The bull market resurrection happening now

Up she goes again.

The gold price in Aussie dollars is up another $200 in the last week or so.

It’s now a stonking A$4,230 an ounce.

How would you feel running a gold mine right now? Every morning you get out of bed you’re making more money than yesterday.

However, take note of this recent fund manager comment. It comes from a guy called John Deniz. He told his clients in a recent note... 

‘Despite gold being at all-time highs and silver at 11-year highs, positioning is not extended nor sentiment euphoric.’

I couldn’t agree more. This is important.

Believe me, I have been around the ASX a long time now.

I’ve seen cannabis stocks go bananas. I’ve seen lithium shares skyrocket – twice!

I was there for the Afterpay led craze for payment firms. Iron ore juniors went into overdrive back in 2021.

Then there were the individual manias in shares like Zoono, GetSwift and Arufura Rare Earths.

Do you want to know a defining feature of all these?

PRACTICALLY NONE OF THEM MADE ANY BLOODY MONEY!

Sorry for the shouty capitals, but it bears saying it at the top of my voice.

It never ceases to amaze me the staggering valuations some ASX firms can fetch…when they don’t have a dollar of profit.

Investors and speculators can drive shares to astonishing heights based off nothing but projections of the future.

Half the time the valuations are insane…but people bid on the shares all the same.

We shouldn’t be surprised really. Human history is littered with manias…from John Law’s Mississippi scheme to Dutch tulups to Wall Street 1929.

Why am I telling you this?

The gold sector in Australia is no way near this type of crazed behaviour.

Even better, the shares are underpinned with REAL cash flow.

If they’re rising now, it’s because the market can see more and more dollars going straight to the bottom line…right where you want it as a share market investor.

Do you see the implication of what I’m telling you?

I have no doubt, as the gold bull run continues, gold shares will push toward the kind of crazed investor behaviour I alluded to above.

But we are not anywhere near that point yet.

In fact, I see this dynamic playing out across the entire ASX.

Yes – the market is up this year. But there is simply nothing like the volume and speculation I have seen in the past.

My speciality –  small caps – are a very good barometer of risk appetite.

And, as it stands today, small caps still trail blue chips in performance over the last 3 years – as a sector.

Why do you care?

There is so much potential buying power to come back to the market, at least in my view.

You need to bring an element of game theory to the share market.

Game theory recognises that players in a game, or situations, are interdependent. Your best course of action should account for what others will do.

In the share market, you can only make money if someone is buying what you sell, and vice versa. And the key is someone is willing to buy from you at a higher price than what you paid.

What I’m trying to get across to you is that now is the time to enter the small cap sector with the idea of selling in 2-3 years to the incoming herd of buyers.

I’m 90% certain that by 2026 or 2027 the ASX will be churning with huge volume, inexperienced retail buyers throwing money in based off hope and momentum.

Why? Because all bull markets end in wild speculation.

And we’re in a bull market. I laid down the game plan for this last year.

The first stage is reviving confidence. That’s what we saw from November 23 to about midyear.

The second stage is the one we’re in now: increasing earnings.

This is where the market chases companies GENUINELY making more money. See the gold market right now to see this in action.

Here’s one example…Regis Resources [ASX: RRL]…