Chris’ note: Inflation concerns have been at the top of our readers’ minds lately. To help address them, today, I’m unlocking subscriber content from our premium weekly big-ideas advisory, Legacy Inner Circle. It’s a conversation I had with International Speculator editor Dave Forest last week.

Dave is a trained geologist and a mining industry insider. And he says gold is where you want to be as inflation looms on the horizon…

Q&A With Dave Forest, Editor, International Speculator

Dave: Right now, I’m in Reno, Nevada, staking some silver properties. I’m heading out into the field after this.

I was planning on holding on to these properties for some time. But a company contacted me and wanted to buy them.

We have a handshake agreement for them to buy the properties. I’m about to show them the spots. The market is really good for silver and gold properties right now.

Chris Lowe: For folks who don’t know, what’s staking?

Dave: There was a time when, if you wanted to claim mineral rights to a piece of government land, you would go out and put down wooden stakes. They would demarcate your area.

Almost every country – except the U.S. – has moved away from that system. In most cases, you can now do it online. But the U.S. is sticking to the old system. You still have to go out and physically put your wooden stakes in the ground.

I also did this in May. It involved a lot of walking about in the hot sun.

Staking gives you the rights to the minerals under the land. Then you can develop them, if you want… or sell them.

Chris: Folks who are just joining The Daily Cut may not know you so well. You’re a trained geologist. You went out there to stake some ground. But how do you know where to put the stakes?

Dave: I do a lot of research! In this case, one of the properties is in an old silver district from the mid-1800s. It was the site of one of the greatest silver rushes in the world.

Looking through all the reports, I was able to piece together where the old mines were. I figured out where there might be extensions of the mines.

No one has looked at this in a century. So I spent a lot of time digging into dusty old reports.

Chris: With worries building over inflation, it’s a great time to be in precious metals. Gold and silver are “hard” assets. That means they’re hard to produce more of.

Governments can’t inflate away their value. And we just had a 5% year-over-year inflation reading in May. That’s the highest level in 10 years.

Our readers are concerned. They see a lot of government stimulus. They don’t see any end to it. They’ve also seen prices go up for a lot of everyday items, such as gasoline, lumber, and other commodities.

But despite this concern over inflation… and despite other commodities taking off… gold hasn’t had the greatest run. What’s going on? Why aren’t we in an epic gold bull market?

Dave: Don’t forget that gold was one of the first assets to run higher after the coronavirus crash. From about May 2020 through July 2020, we had a spectacular run in the gold price, and in gold stocks.

In our International Speculator model portfolio, small gold mining stocks I recommended spiked 104%, 108%, even 307% within a matter of months during that run. That’s typical of these stocks during a bull run.

Usually, when there’s a crash, investors dump everything. Gold is usually the first thing to recover. Gold stocks have a run. Then everything else catches up.

Also, inflation affects all stocks. Now, we’re seeing the second phase of that inflation run with the demand for hard assets – things like lumber, industrial goods, and copper. Stocks are running higher.

Meanwhile, since its run last summer, gold is holding steady. I suspect some sort of crisis will propel the gold price’s next run higher. When we get more signs of trouble in the economy, gold will be the first thing to have another big run.

In that case, we’ll probably see the industrials and the mainstream stocks pull back or even crash. Then they’ll probably catch up with gold as the feds pump more money into the system.

But gold will be the leading indicator for the next phase.

Chris: You’re not someone who just looks at stocks and analyzes them from the comfort of your office.

You’re a mining industry insider – you help people get the metals out of the ground.

What are people on the inside of the industry doing during this holding period for gold?

Dave: They’re consolidating. We’ve seen tons of mergers and acquisitions. Those aren’t just big companies joining together. More important for us as investors, they’re big companies buying small companies.

That’s one of the things we watch. We want to buy the small, junior companies that will get fat buyouts from larger gold companies. We’ve seen a lot of that over the past year. I think that will continue.

There was a lot of hand-wringing about the gold price dropping from $2,000 to $1,800 an ounce. But that’s still a good gold price.

Most of the world’s gold companies are making a lot of money. A lot of them are making record profits. They’ve got a lot of cash. And as always, when the gold market goes up, they’re looking to grow.

So if you’re invested in a small gold company – one that’s developing a new project or a new mine – that’s a sweet spot. Those buyouts can be very profitable very quickly.

A good place to start is the VanEck Vectors Junior Gold Miners ETF (GDXJ). It’s an exchange-traded fund that tracks a broad basket of junior gold mining stocks.

For greater potential profits, I also recommend best-in-breed junior miners at my International Speculator advisory. You can find out how to sign up here.

Chris: Thanks for talking with me today.

Dave: My pleasure.