The last time this happened, gold soared 500%
From Justin Brill, Editor, Stansberry Digest:
Gold is on the run…
Spurred on by a new wave of economic fears, investors are flocking back to gold.
The precious metal was trading around $1,330 per ounce yesterday, its highest level in a year. Gold prices are up nearly 5% over the last 30 days and up 12% in the last six months alone.
Regular Digest readers know gold is traditionally considered a “safe-haven asset.” It’s disaster insurance. If the global monetary system completely collapses, folks will use gold to make everyday purchases.
Naturally, during times of trouble, gold prices tend to rise. So the recent headlines about flaring tensions with North Korea have helped to push the metal higher of late.
Meanwhile, weaker-than-expected economic data have economists growing more cautious about whether the Federal Reserve will continue to raise interest rates by the end of the year as planned. Concerns about our geopolitical climate – plus the massive damages from Hurricanes Harvey and Irma – are adding to investors’ uneasiness.
Investors have started to take notice. Money is pouring into gold stocks and exchange-traded funds (“ETFs”) like the SPDR Gold Trust (GLD), which is up 17% this year. As Bloomberg reported…
ETF buyers are building their holdings, joining hedge funds that have boosted their net-long position in bullion futures by almost nine-fold since early July. Through Tuesday, assets in gold-backed ETFs tracked by Bloomberg posted the biggest three-day gain since February.
“If gold is really ‘the sum of all fears,’ then the gold price is saying that not all is rosy in the garden,” Ross Norman, the chief executive officer of London-based precious metals dealer Sharps Pixley, said in a note Wednesday. “Gold seems to have momentum behind it, too.”
A super-bullish sign for gold…
As we noted in the August 24 Digest, gold is outpacing the overall market for the first time since 2011. Last week, our colleague Steve Sjuggerud told his True Wealth Systems (TWS) subscribers that gold’s recent outperformance is one reason he has become super bullish…
The metal is on pace to break that trend this year. And that alone could be a major sign going forward.
You see, the last time gold broke out of a five-plus year slump versus the stock market was the late-1990s. Gold underperformed stocks for six straight years from 1994 to 1999… And like today, it fell 26% during that slump.
Gold’s massive bull market didn’t start immediately after that… The metal still lost money in 2000. But, in 2001, it started a 12-year streak of positive returns. Take a look…
Steve says it’s time to buy…
Over his 22-year career, Steve Sjuggerud hasn’t made a name for himself as a “goldbug.” But he has had a lot of success in the gold markets.
A quick glance at the Stansberry Research Hall of Fame shows Steve’s recommendation of gold hoarder Seabridge Gold (SA) is the highest-returning recommendation in Stansberry Research history, gaining 995% over a four-year period.
Steve has been invited to speak at multiple gold-focused conferences, like the famed New Orleans Investment Conference, which is known for its bullish gold crowd. And he even hosted his own gold conference – the Long Beach Conference – in the early 2000s, urging people to buy gold before prices rose 500%.
But Steve himself had never bought more than one or two gold stocks in his entire life. That is, until late 2015, when he saw a rare opportunity. By January 2016, Steve had assembled a portfolio of a dozen or so microcap gold stocks. These stocks were far too illiquid to recommend to his subscribers. A few months later, Steve’s personal portfolio was up hundreds of percent.
We don’t share this anecdote to boast about Steve. We’re simply pointing out that when Steve says it’s time to buy gold, he really means it…
According to the TWS computers, it’s time to buy gold. Our main system for gold – which has delivered compound annual gains of 25% when in buy mode – is back in buy mode today.
Plus, we have an even bigger story…
It’s an indicator we’ve never shared before – because it hasn’t flashed since we started publishing TWS.
Based on this indicator, the last time gold looked this good was the early 2000s. And the last time we saw this situation, gold soared 500%.
Yet another bullish sign for gold prices…
Steve also told his TWS subscribers about another catalyst for higher gold prices. Gold’s rolling five-year return – a simple gauge to look at how well gold has performed over any five-year period – shows why now is the best time to buy since the last bull market in gold…
Gold has lost around 22% over the past five years. And as you can see, that’s one of the worst five-year returns in gold’s history. But it also sets up a long-term opportunity.
Gold has performed so poorly in recent years that it’s basically due to move higher. Over the long term, it should “revert to the mean…”
Mean reversion simply means that a stretched rubber band does eventually move back to its center.
If stocks are too cheap, they’ll tend to move back toward normal prices. And in gold today, when long-term rolling returns are extremely low, they tend to revert to higher returns in the future.
In the short term, we always say that the trend is what matters. But over the long term, mean reversion is what matters.
In short, we haven’t seen a pattern like this since the early 2000s… right before one of the best opportunities to buy gold in history.
Steve’s favorite vehicle to play rising gold prices could return 40% to 50% over the next year… And he says it has hundreds-of-percent upside if this is the start of the next major bull market in gold.
To learn more about a risk-free trial subscription to TWS – and how to receive this recommendation immediately – click here.
Gold stocks are breaking out, too…
DailyWealth Trader editor Ben Morris sees plenty of ways to profit off rising gold prices.
When gold recently broke through the $1,300-per-ounce level, Ben told subscribers to jump on board. And he’s particularly bullish on gold stocks today. As he explained in the September 5 DailyWealth Trader…
When the price of gold rises and falls, shares of gold producers tend to rise and fall with it. But they don’t usually move in the same amounts.
In the chart below, when the line rises, gold stocks are outperforming gold. When the line falls, gold stocks are underperforming gold. As you can see, the ratio formed a “wedge” over the past year… And it just broke higher. (In this chart, the VanEck Vectors Gold Miners Fund (GDX) represents gold stocks.)
Gold stocks are outperforming gold. And the breakout suggests that this outperformance is likely to continue.
For folks who trade precious metals stocks, this isn’t surprising. Traders usually think of gold stocks as a way to get leverage on the price of gold.
This is start of the next great bull market in gold…
Our colleague and precious metals expert Bill Shaw, senior analyst for the Stansberry Gold & Silver Investor, says the recent breakout above $1,300 an ounce is confirmation that we’re in the early stages of a big move higher in gold prices.
And if he’s right and gold prices do take off, Stansberry Gold & Silver Investor is the single best way to position yourself to profit.
Since launching the precious metals-focused advisory in April 2016, the results have been fantastic. In the latest Annual Report Card, Porter gave Stansberry Gold & Silver Investor an “A” grade, and for good reason. Bill delivered exceptional, market-beating results. As Porter wrote at the time…
Our Hard Rock Portfolio was up 12.5% since inception through the end of 2016. If you’d purchased GDX instead, you would have only made 4.2%. That’s a significant amount of outperformance, especially considering that fully 20% of our portfolio is the metal itself, which has gone down in value since we launched the Hard Rock Portfolio.
Today, the average open position in the Stansberry Gold & Silver Investor portfolio is up 22%. Six of the portfolio’s 21 positions are up 40%-plus.
The September issue hits inboxes tomorrow night after market close. In it, Bill will recap his latest visit to Ontario, Canada… offer an update on the latest movements in cryptocurrencies like bitcoin… and tell readers which portfolio holdings are a “buy” today.
To make sure you’re receiving our best gold research, click here to learn about a Stansberry Gold & Silver Investor subscription.