PAYDIRT: Mining for Profits with Gold & Silver Stocks

By Jeff Clark

How, exactly, does one pick promising mining stocks? It all starts with experience, and veteran analyst Jeff Clark has it in spades. With insights from 16 other industry experts, PAYDIRT is the guide to getting started with mining stocks.

It glistened like only real gold can, that shiny nugget in the bottom of the pan, stirring the prospector in Jeff’s late father.

That love for discovering gold and silver quickly transferred to Jeff. At one point the family owned mining claims in California, Arizona, and Nevada, his Dad becoming a prolific prospector.

But, Jeff carved his own path, focused on investing.

After decades as a leading industry analyst and commentator, Jeff has put together the definitive guide to one of the most potentially lucrative corners of the investing world. After all, the criteria used to invest in the Apple’s and Amazon’s of the world don’t apply here.

PAYDIRT, Mining for Profits with Gold & Silver Stocks shows you, through a proven step-by-step method, exactly how to identify potential profitable gold and silver mining stocks, in one of the only arenas where retail investors can still invest like a venture capitalist.

Have you ever played the boardgame Battleship? It’s one of many methods used to not just pick potential winners but avoid those with the greatest risk. Even those with no experience in the sector will find Jeff's strategies straightforward, with "tonnes" of resources throughout the book.

In fact, PAYDIRT will have you begin identifying stocks while you're reading. They won't all pass muster, but you'll be told exactly what to do and what to look for in a mining company, written in a text that is both easy and fun to read.

The book does something else usually not often found in how-to manuals. A total of 16 industry experts were interviewed for their input, and their advice is sprinkled throughout. Over 100 excerpts covering everything from why invest in gold and mining stocks and their personal criteria for each stage of company, to when to reject a company and when to take profits. It adds a layer of expertise you frankly won’t find compiled elsewhere.

The book is also entertaining, starting with the most terrifying mine the author has ever been in. We hope you're not claustrophobic!

If you want to learn how to pick mining stocks, then follow Jeff's specific and candid guidance that will tell you exactly how to hit PAYDIRT in your portfolio.

• Language: English
• Publisher: WealthCycles Press
• Release date: Sep 25, 2023
• ISBN: 9798218236847

Book preview

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Copyright © 2023 Jeff Clark

TheGoldAdvisor.com

All rights reserved. No part of this book may be reproduced or used in any manner without prior written permission of the author, except for the use of brief quotations in a book review.

Permission requests should be sent to [e-mail]

The author believes the information in this book was correct at the time of publication, but does not assume any liability for loss or damage caused by errors or omissions. Readers are reminded that all investment involves risk.

DEDICATED TO

Chuck and Winnie

Dad and Mom

Prospectors of Gold

Inheritors of Heaven

Going for the Gold

Painted in 2006, by a friend of the family

Table of Contents

Foreword: By Mike Maloney

Preface: What This Book Is and Whom It's For

Introduction: The Most Terrifying Mine I've Ever Entered

SECTION 1: YOU'RE ALREADY A MINING INVESTOR!

Chapter 1:Precious Metals Everywhere

Chapter 2: Should I Invest in Mining Stock?

SECTION 2: THE KEY TO MINING PROFITS

Chapter 3: The #1 Catalyst for a Gold & Silver Mining Stock

Chapter 4: What PAYDIRT Looks Like

SECTION 3: MINING STOCKS AND FUNDS

Chapter 5: No Two Mining Stocks Are the Same

Chapter 6: Mining Stocks Made Easy

SECTION 4: HOW TO PICK MINING STOCKS

Chapter 7: The Most Powerful Formula to Identify Winning Mining Stocks

SECTION 5: INVESTMENT STRATEGIES

Chapter 8: Identifying Producers That WIll Beat the Index

Chapter 9: Developers—And My Favorite Investment Strategy

Chapter 10: Explorers: The Biggest—and Riskiest—PAYDIRT

SECTION 6: HOW TO BUY AND WHEN TO SELL

Chapter 11: The 5 Commandments for the Mining Stock Investor

Appendix I

Appendix II

Acknowledgments

About the Author

Foreword

by Mike Maloney

Many years ago, Robert Kiyosaki, author of the best-selling financial book in history... Rich Dad, Poor Dad, said to me Investing is a team sport. What he meant was, if you can find someone else who is passionate about the same thing, someone who likes doing the research, investigation, and analysis required, then your chances of success are far greater than going it alone.

Another one of the many truths that Robert shared with me is You can’t do a good deal with a bad partner, and believe me, I have personal experience with this one. Things will not go well for you if you pick the wrong person.

When it comes to precious metals mining stocks, I can think of no one who I would want on my team more than Jeff Clark. Because Jeff has the passion—so much so that he has made it his life’s work—he is one of the best partners you’re ever going to find. Jeff is truly an expert in the precious metals mining industry, and he is also one of the kindest, most well-intentioned human beings to walk this planet.

You may not know it yet, but by reading this book you have just added Jeff Clark to your team.

Congratulations!

