Justin’s note: If you don’t already own gold, you’re going to want to after reading our special, two-part edition of the Dispatch.
You see, I’ve gotten special permission from Chris Lowe, editor of Legacy Inner Circle, to “unlock” his exclusive interview with Strategic Investor editor E.B. Tucker.
If you’ve been paying attention this month, you know a lot about E.B. and his incredible track record of nailing big calls.
You also know E.B. is a true gold expert. Before working in the newsletter business, he co-managed a precious metals equity investment fund. Today, he serves on the board of a successful gold company. In short, he has deep connections in the gold business. And he’s helped his readers book big gains from some of the industry’s most explosive stocks.
In fact, one of his picks in Strategic Investor recently shot up 28% in one day.
In part one of this deep-dive interview, Chris gets E.B. to lay out the case for why gold is about to embark on a bull run – and how to position for it today.
Tomorrow, in part two, E.B. will share how you can make up to 25x more by speculating on gold mining stocks.
Chris Lowe, editor, Legacy Inner Circle: E.B., you called the bottom for gold last summer when we talked in August. Since then, gold is up almost 11%. What was it that made you think gold prices had bottomed… and that higher prices were on the way?
E.B. Tucker, editor, Strategic Investor: As we talked about at the time, gold bullion and gold stocks had been taking a beating. Then the fund management industry started throwing in the towel, too.
Last July, The Vanguard Group announced it was shuttering its $2.3 billion Vanguard Precious Metals and Mining Fund. Gold had seen an almost 10% drop in the previous three months. And the fund had dropped 24% in the past year. So Vanguard – one of the world’s largest investment firms – just gave up. It turned the fund into something completely different because it felt the need to get away from out-of-favor precious metals miners.
When you see a big change at a fund like that, it’s always something to watch. It often signals a bottom in the market.
Chris: Can you give me an example of what you mean?
E.B.: In August 2017, an oil hedge fund called the Astenbeck Master Commodities Fund II shut down. It had lost 30% in the first half of the year. Andy Hall, the legendary oil trader running the fund, said he just couldn’t figure out what to do in a falling market. So he shut up shop.
That turned out to be a bottom for oil. It went on a big run up for the rest of August and into September.
Chris: A lot of folks would run a mile from an asset class that’s getting hammered so hard that even the pros are turning their backs on it. But you look at these events as buying opportunities. Why so?
E.B.: When you see the pros throwing in the towel like that, it’s a sign that most of the pessimism has been wrung out of prices. And that’s when buyers start to step in.
That’s why the Vanguard fund news caught my attention. Vanguard said, “Forget about having this gold fund. We’re just going to turn it into something else entirely.” It resulted in a massive liquidation. Gold stocks went down. Physical gold went down. And that, in my opinion, marked a bottom.
It also helps to have a good grasp of market history. You see, it wasn’t the first time Vanguard gave up on gold just as it was hitting a bottom.
In 2001, Vanguard removed the word “gold” from what was then its Vanguard Gold and Precious Metals Fund. Soon after, gold set off on a decade-long rally. The price of gold went up 567% between May 2001 and September 2011.
Chris: Are there other signs you’re picking up on that the bottom is in for gold?
E.B.: The other big one is the surge in high-profile mergers among the so-called majors – mining companies with market values of $4 billion and over.
Since last fall, six of the gold mining majors have merged in three separate deals. And they haven’t combined in aggressive takeovers like you see at the top of a boom in gold… when the majors are buying each other at a premium. Forget about that. Today, they’re merging out of the need to survive.
You had Tahoe Resources, a big silver miner, that lost access to its key mine in Guatemala. Tahoe went to Pan American Silver, a Canadian mining company with operations in South America, and said, “Is there a way we can work something out? We don’t know what we’re going to do.”
I’m not going to say that was a merger of distress. But Tahoe Resources didn’t have a lot of options. There weren’t a lot of people knocking on Tahoe’s door begging to buy the company.
