Welcome, and thank you for signing up for Golden Portfolio's Free Newsletter. As some of you may know, my name is Garrett Goggin. I've been a mining analyst since 2009. I worked at Stansberry Research's Gold Stock Analyst for the past 15 years. I hold an MBA from Babson College, a prestigious institution, and I am a Chartered Financial Analyst (CFA), a globally recognized standard of financial excellence. The CFA designation, championed by Benjamin Graham—Warren Buffett's mentor and the father of value investing—is a mark of exceptional rigor. Only about 10% of candidates complete the program and pass all three exams over a minimum of four years. I've presented at leading mining conferences from Toronto to Zurich and have traveled extensively in pursuit of gold and silver discoveries. Which has led me to places like Peru, Bolivia, Argentina, Quebec, Nicaragua, Mexico, and the historic mining areas of Colorado. |
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My research is highly regarded by mining companies, who seek my coverage for its value-oriented approach and the exposure it provides. |
Throughout my career, I have witnessed significant developments in the space: High-value discoveries, such as the Taylor hole at Arizona Mining, which created hundreds of millions in value overnight and led to a $1.2 billion acquisition. Deeply undervalued miners, like NewMarket Gold, which surged in value and was acquired for C$1 billion. I was among the first to recognize their potential. Conversely, I have also observed the negative aspects of the mining sector: Lifestyle companies that benefit management at the expense of shareholders. Executives profiting while shareholders suffer from stock sales. Shell companies funneling revenue through captive subsidiaries. Dishonest CEOs concealing critical issues, such as unachievable mining licenses. I've seen gold miners lose 50% of their value even as gold prices tripled, with management and bankers benefiting while share prices declined. Companies have repeatedly undergone share rollbacks and name changes to obscure their poor performance. I've gone independent to bring you the truth … As an analyst working for a larger organization, I was limited in my message. Companies seek positive coverage. A negative bias, despite being accurate and truthful, was simply not good for business. Now, I'm free to share the truth with you … I have identified a sector within the precious metals market that consistently outperforms Gold, the GDX ETF, and the GDXJ ETF. I refer to this as my Golden Portfolio ("GP"). And I'll explain exactly why these companies consistently exceed benchmarks. In summary, GP companies are uniquely positioned to achieve success. But first, let me explain why the average miner is not a good investment. |
Masterclass Part 1: Most Mining Stocks Are Poor Investments |
There's a reason why the world's best investors avoid mining stocks. Simply stated, they're not good investments. Heavy capex, low margins and reliance upon a commodity for pricing power make the average mining stock a poor choice. I've worked for the legendary John Doody of the Gold Stock Analyst and Stansberry Research for nearly 15 years. I'm an MBA, CFA and CMT who has traveled the world in search of gold and silver. I've seen it all in the mining world over the past 15 years. They say a picture is worth a thousand words, so before I get into it, have a look at the chart below: |
You can clearly see from 2002 the vast majority of gold mining stocks trailed gold in performance by a great deal. Gold exploded in value from $300/oz to $2,500/oz today — a 8.3X increase. You would think the average mining stock would have soared. Well, they didn't. In fact, most lost value. Gold's 8.3X performance beat every major minor since 2002. Agnico Eagle led the pack only up 223% while Kinross lost 25.7%. The average mining stock, represented by the GDX, beginning in 2006 declined 25.8%. Even worse were the smaller exploration stocks, represented by the GDXJ ETF, that declined 66.9% from 2009 inception. There's a reason for this horrible performance. The price of gold was about $300/oz in 2002. Now gold is trading for nearly $2,500/oz, an increase of 8.3X. But look at the average All-in Sustaining Cost (ASIC) rising 5X from $272/oz to $1,472/oz now. This AISC data is the average from the top 4 miners: Barrick, Newmont, Agnico and Kinross that I have been compiling for over a decade. |
When inflation pushes gold higher, costs follow. Naive analysts love to build their economic models of a gold mine, then change the gold input price. Project economics appear to explode higher. The stock appears to be worth multiples more. The problem is, these rookies need to adjust their costs higher as well. When inflation pushes gold higher, the major inputs for mining costs (oil, cyanide, labor, machinery, consulting) soar as well. When gold rises to $5,000/oz you can be sure it's going to cost a lot more than the current $1,472/oz AISC to mine an ounce of gold. Beware the miner that boasts of leverage to the gold price. This simply means that the miner is barely profitable, opening with high costs. In theory, as gold rises, small profits will lever higher off a small base growing 10X or more. In reality, as you know when gold rises, costs follow, so this barely profitable miner will still show little profits even when gold reaches $3,000/oz. But, what if I could show you a better way? A small sector of the gold and silver market leveraged to revenue only, which climbs as gold rises, and no exposure to rising costs when inflation and gold soar. Gold and Silver stocks that are truly leveraged to the gold price, so when gold rises, the stock price magnifies gold gains, and rises 2X, 3X or more. Tomorrow I will dive into the main factor that drives stock price performance. Keep an eye on your inbox… Best, Garrett Goggin, CFA
Founder, Golden Portfolio P.S. Two FREE recommendations will be sent to your inbox after this 5-Part Masterclass is complete. I've personally picked two of my favorites to share with you. One from Golden Portfolio and one from Golden Portfolio 10X. Keep an eye on your inbox. |
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