Ep. 551: Amir Adnani: How to Win in Bear Markets

Amir Adnani

“There are two certainties when it comes to resource investing…”

On today’s episode of Wall Street Unplugged, we unveil a junior miner that’s molded its entire business model around these two certainties… and how to profit from them.

The first certainty you probably know:

The resource market is cyclical.

When supply and demand imbalances occur, the resource sector is slow to react. This lengthy lag time creates massive price swings incomparable to other markets.

Take a look at the chart below. It’s what the past twenty years have looked like for the resource-dominant TSX Venture Exchange:

The second certainty, on the other hand, is not so obvious…

When bear markets occur, the majors significantly underinvest in new assets.

As commodity prices fall into bear markets, the major players in the industry (the multi-billion dollar mining firms) fail to do what they’re typically good at…

Buying resources.

Instead, these firms go into “protection mode.” They stop investing in new projects… cut exploration costs… and primarily maintain their balance sheets. Some, depending on the bite of the bear, even brace for bankruptcy.

This phenomena is one of the most overlooked certainties in the industry today.

And as you can see in the popular VanEck Gold Miners Fund (GDX) below, this has been taking place since the last bear market began in 2011…

From my experience, only a handful of miners truly take advantage of these certainties…

When a bear cycle hits, they pick up fantastic assets for pennies on the dollar.

With the help of today’s WSU guest and mining expert, Amir Adnani, I’ll be breaking down one of these companies.

As the price of gold slowly but surely begins to crawl back, insiders have picked up about 25% of the company with their own capital.

More importantly, with roughly 19 million ounces of gold in the ground drilled at just $8/ounce, this particular miner is in a league of it’s own.

It’s one of the most under-appreciated gold miners today…

And one of the best investment ideas I’ve ever given my listeners.

Good Investing,

Frank Curzio

P.S. After Amir signs off, we’re jumping into an Educational Segment [47:55]. Outside of FAANG, the underlying market is becoming dangerously volatile – with numbers I haven’t seen since the credit crisis. For short-term speculators, this segment will tell how to place your next bet… without catching a falling knife.

Links & Resources

Stocks Mentioned

  • Uranium Energy Corp (UEC)
  • GoldMining Inc. (GOLD.V)
  • Hertz (HTZ)
  • Teva Pharmaceuticals (TEVA)
  • General Electric (GE)
  • Chicago Bridge & Iron (CBI)
  • Kinder Morgan (KMI)


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