5 Oil & Gold Companies To Watch

A record breaking oil discovery, a junior searching for the source of the Yukon Gold Rush, a lithium major with an under the radar project and an Africa-focused miner proving up the giant of all giants…

The upside for all these companies is in exploration… and it is in taking these projects from discovery to proving up resources where investors can make huge gains.

Oil prices remain depressed for now, but when they bounce back, companies who have just proved up new discoveries that are profitable even at today’s prices will soar.

Gold remains the pre-eminent, time-tested safe-haven asset for hedging against macroeconomic upheavals—but even better if you find a junior explorer who’s probably just found the original bedrock source of the Gold Rush in the Yukon. It’ll be ripe for a takeover once it’s proved up.

Lithium—the hottest metal in the world right now—is becoming an increasingly crowded space, but there’s one huge project that’s off the radar because it’s in a geographical location we don’t naturally associate with major lithium production. It’s not Nevada, and it’s not the Lithium Triangle of Argentina.

So let’s look at 5 stocks that have great upside from massive discoveries and exploration potential right now:

#1 Exxon Mobil (NYSE:XOM)

Just last week, this supermajor said it had discovered yet more oil offshore Guyana, in the Payara reservoir. This means the company is looking at a total discovery of around 500 million barrels of oil equivalent—and that’s commercially viable. The discovery was made at the Payara-2 well, and the news just keeps getting better and better for Exxon.

The company’s Stabroek Block in Guyana is truly massive—a whopping 6.6 million acres, with estimated recoverable resources of up to 2.75 billion barrels.

Exxon owns 45 percent in the project, and is the operator, while Hess owns 30 percent and China’s CNOOC owns 25 percent. Exxon owns its share through its subsidiary, Esso Exploration and Production Guyana.

If the 2.75 billion barrels doesn’t do enough for you without a means of comparison, consider this: The massive Thunder Horse discovery in the Gulf of Mexico had estimated recoverable reserves of around 1 billion barrels.

So Exxon’s Guyana project is a giant of giants.

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And it’s not the only thing Exxon’s got going in Guyana: It’s also got a discovery at Liza Deep. The Liza discovery should come online by 2020 with a floating production storage offloading vessel (FPSO), capable of producing 120,000 bpd, but more likely shooting for a 100,000 bpd.

Just in the first phase of Liza production, Exxon is targeting 450 million barrels of oil. And the development costs are said to come in at less than $10 per barrel. So even with depressed oil prices, this sounds great.

But the bigger story here is that the exploration upside remains phenomenal, and even more so when you consider that oil projects in Guyana are attractively economical. And this venue looks set to enjoy a real oil boom in a matter of years.

For a huge company like Exxon, which has maturing fields with declining production, the huge wins in Guyana are timely, indeed.

#2 Klondike Gold Corp (TSX:KG.V; OTC:KDKGF)

In the world of discoveries just waiting to be proved up, there’s nothing more spectacular on the small-cap scene that this company: It’s backed by a Canadian billionaire and mining finance legend, and led by a famous geologist who’s exploring for the historical bedrock source of the Yukon Gold Rush.

The Company, Klondike Gold, is drilling right now. They’ve already drilled 30 holes, and are fully funded to drill another 50 at least, and it’ll all be done by mid-October.

But let’s back up just a bit …

This is the Yukon territory, the same place where one of the biggest gold rushes in history took off in 1896. The same place where over the years 20 million ounces of “placer” gold have been pulled from the district’s creeks and stream gravels. But, until now, no one’s been able to get a lead on the bedrock source of all this gold.

Geologist Peter Tallman thinks he has, thanks to geological genius and much more help than his historical pick axe. He’s armed with the most advanced drones that can fly over and find the sweet spots in this forbidding terrain, along with geophysical surveying tech and on-site x-ray analysis of samples.

It has been only three years since Canadian billionaire and key Klondike shareholder Frank Giustra recruited him to take over this company and get to the bedrock source of gold.

