.
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	Last	Change	52-Wk
S&P 500	770.05	-1.14%	-42.64%
Oil (USO)	24.31	+0.12%	-68.56%
Gold (GLD)	97.78	+2.10%	+4.86%
Silver (SLV)	14.25	+2.59%	-19.47%
U.S. Dollar	86.47	-1.17%	+14.38%
Euro	1.28	+1.44%	-13.22%
VIX	49.24	+4.59%	+96.02%
HUI	321.45	+3.66%	-30.99%
10-Year Yield	2.77%	-0.09	-0.74

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Company	Sym	Industry
ICU Medical	ICUI	health care
Anadys Pharma	ANDS	pharma
Odyssey Healthcare	ODSY	health care
Central GoldTrust	GTU	gold fund
Zion Oil and Gas	ZN	oil & gas
AutoZone	AZO	car parts
O'Reilly Automotive	ORLY	car parts
Career Education	CECO	education
Health Mgmt	HMSY	health care
IAMGOLD	IAG	gold

Company	Sym	Industry
Bank of Montreal	BMO	bank
Walt Disney	DIS	entertainment
Manulife Financial	MFC	insurance
SKTelecom	SKM	communications
Anglo American	AAUK	mining
Berkshire Hathaway	BRK/A	insurance
Canon	CAJ	technology
Devon Energy	DVN	energy
General Electric	GE	conglomerate
3M	MMM	conglomerate
Norfolk Southern	NSC	railroad
Sun Life Financial	SLF	insurance
US Bancorp	USB	bank
American Express	AXP	credit cards
Citigroup	C	bank
CSX	CSX	railroad
FedEx	FDX	shipping
Kellogg	K	food products
Nokia	NOK	cell phones
PNC Financial	PNC	bank
Toronto Dominion	TD	bank
Adobe Systems	ADBE	software
BT Group	BT	communications
Caterpillar	CAT	machinery
Emerson Electric	EMR	industrial equip
HJ Heinz	HNZ	food products
Mitsubishi Financial	MTU	bank
Novartis	NVS	big pharma
Sony	SNE	electronics
Veolia Environnement	VE	utilities
AXA	AXA	insurance
ConocoPhillips	COP	oil & gas
Ing	ING	bank
Pfizer	PFE	big pharma
Wells Fargo	WFC	bank
Boeing	BA	aerospace
Dupont	DD	chemicals
Kraft Foods	KFT	food products
Reynolds American	RAI	tobacco
Bank of America	BAC	bank
Dell	DELL	computers
Kimberly Clark	KMB	paper products
Royal Bank of Can	RY	bank

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