Take a look at the ASX Gold Index [ASX:XGD] during this period. It’s an index of gold mining stocks: Now, you might point to June 2013 and December 2015 as great entry points. I’m sure there were a few people who picked these points and enjoyed big gains. Bull market, bear market…it didn’t matter for these investors. Pick the trend, ride the momentum and get out before it turns. In the other camp, fundamental investors (myself included) were initially baffled. Our seemingly cheap gold stocks only got cheaper by late-2014 when the market bottomed out. Looking back, these gold stocks really got hammered. Pounded. Newcrest Mining Ltd [ASX:NCM] traded at less than $7 in December 2013, down from $42.66 at its peak in April 2011. And do you remember St Barbara Ltd [ASX:SBM] trading at 7 cents in December 2014? If I’d said back then that St Barbara could be $5 in the next 10 years, you’d have laughed at me. (Well, St Barbara did reach $5…but just four years later in July 2018.) The 30 months from July 2013 to December 2015 was a frustrating and at times painful journey. You’d watch your portfolio and experience moments of recovery, only to see sharp moves down again. If you lived through this and can still remember it, let me ask a few questions: Did you, like me, find encouragement from experts like Eric Sprott, Rick Rule and Peter Schiff? They reminded you about the merits of investing in gold stocks…and the need to ride out the wave. They were like emotional boosters at the time of discouragement. But it felt like eons before their experience and wisdom became even a partial reality. Did you read reports and wonder why gold and gold stock prices were not heading higher? And what about in the second half of 2014 when companies started to turnaround? I for one was glad I persisted. The oil price halving in the second half of 2014 gave me just enough ‘hopium’ (the intoxicating drug of hope) to stay on. Now look at the oil price in the second half of 2014. That was a huge decline, only dwarfed by the early 2020 plunge that sent oil going negative (and toilet rolls were more expensive than oil, go figure!): Now what does oil have to do with gold miners? Machinery needs diesel. Lots of it. A high oil price keeps the expenses up, leaving less profits and cash flow for the shareholders. With oil falling, this gave the gold stocks fuel for the price boost. Looking back at the bear market, I think both the timers of the market and those who did their time in the market were rewarded handsomely. The timers of the market could have picked up some profits in short-term trades as these stocks were very volatile. Those who did their time in the market were rescued partly by what Rick Rule called ‘the cure for low prices is low prices’. The macroeconomic shift in the oil market also boosted the cash flow generating potential of gold stocks. The greatest winners in my view build their character through adversity. You do not strengthen through victory. You become victorious through building your character. And that’s true with life, just as it is with investing. I’ll leave you with that reflection for the weekend. Tune in next week for more thoughts and musings on the economy, the markets and the fiat currency system’s slide into oblivion. Yours sincerely, Brian Chu,
Editor, The Daily Reckoning Australia PS: I’m interested in hearing your war stories. Did you live through the gold bear market back in 2013? Or perhaps it was another significant bear market? If you do want to share yours story, reach out to me here with subject line as ‘DR War story’, as I would love to hear it! | 