Majors like Gold Corp. (also built up by Giustra), Kinross and Barrick have recently swooped in on the Yukon to take advantage of new technology that can get to the heart of the gold rush.

But they always let juniors do the discovery work. Then they buy them out and make their shareholders rich.

It’s already happening …

#3 Apache Corporation (NYSE:APA)

Apache isn’t doing well at the moment, but it’s turnaround will be based on new projects. It just brought its Callater North Sea subsea tieback on stream—and that was ahead of schedule. It only discovered this six-well tieback to its Beryl Alpha facility in 2015. It was one of three fields they discovered. The other two were Seagull and Corona—all in the same area. And it was all territory Apache bought from Exxon in 2012 for $1.4 billion.

So, even though Corona was discovered first, Callater is already online, pumping at a rate of 19,000 boe/d (70 percent oil and natural gas liquids). Corona should come online mid-next year, with another 5,000-10,000 boe/d net to Apache.

It’s good timing, since Apache is seeing steep losses compared to its peers. It’s next big turnaround point should be the scale-up of the Alpine discovery, which isn’t going to happen near-term—so this is a longer-term bet.

But Alpine could contain up to 3 billion barrels of oil and massive amounts of natural gas. It will take a lot of money to prove it up, but there is a ton of potential upside here. So far, the discovery of Alpine has had a negative effect on Apache’s shares, but that’s why this is the contrarian play. If they prove this up, it will be the definitive turnaround.

Shares are trading now at around $45, with a 52-week-low of $43.24 and a 52-week-high of $69.00.

 

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#4 Rio Tinto Plc (NYSE:RIO)

This story is all about lithium—a metal for which demand is not only visible, it’s palpable.

• According to Macquarie Bank (ASX:MQG), the share of lithium demand from electric and hybrid vehicles alone is due to surge from 10 percent in 2015 to 33 percent by 2021.

• Battery manufacturing capacity will triple in the next four years, according to Bloomberg.

• ‘Mr. Lithium’, Joe Lowry says demand should double between now and 2020, driven by the massive battery market, producers are in no position to keep up with this in the medium or long term.

• Volkswagen says the situation is desperate, and the industry needs 40 gigafactories. The auto giant foresees a huge shortage of batteries by 2025.

Global mining giant Rio Tinto has seen its first-half profits more than double from the same period last year, thanks to a rebound in iron ore prices. The headlining news, though, is the company’s move to return $3 billion to shareholders, $2 billion of which will go to dividends, and $1 billion to share buybacks.

But one catalyst we’re looking at here is a story you might not have heard yet. Rio’s Jadar lithium and boron deposit in Serbia is poised to be a major growth project for the mining giant, and it’s hoping to start construction in 2020, and production in 2023. Right now, it’s waiting for the approvals to move ahead. It’s likely to get them in the current political environment. In fact, Rio just signed an MOU with the Serbian government, so the approval process is in full swing.

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Serbian Jadar would be the only unapproved medium-term growth project Rio has, and all said and done, it would be one of top-three lithium producers in the world.

Rio says the project has enough lithium to supply more than 10 percent of global demand.

#5 Randgold Resources Ltd. (NASDAQ:GOLD)

Africa-focused Randgold Resources saw a 53 percent spike in half-year profits, and it’s even got over $572 million in cash on hand after paying shareholders a $94-million dividend.

The big news is a large discovery in Côte d’Ivoire, which some are calling the “most exciting” gold prospect in West Africa.

Here, the latest drilling results from Randgold’s Boundiali permit in the Fonondara corridor showed a “massive system” of multiple mineralized shears, extending for 50 kilometers. It’s another giant among giants, if they can prove it up.

But unlike Apache, this pick isn’t dependent on proving this discovery up alone. The balance sheet already looks solid, and it would seem that the company will achieve its full-year production guidance of 1.3 million ounces, at a cost of below $600 per ounce.

