Gold Mining Buy-Out Binge Coming, And That’s A Mixed Blessing

This is a good news/bad news story.

Say you’re one of the many people who bought junior gold and silver mining stocks a few years ago — and then watched in horror as they fell day after day, week after week, finally settling at pennies on your dollar.

Then, just as they seem to be recovering, you’re notified that some big miner with much less spectacular upside potential is buying one of your little lottery tickets for a premium to the current price — but a fraction of what you paid back in the day. You now own shares of Goldcorp or Agnico Eagle or some other household name, which isn’t bad. But it’s definitely not the 10-bagger you’d been hoping for to redeem your terrible timing.

Well, get ready, because that’s your future. As Casey Research’s Louis James put it in a recent interview:

The uptick is quite visible. Companies were running out of cash, pulling in their horns, operating in lights-on mode. But now they’re raising money and putting it to work. Resevoir’s deal with Nevsun was a real eye-opener, as was Goldcorp’s acquisition of Kaminak. I hear from contacts that the quality exploration companies are getting new CAs [capital advances] signed with juniors as well as majors. The latter have been cleaning up their balance sheets and are thinking of going shopping again.

Some recent news stories bear this out: