With bitcoins recent legendary rally, investors and enthusiasts have geared their attention to making more gains in the cryptocurrency market. This past year sent bitcoin up 2000% and small cap cryptocurrencies have gone up similarly.
The market went up parabolically in less than a year, but what many have failed to realize is the reality that it actually took almost a decade for this type of market recognition to take place. Yes, the market rallied heavily in 2017, but this was led by Bitcoin. Bitcoin has been around since 2009.
Therefore, it's actually been 9 years in the making, and John McAfee's legendary 1 million dollar price target for bitcoin by 2020 is probably not going to happen. I'm not saying it won't, just unlikely, very unlikely. Markets don't go up in a straight line, and Bitcoin's parabolic rise is likely to be offset by a healthy correction. The market could even go sideways for the next year or longer, and all of this attention could lead to a large sell off if it doesn't meet expectations, my article on bitcoin price ranges here.
I'm sure there are plenty of sectors with potential, and for those who are focused on the crypo market, whether it be for the innovative potential, dollar destruction, or for those simply trying to make a dollar, what might be the next best (or better) market to invest in? (More below)
The answer is in GOLD, specifically, gold miners. Gold's recent bull market that began in early 2016 has been on an absolute tear so far these past few months and is on it's way to reaching record highs that were hit in 2011, yet the gold miners are currently selling at such a ridiculously low discount in comparison that you would still probably make a return if these companies simply gave up and liquidated their assets.
But they won't liquidate their assets, because they know how much money they're going to be raking in for the next couple of decades, and they're currently accumulating their own shares so that they could capitalize on the premiums that investors will be paying when they flock like geese. Hedge fund managers like Eric Sprott have been on a buying bonanza since the fall of Gold in 2011 and this is another opportunity for us to load up the trucks. Today in particular there was a big fall in some miner's due to some speculation about news on EPA administrator Scott Pruitt's statement about environmental concerns.
This is how gold has performed since 2016 (up 30%).
To draw a simple price comparison, here are the prices of the most popular gold miner ETF's, the GDX & GDXJ, back when gold was at it's peak in 2011 and now:
GDX 2011 - peaked at approximately $65
GDXJ 2011 - peaked at approximately $175
GDX 2018 - currently trading at $24
GDXJ 2018 - currently trading at $34
This equates to a a 40% price discount for the GDX and an 80% discount for the GDXJ. Not to mention that the miner's that are currently in business are those that have survived the recent bear market by getting smart and lean by cutting cost's by consolidating or outright buying the competition.
So you're basically getting the fittest companies with the best management that have survived a 50% decline in Gold in the past 7 years, hence the term, survival of the fittest. Some were even able to profit with falling precious metals prices with break-even production costs at well below market prices. To say the least, there is potential.
Nobody is talking about it yet because we're all so focused on Bitcoin, but I believe the gold miners are the place to be. Get in early, cause early bird gets the worm.
Thank you for reading, feel free to upvote & follow.