Randgold has another mine in Côte d’Ivoire, as well—Tongon, and it’s also declared a second dividend. Elsewhere in Africa, Randgold is exploring the fragile Democratic Republic of Congo (DRC) with good results so far. And its Sofia satellite deposit could boost growth prospects for the Massawa project in Senegal, which is in the feasibility study stage and which has a mineable reserve of some 2.6 million ounces of gold.

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Bottom line: This company has a massive exploration pipeline with formidable upside, and a pretty sharp track record of success.

Honorable Mentions:

Hess Corporation (NYSE:HES): We’re also considering Hess because it’s a partner in the massive Guyana discovery, operated by Exxon.

CNOOC (NYSE:CEO): Chinese CNOOC also owns a 25 percent share in the Guyana project. There are a lot of catalysts here, including the fact that its BD gas field in Indonesia just started production.

By James Burgess 

Source:https://goo.gl/uGbdXi

Bitcoin Crash Creates Golden Opportunity

GPL FSM ASM AGI

I’ve been wrong about my timing of the silver and gold trade twice now. Once to my followers in Momentum Trader and another time in a much more public way, on Bloomberg the end of last year. My fundamental investment thesis surrounding gold hasn’t been wrong just my timing. And now, with gold prices bouncing off $1,200 and last week’s Bitcoin debacle I’m taking another stab at it.

You could argue that Bitcoin and gold are both alternatives to global fiat currencies. Neither has a central bank which governs them nor do they pay interest. They are both a store of value and can be held anonymously. Gold and silver have a tendency to track with each other so I’m including it when I look for stock ideas.The Bitcoin debacle I’m referring to is last week’s decision by the SEC to reject the Winklevoss Twins’ proposal for a Bitcoin ETF. An ETF would have helped to legitimize the cryptocurrency and expose it to an entire new market of potential investors. The SEC’s decision was based on the unregulated nature of the Bitcoin market itself. With no way of overseeing the underlying investment, there was no way the SEC could give it a stamp of approval.

Of course there’s one giant difference between the two. Gold has been a historic store of value for ages and something you can physically possess. Bitcoin is a digital currency that was created from nothing a few years ago. There is still a huge amount of skepticism surrounding Bitcoin and other cryptocurrencies. A rash of high profile hacks, essentially digital bank robberies, have loomed like a cloud over Bitcoin for years. This ETF would have been something like a Bitcoin coming out party.

However, that was not the case and Bitcoin’s value plunged in Friday trading. Nearly simultaneous there was a huge rally in gold prices with the metal bouncing from just under $1,200 an ounce, an obvious psychological support level. Gold still does have an inverse relationship with yields. As interest rates rise you tend to see pressure on gold prices. We all know the Fed is going to hike rates next week. That is a huge negative on gold pricing. But if the metal can rally even in the face of that hike, then there could be overpowering fundamentals at play.

One way to play a potential continuation of silver and gold’s move higher is to look at the silver and gold miners. A lot of these companies got lean and mean in order to survive the plummet in prices and have emerged with much stronger balance sheets. They have found ways to minimize their acquisition costs and streamline their mining process. I’ve put together a list here of gold stocks that are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks for you to investigate a little further.

Alamos Gold (AGI - Free Report)

Alamos Gold Inc., together with its subsidiaries, engages in the acquisition, exploration, development, and extraction of gold deposits in North America. It also explores for silver and precious metals. The company holds interests in the Young-Davidson mine, which includes contiguous mineral leases and claims totaling 11,000 acres located in Northern Ontario, Canada; the Mulatos mine located within the Salamandra Concessions in the Sierra Madre Occidental mountain range in the east-central portion of the State of Sonora, Mexico; and the El Chanate mine that comprises 22 mineral concessions covering 4,618 hectares situated in the State of Sonora, Mexico. It also holds interests in a portfolio of development stage projects in Mexico, Turkey, Canada, and the United States.

