In the gold business, there are two kinds of companies, says mining guru Doug Casey. First, there are the companies that dig gold out of the ground after it has been discovered. These are the “producers.” These companies have done well during the current gold bull market – up as much as 200% during that period.

But what most investors don’t realize is that it’s the second type of company, the small gold “explorers,” that always produce the biggest gains in gold bull markets.

These are the companies that send geologists around the world, scouring for the next gold discovery. They find a promising deposit and get samples of the rock beneath the surface using drill rigs. If the samples indicate there may be enough gold to profitably mine, they either sell the rights or do the work themselves.

What’s interesting about gold bull markets is that these exploration companies explode in price after the price of gold has already jumped.

In the late 1970s, for example, the price of gold skyrocketed, from around $200 in 1979 to over $800 in January 1980. But it wasn’t until after the price of gold peaked that the best exploration companies saw their biggest gains.

What kind of profits are we talking about?

• Carolin Mines up 1,739%

• Lincoln Resources up 2,464%

• Copper Lake Expl. up 13,025%

• David Minerals up 1,726%

• Eagle River Mines up 3,479%

• Silverado Mines up 3,987%

• Wharf Resources up 2,779%

A simple $500 invested in just 11 of these companies would have given you $172,585. $1,000 invested in each would have given you about $350,000.

Doug, who was also recently down in Buenos Aires visiting us here at Notes, has written a special report about today’s gold exploration companies, which he calls Toronto’s Secret Gold Investment. You can get the details here.