Bull markets are actually very simple.

We tend to overthink why they are happening or the cause of them.

But basically what really happens in a bull market is things go from being cheap to being expensive. And I’m not talking about a two-year or three-year rally. I am talking about major secular moves that tend to last 10 to 20 years.

Such was the stock rally from 1982 to 2000 or the gold rally from the mid-1960s to 1980.

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What happens at the beginning of a bull market is a certain asset class is cheap. It’s hated and underowned cause it has underperformed for years. It then begins to move up and the news gets better surrounding the asset class.

The valuations begin to move up.

As more people buy and more people accept the bull market, the asset class eventually becomes overowned and expensive. This is what we saw in tech stocks in 2000, real estate in 2005 and gold back in 1980.

I think that gold is about half of the way through its bull market for numerous reasons that I outline in my investment publications and recent book “The Great Super Cycle.”

However, what is going on with gold stocks amazes me. For about the past four years, gold stocks have underperformed gold.

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For example, Amex Gold BUGS Index (HUI) peaked at 520 in 2008, gold peaked at about $1,000 an ounce in 2008.

Gold bullion is pushing up against $1,775, an ounce or 77 percent higher than its 2008 peak. The HUI Index is about 540 or about 20 points or roughly 4 percent higher. You can see the underperformance.

The good news is as a value investor is this has lead to a lot of bargains in the gold market. There are dozens of stocks trading at between 12 and 20 times earnings in the gold market. Gold stocks tend to historically trade around 30 times earnings.

Right now, there is a definite great opportunity. This is buying top-end gold companies at bear-market bottom valuations even though gold and precious metals are in a raging bull market. As a prudent investor, I suggest you take advantage of these bargains.

About the Author: David Skarica

David Skarica is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes the Gold Stock Adviser. Discover more by Clicking Here Now.