Avino Silver (ASM - Free Report)

Avino Silver & Gold Mines Ltd. engages in the production and sale of silver, gold, and copper bulk concentrates; and the exploration, evaluation, and acquisition of mineral properties. The company owns 42 mineral claims and leases 4 mineral claims in the state of Durango, Mexico. It also holds 100% interests in the Bralorne mine located in the Lillooet mining division, British Columbia, Canada; and the Eagle property located in the Mayo mining division of Yukon, Canada.

Fortuna Silver (FSM - Free Report)

Fortuna Silver Mines Inc. engages in the exploration, extraction, and processing of mineral properties in Latin America. The company explores for silver, gold, lead, and zinc deposits. It holds interests in the Caylloma mine located in the Arequipa Department in southern Peru; and the San Jose mine located in the State of Oaxaca in southern Mexico. 

Great Panther Silver (GPL - Free Report)

Great Panther Silver Limited, a silver mining and exploration company, engages in the mining of mineral properties in Mexico. It explores for silver, gold, lead, and zinc. The company holds interests in the Topia Mine and Guanajuato Mine Complex properties. It also holds mineral property interests in the exploration stage, such as the El Horcon and Santa Rosa projects located in Mexico, and Coricancha Mine Complex located in the Central Andes of Peru.

Bottom Line

I think Bitcoin blowing up here could benefit gold and silver over the short run. That being said, a great way to play the rise in these metals could be to look at the silver and gold miners. This is a short list to start researching the best one to buy.

by David Bartosiak 

Source: https://www.zacks.com/commentary/106041/bitcoin-crash-creates-golden-opportunity

Investing Themes For 2017

It could be argued that any year following a U.S. Presidential election is a difficult one for investors as the new administration and Congress attempts to enact the platform on which they were elected, and that is certainly true of 2017. Trump’s lack of specificity regarding policy and the fact that many of the things outlined run contrary to traditional Republican policies make it difficult to predict the shape of government policy in the first few months of the year, which means that you will have to be prepared to make changes to your portfolio as actual policies become clear.

That said, from what we already know it is clear that starting out with a portfolio light on bonds and skewed towards certain sectors would be smart.

What to Avoid

The fact that President-elect Trump intends to pursue expansionist policies also poses a threat to those sectors. If Congress does support a large stimulus program it is likely to have an inflationary effect which makes it unlikely that the Fed will have to backtrack on their intentions. That also would have the effect of pushing stock prices up, making that a better place to be invested than bonds or yield based stocks.It is easier in some ways to identify places that you do not want to be going into the New Year than places that you do. We know that the Fed intends to enact three more rate hikes this year, which makes bonds and interest rate sensitive stock sectors places to avoid. Those sectors include things like utilities, telecoms and MLPs, where their dividend yield is an intrinsic part of their value.

Where to be: Health Insurance

One point of agreement among Congressional Republicans and the incoming President is that Obamacare should be repealed. There is no clear indication yet what a replacement healthcare policy and legislation would look like, but based on what has been said so far lifting restrictions on selling across state lines would be a part of it. Combine that with a general intention to scale back regulations on business and the likelihood of less opposition to big mergers, and it looks like health insurance companies could be big winners.

There is, however, one thing to watch out for. Trump has expressed a desire to keep certain parts of Obamacare, such as being able to stay on your parents’ policy until the age of 26 and the ban on discrimination based on pre-existing conditions. If he does that but scraps the individual mandate to buy insurance, then insurers will suffer.

General Insurance

Other insurance companies, whose focus is on life, auto and property insurance should also benefit. Increasing Treasury yields make it easier for companies such as Met Life (MET) and AIG (AIG) to get a decent return on the large amounts that they have to keep safely invested to cover claims. Stocks in the sector have already climbed after the election, but should continue to show steady gains next year.