Then you had Newmont Mining and Goldcorp – two of the biggest mining companies in the world. Earlier this year, they merged to become Newmont Goldcorp. Now, if you look at the deal, Goldcorp was clearly in a position where it needed to merge in order to survive.
And you also had Barrick Gold – the world’s largest gold mining company – buying British gold mining giant Randgold Resources for $6 billion.
All these companies have fired a bunch of staff. And they’ve been selling off non-core assets. This tells you in no uncertain terms that the world’s biggest gold mining companies are not thriving. They’re struggling for survival. That’s another indication we’re at the bottom of the cycle.
I’ve seen these cycles before. At the top of a gold market cycle, these guys are buying silk rugs from the other side of the world and having them flown over here on a Gulfstream jet so no one touches them. At the bottom of the cycle, they’re wondering if they can merge so they don’t need as many copiers in the office.
You can complicate things all you want. But at the most basic level, as a gold investor, you want to see what you’re seeing now – people running scared and tightening their belts. Survival-type thinking. And that’s where the majors are at right now.
Chris: So what’s ahead for gold? Will the rally keep going?
E.B.: I went on Kitco News – which is focused on precious metals investing – in December. And I called for $1,500 per ounce of gold by the end of this year. That call still stands.
In fact, I believe we’ll see gold surpass its September 2011 all-time high of $1,895 at some point in this cycle. It may take a year or two. But it’s definitely in the cards.
Justin’s note: E.B. says “owning physical gold is one of the best ways to protect your wealth.” Check out the Gold Investor’s Guide for easy ways to own some. And for fun, check out E.B.’s favorite way to treasure hunt for physical gold.
And be sure to stay tuned for part two of this interview tomorrow, when E.B. will share how you can book big gains from rising gold prices through gold stocks.
And for yet another way to profit off gold, you should tune in to tomorrow night’s landmark event.
E.B. will share the details on a unique type of security that could make you 1,000%-plus gains in 2019. He calls it “premium shares”… and you can use these securities in the coming gold rally. Doug Casey has used this strategy, too… and he’ll be joining E.B. to explain how they work, and why everyone needs them in their arsenal today.
The broadcast is free. And E.B.’s premium shares strategy is something that needs to be acted on now. He’s got a watchlist of 15 premium shares that fit his buying criteria. And he has three others that are strong buys today, as well as a little-known gold stock set to rip higher in the months ahead. Anyone who tunes into the summit tomorrow night will have the chance to get these four names.
Reserve your spot for free here. But hurry… space is limited.
Readers respond to Casey Research founder Doug Casey’s recent interview on class warfare…
My husband and I have discussed this topic and I do believe a war will break out. There are more and more people with the idea that everything should be divided equally. It goes back to the story of the hen who did all the work and then everyone else wanted the profit. It just doesn’t work. I came to this country with the belief you work and improve your life.
Nothing is really free, there always is a price to pay when all is said and done. We as a nation are not set up to continually give with nothing in return. There isn’t one entity that can survive with that type of mentality. I lived through Socialism and also Communism, they just do not work. People need to quit feeling and start thinking. My husband says I am a pessimist, I consider myself a realist. I see what is going on and what is coming, so we all better get ready for the long ride.
Not “a war between the states”… rather “between the classes.” Where you physically are does not matter! Rich is anyone with more (everyone else but me). Poor is me and all below me. Everyone is “rich” to those with less.
Great conversation about definitions and feel as opposed to think.
Sure, there are always those lazy “have-nots” seeking handouts and enduring co-dependent relationships with the “haves.” But just as surely, there are many souls in critical need due to external circumstances (natural disaster, work layoff, economic recession, grave illness, entrapping poverty and so on) who are worthy and of good character and only need a transformative hand up, not a handout to get them through and beyond their crises. Simply avoid the former and aid the latter.
For those blessed with abundant means, there is no better way to express sincere thankfulness for their just rewards than to help others in need.
As always, send your thoughts, questions, and suggestions to [email protected].