Michael Maloney

Preface

What This Book Is and Whom It’s For

My life as an investor changed forever when I discovered what mining stocks could do. A good example is what happened in 2011...

I bought shares in Pretium Resources, a Canadian gold company with a property in a remote and snowy part of British Columbia. Everyone in the business knew they had an elephant deposit, but some investors questioned how easy it would be to mine. After doing the same research I’ll show you, I sided with those analysts and management that thought it would work. I paid $6 for the stock, and about 18 months later it hit $18.

I sold. My $10,000 investment became $30,000.

But it wasn’t the win on that stock that changed things for me. By this time I’d pocketed multiple doubles and triples. It was the realization that hit me: it was clear this could be done repeatedly, again and again, in the mining sector.

Believe it or not, doubles and triples in mining stocks are almost routine. It happens much more frequently in bull markets, but it can even occur during bear markets. Sometimes the gains can be ten-fold or more, as I’ll show you.

In fact, there are very few places in the world where this is still possible, let alone consistently. These kinds of returns are usually reserved for private venture capitalists who already have billions of dollars. But mining works differently, and it’s still one of the few places where ordinary investors can get access to this level of potential. I’m going to show you how, exactly, in this book, using the very method I’ve employed successfully since 2006.

So, how did I come to write this book?

It’s simple. In my job as an industry analyst—for companies like Casey Research, Goldsilver.com, Hard Assets Alliance, as a frequent speaker at natural resource investment conferences, and serving on advisory boards—I write and talk a lot about investing in the gold and silver mining industry. And inevitably one question comes up more than any other:

How?

How does one hit PAYDIRT in gold and silver mining stocks?

Many of those wanting to dip their toes into these waters may have heard of the potential profits to be gained, but know next to nothing about how to pick stocks, let alone mining in particular. Others may have a cursory understanding, or watched a YouTube presentation by a self-appointed expert, or subscribed to a resource-oriented newsletter. Others may have experience investing in the sector, but have had only middling or even poor results. And there may be a few of you who already have a deep understanding of both the business of mining and the ins and outs of investing in miners.

So who is PAYDIRT for? It’s for all of you, if you wish to participate, on your own, in the exciting possibilities for profit this unique investing niche can offer.

Along the way, I’m going to take you on a ride through the mining industry, which is the least understood—and most misunderstood—business on the planet. I’ll lead you on a trip deep underground, to show you what it feels like to be far from sunlight and safety. I’ll acquaint you with different stock-picking strategies. And I’ll introduce you to some of the fascinating entrepreneurs I’ve met during my 16-year career and let them tell you their stories.

There will be some necessary technical detail to absorb, but the method I use is not difficult to grasp. And just as important, this journey will be fun.

It’s wise to always keep in mind the words of wisdom spoken by Tom Hanks’ character in the wonderful film, A League of Their Own: "Baseball is hard. It’s supposed to be hard. If it wasn’t hard, everyone would do it."

Exactly. Like baseball, investing in this sector isn’t easy, especially in the junior mining stocks I’ll write about, which is why it isn’t for everyone. That’s not meant to scare you off—it’s really a deterrent only for followers of flashy trends, or gamblers who would bet the mortgage payments on a roll of the dice, or fools who believe they can win at three-card monte.

But it does entail some work and study and a commitment to learn new things. Believe me, I know. Since 2006 I’ve studied my adopted profession. And I’ve found there is always something new just around the corner. I’ve learned so much, often by trial and error, but also by taking full advantage of the help offered by some of the most knowledgeable folks in the business, many of whom have become friends.

The mining game is full of some real characters. In fact, you have to be a bit of a maverick to want to try your luck in such a risky business in the first place. But perhaps more than you’d expect, the industry is full of successful people more than willing to share their time and expertise.

And like them, I would like to share what I’ve learned with you.

But this is not just a memoir. It is—first and foremost—a hands-on investment guide. A close-up look at the nuts and bolts of gold and silver mining and the companies that do it. The methods for picking the best ones in which to invest. And the pitfalls to avoid.

First, we’ll look at each opportunity from all the important angles, using a system specifically designed for the mining industry. This method is detailed in sections Four and Five, and it will help you cut through a lot of the noise that surrounds this sector. I’ll detail, in a straightforward manner, the most important factors to look for as predictors of a company’s success. It’s not foolproof, but it will point you to more winners than losers.

I’ll teach you the meaning of the technical information a company puts out, and how to analyze and read between the lines of press releases.

I’ll show you the typical characteristics of every successful company, including the single most important one of all.

We’ll also do something else to increase our odds...

Because mining stocks are so volatile, you have to take a Pringles™ approach: you can’t buy just one. After all the analysis and study and research, we still can’t be absolutely certain a mining stock will be a winner, particularly when it comes to exploration companies.

For this reason you won’t buy just one or two mining stocks. I’ll help you build a proper portfolio in section Six.

If, after my presentation, you decide that mining stocks are not for you, so be it. Instead of investing in miners, you may decide simply to stick with the safer route of owning gold and silver themselves—which everyone should own anyway. They are, after all, the ultimate safe harbor in a crisis.