Manufacturing and Engineering

Bringing back manufacturing jobs to the U.S. was a big part of the Trump platform and has also been embraced by Congressional Republicans. Actually doing that may not be all that easy as it is still cheaper to make most things overseas and automation is at least partly to blame for the decline in the sector. From an investment perspective, that is not really the point. Policies designed to achieve that goal, even if they are not particularly successful, are bound to benefit U.S. manufacturing companies.

From an engineering perspective, while a physical wall along the U.S/Mexico border now looks unlikely, there is a strong possibility of a big push to spend on infrastructure and a desire to do that through the private sector. That makes for a good outlook for domestic focused engineering companies.

Consumer Discretionary & Luxury Retail

Judging by the reaction so far in the market and in business and consumer confidence numbers it looks like we will be going into 2017 with a general air of optimism. Regardless of the actual shape and effectiveness of policy that will benefit the consumer discretionary sector, at least in the short term. In addition, tax cuts, particularly to the top rate, will probably encourage spending on luxury goods, so companies such as Tiffany (TIF) and Coach (COH) could have a good year.

Gold

As mentioned above there is a strong chance that we will shift soon to an inflationary environment, and after nearly a decade when deflation looked more of a threat than inflation that will be a major shift. I don’t think it is likely to get out of control, but after years of Central Banks around the world flooding the system with cash there is always a chance of that happening. Holding some gold as an inflation hedge, therefore, is a sensible precaution for investors.

If we believe the evidence of the market reaction so far since the election, 2017 is shaping up to be a good one for investors. That doesn’t mean that everything will perform well. Starting the year with reduced bond holdings and a focus on the industries that will benefit from what we know about policy intentions will pay off, but above all, it is important to start the year knowing that some changes may have to be made. Flexibility will be the key to investing next year.

Referenced Symbols: MET , AIG , TIF , COH

By Martin Tillier

Source: http://www.nasdaq.com/article/investing-themes-for-2017-cm724411#ixzz4TlL8mPeX

How to Pick Great Gold Stocks

One of the primary keys to success in investment and speculation is picking the right stocks to trade. That’s no mean feat, as it takes great effort, expertise, and time to winnow the whole field down to the likely winners with the best fundamentals. Gold stocks’ dazzling market-leading performances so far this year have sparked much interest in what factors to consider to pick great stocks in this red-hot sector.

I’ve been in the financial-newsletter business for 16 years now, after founding my company Zeal LLC way back in early 2000. I needed to do extensive markets and individual-stocks research to support my own personal speculation and investment, so I figured why not share it so others can benefit as well. Since then I’ve researched and written 711 web essays, 192 monthly newsletters, and 695 weekly newsletters.

The primary mission of my research has always been to drive profitable real-world trading. If financial-market research doesn’t actually help multiply wealth, why even bother? The stock trades resulting from these 16 years of hard work were all recommended in real-time in our newsletters as the buys and sells wereactually made. Our cumulative realized stock-trade count is now up to 325 in our monthly and 506 in our weekly.

831 real-world stock trades fully disclosed to, fully accountable to, and fully auditable by our subscribers over such a long span of time has been an unparalleled learning experience. Like every speculator we won some and lost some, but our overall track record is outstanding. All 831 Zeal newsletter stock trades ever closed,including all losers, have averaged impressive annualized realized gains of 16.6% since 2001!

Since our first newsletter was published on August 1st, 2000, the compound annual rate of return of the benchmark S&P 500 has only been 2.2%. The S&P 500’s absolute return over that long intervening secular-bear span is 41.6%. But 16.6% compounded annually since then equates to a radically-better 1152.6% return. There’s no doubt that studied stock picking and trade timing can vastly outperform the indexes!

Since general stocks have been mired in a secular bear since early 2000, the great majority of our Zeal trades have been gold stocks and silver stocks. The precious metals are one of the best-performing sectors during sideways-grinding general stock markets. So one of the most common questions I get is how do I go aboutpicking great gold stocks? What factors do I consider in trying to sort the best from the chaff?

