What 10-Baggers Look Like—And 100-Baggers

Dear Reader,

I’m shivering in Toronto as you read this, here to participate in the biggest mineral explorer conference of them all, the annual Prospectors and Developers Association of Canada convention. I’m here to pick up the vibes I can on mergers and acquisitions in the works—I do expect M&A to heat up in the near term.

Meanwhile, Jeff Clark has an unabashedly sensational—but completely factual—look at what the coming surge in the bull market could mean for us as gold and gold stock investors.

It may seem to some of you that we’re beating the drum here pretty loudly on this subject, and yes, it’s true. But I am very excited about the opportunity shaping up, as is the rest of the Casey crew—I truly believe in the potential we outlined in our Upturn Millionaires broadcast, and have put more of my own money into the same stocks I recommend than I ever have before.

And I am convinced that disciplined investors who have the courage to do the same will be very glad they did.

Sincerely,

Louis James

What 10-Baggers (and 100-Baggers) Look Like

Now that it appears clear the bottom is in for gold, it’s time to stop fretting about how low prices will drop and how long the correction will last—and start looking at how high they’ll go and when they’ll get there.

When viewing the gold market from a historical perspective, one thing that’s clear is that the junior mining stocks tend to fluctuate between extreme boom and bust cycles. As a group, they’ll double in price, then crash by 75%… then double or triple or even quadruple again, only to crash 90%. Boom, bust, repeat.

Given that we just completed a major bust cycle—and not just any bust cycle, but one of the harshest on record, according to many veteran insiders—the setup for a major rally in gold stocks is right in front of us.

This may sound sensationalistic, but based on past historical patterns and where we think gold prices are headed, the odds are high that, on average, gold producers will trade in the $200 per share range before the next cycle is over. With most of them currently trading between $20 and $40, the returns could be stupendous. And the percentage returns of the typical junior will be greater by an order of magnitude, providing life-changing gains to smart investors.

What you’re about to see are historical returns of both producers and juniors during three separate boom cycles. These are factual returns; they are not hypothetical. And if you accept the fact that this market moves in cycles, you know it’s about to happen again.

Gold had a spectacular climb in 1979-1980, and gold stocks in general gave a staggering performance at that time—many of them becoming 10-baggers (1,000% gains and more). While this is a well-known fact, few researchers have bothered to identify exact returns from specific companies during this era.

Digging up hard data from before the mid-1980s, especially for the junior explorers, is difficult because the information wasn’t computerized at the time. So I sent my nephew Grant to the library to view the Wall Street Journal on microfiche. We also include information we’ve had from Scott Hunter of Haywood Securities; Larry Page, then-president of the Manex Resource Group; and the dusty archives at the Northern Miner.

Note: This means our tables, while accurate, are not at all comprehensive.

Let’s get started…

The Quintessential Bull Market: 1979-1980

The granddaddy of gold bull cycles occurred during the 1970s, culminating in an unabashed mania in 1979 and 1980. Gold peaked at $850 an ounce on January 21, 1980, a rise of 276% from the beginning of 1979. (Yes, the price of gold on the last trading day of 1978 was a mere $226 an ounce.)