Or perhaps you’ll want exposure to mining stocks, but don’t want to go it alone. I’ll show you how to identify funds that do it for you.

Or you may prefer to hire a broker from the industry to work for you. In that event, I’ll share some tips on how to find an honest one as well as alert you to some of the pitfalls that you may encounter. Or hire a newsletter writer—I’ll give you some names of ones I’ve come to trust and some tips on what to expect.

But if you want to speculate in individual mining stocks, this book will show you exactly how to do it. I can’t promise it will make you rich—anyone who makes such a claim is someone to run away from as fast as you can. But what it will teach you is how to put the odds greatly in your favor. And it is my fondest hope that, as I have, you will arm yourself with the techniques that lead to hitting PAYDIRT.

I’ll sprinkle examples of investment successes through the book, from some of my own wins to those of colleagues and friends, just to illustrate the leverage this sector holds. And yes, I’ll even own up to a couple of embarrassing losses—like most investing, there will inevitably be some—but will pass along what I learned from them in hopes that you can avoid the mistakes I made.

But first, take a peek into the actual, physical business of underground ore extraction, as you follow me down into one of the most terrifying mines I’ve ever entered...

Introduction

THE MOST TERRIFYING MINE I’VE EVER ENTERED

I’m hot and sweaty. I’m carrying an extra twenty pounds of weight—and it’s not because I overate on Thanksgiving.

It’s my gear.

I’m outfitted in heavy coveralls, stout rubber boots, a hard hat with light, thick gloves, protective eyewear—even a backup battery in case my light fails.

But I’m also sweaty for another reason.

Fear.

I’m in a silver mine in China, on an analyst tour that began on a set of tractors driving us into the mine, chugging along for 10 minutes, then dumping us out to go on a 15-minute walk on a dusty dirt floor, leading us further and further beneath the earth’s crust.

And now they show us the next part of the tour: a deep hole in the ground that looks barely wide enough to fit a human. A fellow analyst backs up and quietly says, I’ll pass.

I proceed with a few other analysts, in the middle of the pack. I descend slowly down the ladder—five feet, ten feet—and about halfway down find that one of the rungs of the ladder is broken. I drop down to the next rung and it holds—but suddenly realize the dirt walls are now touching both sides of my body.

I hear an analyst below me begin to panic breathe, the hole apparently still tight where he clutches to the ladder. The line stops. With people both above and below me, and the dirt walls tightening, it hits me like a fist: there’s no way out!

How in the world did I get here?

GOLD ROOTS

Following an early retirement, my parents moved to California in 1997, and almost immediately my Dad got bitten by the mining bug. More accurately, the prospecting bug. From the first time he spotted that tiny gold nugget in the bottom of his gold pan, he was hooked. I can remember his excitement when he showed off his finds.

What immediately followed was the wide and proficient use of dredges, sluices, pickaxes, shovels, pumps, metal detectors, and of course gold pans. Mining trips to deserts and riverbeds and mountains and more deserts, some with roads and some without... scores of mining claims scattered over California, Nevada and Arizona... lots of mining clubs and conventions and shows.

Over the next two decades, he became so adept at prospecting that he was part of a group that would teach you how to use your newly-purchased gold detector—and guarantee you’d find gold with it during the lesson. He always came through. He won a few gold panning contests, too—yes, there are such things.

Naturally, some of this rubbed off on me. And of course it was very exciting when you found something. (That didn’t happen every day; it’s kind of like fishing... you don’t know how long it’ll take you nor what you’ll catch beyond a sunburn.)

My interest quickly transferred from gold panning to gold investing. But what I learned from my Dad and his many prospector friends would pay off...

FROM GOLD PANNER TO GOLD ANALYST

In 2006 I found myself at loose ends, my original career path ending through no fault of my own. I needed a new profession, one that wouldn’t just pay the bills but also bring me satisfaction. I was always told I was a good writer, so marrying that skill with my love for gold investing meant one thing.

Newsletter writer.

I had followed Casey Research, a newsletter firm specializing in the resource sector, for a year and found I had learned so much that it felt like a college education. I thought I would be a good match for them, combining all my interests under one roof. So I sent them some writing samples.

Lobo Tiggre was the editor of International Speculator at the time, the company’s flagship publication. Doug Casey was the founder, well-known in those circles as one of the greatest speculators in the resource sector. Lobo had been trained by Doug, and he responded to my query.

He put me through the wringer. I submitted a number of articles, and each time was met with, Okay Jeff, this is good, but now we want you to write on this stock and he’d name a gold company. The research was painstaking, and even required some calls to a remote project in South America, but it paid off. I was hired in 2007.

It was on a trial basis at first, to make sure I knew what I was talking about, but in less than a year I was the lead writer for what would become the company’s largest circulating newsletter, BIG GOLD.

Over the next decade we became a force to be reckoned with. I say that with no false modesty; the quality and depth of our research was unequaled in the field. Even some institutional investors and hedge fund managers subscribed to our newsletters.

What I learned from working with my Dad and his friends, and everyone then at Casey Research, is