These are tough questions to answer. So much time on task, so many trades, so much experience both winning huge profits and suffering vexing losing streaks are hard to distill down into a book, let alone an essay. It’s hard to even know where to start after tens of thousands of hours of research on markets and individual stocks. Nevertheless, I get this question so often that I should at least attempt to address it.

So here’s a brief overview of key things I look at when comparing and contrasting gold stocks attempting to find fundamentally-superior ones to trade. And “gold stocks” used in this essay applies equally to “silver stocks”. My stock-picking methodology is a perpetual work in progress. I’m always learning and striving to improve it, and there are plenty of traders out there with long track records better than mine.

Major-ETF Inclusion. Ask any prospector where the best place to find gold is, and he’ll claim where it’s already been found! Great gold stocks are very similar. So one of the first things I check when I’m researching individual stocks is what ETFs they are included in. The companies creating the leading exchange-traded funds and the indexes behind them have big research departments full of experienced analysts.

The dominant leading gold-miner, gold-junior, and silver-miner ETFs today are GDX, GDXJ, and SIL. They are the VanEck Vectors Gold Miners ETF, the VanEck Vectors Junior Gold Miners ETF, and the Global X Silver Miners ETF. Being considered worthy of inclusion in these elite ETFs truly is the gold standard in precious-metals stocks. So if a miner or explorer is large enough, I always check for ETF inclusion.

I certainly don’t only trade gold stocks included in major ETFs, but when one is I know it has been vetted by leading expert researchers. While some of the stocks they include perplex me, the vast majority are truly the best in the business. ETF inclusion can be a self-fulfilling prophecy too. Since most investors and speculators settle with ETFs instead of individual stocks, their ETF buying drives up components’ prices.

Market Capitalization. If I had to pick a single-most-important factor for picking great gold stocks, I’d actually choose market capitalization. That may sound shocking, as how could market cap be even more important than production, costs, or reserves? The reason is market caps ultimately distill everything that all traders collectively know about any gold stocks, and govern their potential for big near-future gains.

When buying a house, the first thing you have to consider is price. It makes no sense to fall in love with a perfect house you simply can’t afford. Gold stocks’ market capitalizations, especially when they are consideredrelative to each other, give great insights into how valuable their mines and projects actually are. Market caps are the ultimate form of relative ranking resulting from actual real buy-sell votes from all traders!

When two gold miners with similar production levels have significantly-different market caps, the one with the higher market-assigned value almost always has the superior fundamentals. Investigating why market-cap differences of similar producers have arisen is one of the most rewarding parts of gold-stock picking. Market-cap premiums often reveal superior mines, projects, or managements than similar peers have.

Market capitalizations also greatly affect future gains. The higher the market cap of any stock, the more capital inflows and buying will be necessary to drive it significantly higher. Like oil supertankers, the largest gold stocks have big market-cap inertia and will ultimately see smaller gains than their smaller peers. On the other end of this spectrum, super-tiny gold stocks will often prove too illiquid and risky to trade.

When comparing all gold stocks by market cap, there is a sweet spot of small (but not tiny) to mid-size gold miners that have the best potential to see the greatest gains in their stock prices assuming their fundamentals are sound. The higher market caps among this optimal gold-miner size usually have the most-superior fundamentals, but the lower-market-capped stocks will be easier for new buying to push higher.

Jurisdiction and Diversification. Unfortunately mining companies are exceptionally vulnerable to local government over-regulation, over-taxation, and even confiscation. Unlike most industries, gold mines’ production can’t be shifted across borders to flee to more-friendly countries. So I always look to see where gold stocks’ mining operations and major exploration projects are located. Some countries are too risky for me.

Mexico and Canada are probably the best countries in the world to mine gold in. Their mining laws are well-established and their governments generally don’t harass miners too much. The US is safe, but over-regulation and ludicrously-extensive permitting processes make America somewhat less attractive. Plenty of countries in South America, Asia, and even Africa are fine, but property rights and rule of law are less certain.

But some countries often ruled by Marxist dictators have ugly histories of forcing gold miners into paying punitive taxes and royalties under the implicit threat of mine seizures. Like much of stock picking, that knowledge simply comes from experience. We’ve owned gold miners in the past that have suffered major predation by local governments, so it makes no sense to buy other miners with heavy exposure to them.

This great geopolitical risk inherent in static gold mining can be diversified through mines and projects spread across multiple jurisdictions. Smaller gold stocks only have one mine or project, so diversification is impossible. But larger ones have multiple mines and projects reducing the threat posed by any one government. Cross-country diversification does add significant costs as well though, it can be a double-edged sword.

Production. Gold stocks are naturally in the business of mining gold, so their current and projected production levels from mine expansions or new mines coming online are exceedingly important. The more gold companies produce, the greater their operating cash flows, profits, and therefore ultimately stock-price gains. But with larger operations also come bigger market caps, weighing down upside potential.

Within that sweet spot of smaller-to-mid-size gold-miners, I like to compare miners’ production relative to their market caps. While this ratio means little in isolation, considered across a group of miners it helps reveal which are relatively expensive or cheap. As long as those miners with lower market caps per ounce produced have sound fundamentals, they often have greater upside potential than their more-popular peers.

Production trends are also important to consider. If a gold miner’s production is moderating or retreating for anything beyond a well-telegraphed few-quarter span, it suggests depleting mines and lower coming stock prices. Sometimes gold miners have good reason for lower production, such as planned digging through lower-grade ore to get to higher-grade ore or temporary disruptions due to mine-expansion projects.

Growing production is viewed highly favorably by traders and portends higher stock prices, so miners withconsistent output growth are prized. Managements often provide guidance early every year for their coming expected production, making it easy to find expected growth. Big growth surges driven by new mines coming online are often great opportunities to see fast stock-price appreciation around their openings.

Since it’s far easier to simply consider reported current-quarter production instead of wading through quarterly filings, annual reports, and news releases to get updates on new mines nearing production, many investors overlook new-mine openings. Gold stocks often see major gains in the year or so that straddles new mines spinning up to commercial production, from about 3 quarters before to 1 quarter after.

A high-potential subset of this phenomenon occurs when explorers successfully manage to make that rare transition from explorer to producer. Since gold deposits now take 10 to 15 years to prove out, permit, and construct mines, most traders lose interest long before these plans come to fruition. So finding an explorer on the verge of opening its first mine in the next year or so can be a major upside opportunity.

Costs. Gold miners naturally have no control over the price of gold, their selling price is set by the whims of global gold traders. And gold-mining cash flows and profitability are totally determined by the difference between prevailing gold prices and miners’ costs. So gold miners’ cost levels are the critical driver along with the gold price of their operating cash flows and profits. Costs determine profits leverage to gold.

Comparing gold miners’ costs, especially all-in sustaining costs, helps determine the better ones to buy. And that isn’t as simple as low costs are good and high costs are bad. Lower costs are great if gold is expected to go lower, as it makes for fundamentally-stronger miners generating more cash flow and better able to withstand gold corrections or bear markets. Low-cost miners are bid to premiums on weak gold.

While I prefer lower-cost miners since I like fundamentally-strong gold stocks, higher costs actually havegreater upside profits leverage to gold-price increases! So if you expect a major gold bull or strong gold upleg, higher-cost miners actually have more upside potential. This seemingly-counterintuitive outcome is easy to understand with a simple example. Consider two hypothetical gold miners, LowCost and HighCost.

Make Any Investment Risk "Free" in One Move

Readers ask me all the time if I can recommend an investment that is 100% risk free.

(If anyone tries to tell you otherwise, take your money and run!)I can't do that. There is no such thing.

By Money Morning

That said, there is one way you can make any investment risk "free" under the right set of circumstances, by using one of my favorite Total Wealth tactics: the free trade.

We've talked about this before, and many of you got a chance to put it into practice with our Human Augmentation target, Ekso Bionics Holdings Inc. (OTCMKTS: EKSO ) - simultaneously doing three things in the process: capturing profits of at least 100%, paying for your initial investment and reducing the risk on your remaining position to almost nothing.

Now, with the markets at new record highs and Greece machinations threatening to cause major corrections in world markets, I want to revisit that tactic. That's because many investors are sitting on solid profits and, in doing so, unwittingly taking on a lot more risk than they should.

Do this instead...

The concept of a "risk free" investment is not new. The allure of risking nothing and gaining everything has been around for centuries. And, as you might suspect, it's almost never ended well.

Case in point...

...the Tulip Bulb Crisis of 1634-1637

...the South Sea Bubble of 1711

...the Florida Real Estate Crash of 1926

...Bernie Madoff's Ponzi scheme

So why is it that you hear the term in widespread use today?

Because Wall Street only associates risk with loss.

That's why they consider U.S. Treasuries and other government paper as "risk free" choices, even though they know full well that there are risks inherent in every investment. It's a game of semantics.

It's a game, incidentally, that they want you to play, because it forces you to implicitly buy off on the most profitable strategy of all (for them) - diversification.

That's the idea that if you spread your risk around in different asset classes and investments - like stocks, bonds, cash, real estate, and the like - you'll be better off. The thinking is that not everything can possibly go down at once.

It's been around a while. In fact, the theory was first noted in the book of Ecclesiastes written around 935 B.C. It's also mentioned in the Talmud. Even Shakespeare picked up on it in "The Merchant of Venice" hundreds of years ago.

But it's absolutely wrong.

Ask anybody who got their portfolio halved twice in the last 15 years - first during the dot-bomb implosion from 2000-2003 and then the ongoing Financial Crisis that kicked off in 2008 with a vengeance. Everything went down at once both times.

And it's not just me who thinks so either. Warren Buffett notably quipped that diversification "makes very little sense for those who know what they are doing."

I believe you've got to think about risk differently in today's highly computerized and interlinked global markets, especially when it comes to your winners.

My logic isn't sophisticated. Put simply, nobody ever went broke taking profits but plenty of people have gone broke taking losses. So it not only makes sense to concentrate your assets using appropriate risk management but also to harvest your winners when the markets are strong. That way you'll have opportunity at hand rather than being forced to run for the hills when the markets are weak.

It doesn't matter whether you've got a lot of money or just a little, the principles driving our discussion today are exactly the same:

• You want to capture profits every chance you get; and,
• You want to take risk off the table at every opportunity.

Preferably, both at the same time.

Here's a Real-Life Example of How This Works

I recommended Raytheon Co. (NYSE: RTN ) to my Money Map Report subscribers in August 2011 because it was closely tied into two of our most important Unstoppable Trends - Technology and War, Terrorism & Ugliness. It was trading at $46.05 a share then.

By November 2013, the company's stock had risen to $85.19, and dividend payouts had reduced the cost basis to $42.51, so subscribers who followed along as directed were sitting on returns of at least 100%. In keeping with what I've just explained, I recommended selling half the position to capture profits and redeploy into subsequent recommendations. I also suggested that they let the remaining shares run.

Pro traders call this a "free trade," because you not only get back your original investment, but you maintain all the upside you can handle, essentially "for free." Even better, because you've now "paid" for your investment, you can stay in the game with not an additional dollar at risk... even if the stock you've just harvested has a sudden reversal in fortune and goes from hero to zero.

The advantages were as clear then as they are now.

By capturing profits when we had the chance, subscribers ensured that their focus was on winning and on new opportunity, exactly as a savvy investor should.