We have exciting news…
The Casey Daily Dispatch is back.
Regular readers know we published the Casey Daily Dispatch for years. Our goal in bringing it back is to provide readers with a daily briefing on the world’s most important financial trends, news, and price action. Our daily writing will be informed by boots-on-the-ground analysis from the Casey analyst team and our extensive network of high-level contacts.
Stocks, commodities, gold, currencies, bonds, you name it… if it’s worth knowing about, you’ll find it in the Casey Daily Dispatch. We kick off its return with these insights…
• The bear market in gold mining stocks has been brutal…
Gold stocks are down 78% from their peak in 2011. They’ve been in a bear market for 52 months, making this the second-longest bear market in gold stocks in 76 years. On average, gold-stock bear markets last only 34 months.
It’s gotten so bad that the mainstream media is declaring gold dead. A Washington Post headline from Saturday was titled “Gold is doomed.” A Bloomberg headline read “Gold Looks Like a ‘Textbook’ Short.”
Longtime readers know that the mainstream financial media has a horrible track record of investment calls. You’re usually better off doing the exact opposite of what they recommend.
For example, in May 2006, Bloomberg published an article titled “Why The Housing Bubble Won’t Burst.” Two months later, US home prices peaked and went on to decline by 33%… sparking the worst economic downturn since the Great Depression.
We call these “magazine moments.” When the mainstream media weighs in on an investment, it’s often a great contrarian indicator. And the mainstream media thinks gold is doomed…
• Believe the mainstream media if you want, but we prefer to trust the data…
The data show that gold stocks could produce huge returns very soon.
Meb Faber is the chief investment officer for Cambria Investment Management. He’s one of the most respected people in finance. He produces incredibly useful research that you can check out here.
Meb recently wrote a short yet powerful piece on mean reversion. “Mean reversion” means that nothing goes up or down forever. A soaring stock market eventually comes down to earth. Beaten-down assets eventually recover.
Meb analyzed global stock markets from 1903 to 2007. He also crunched 1975 – 2007 data on different investment classes. He wanted to find out what happens to an investment class after it declines for three straight years.
Meb found that stock markets rarely decline three years in a row. It happened less than 3% of the time between 1903 and 2007. But on the rare occasions when markets do decline three years in a row, powerful rallies usually follow.
Stock markets that fell three years in a row gained an average of 30% in the fourth year. And Meb found that asset classes that fell three years in a row gained 34% in the fourth year.
Meb also looked at the data for US industries dating back to the 1920s. He found that industries down 80% or more from their peak held incredible upside potential. On average, these industries returned more than 170% three years later after recovering.
• Gold stocks are down 78% and have fallen for three years in a row…
Buying a sector that’s near a bottom is scary. The news is terrible, and it feels like the sector will never go up again.
But Meb’s research shows that’s not how markets work. And it’s really not how gold stocks work.
Gold stocks might be the most cyclical stocks in the world. They boom and bust all the time. This chart shows gold stocks’ rallies and busts going back to 1976:
As you can see, gold stocks are as beaten up as they’ve ever been. Their current 75%-plus decline is the second worst since 1976.
Our colleague Porter Stansberry just wrote about gold stocks’ incredible potential. He said he’s “100% certain that eventually, this downward trend will reverse.”
Porter also explained why we’re approaching a significant bottom in gold:
I’ve been getting phone calls from leading precious-metals investors. They’re looking to sell assets and asking me for terms. They’re getting desperate to raise money. These were some of the richest men in the world five years ago… and now a few of them are virtually broke. That’s what happens when an industry declines by 80% or more. And that’s what a bottom “feels” like.
Porter went on to say that “average gains in excess of 250% are likely” in gold stocks.
• The best way to make money from gold stocks’ inevitable rebound…
…is with a risk-free subscription to International Speculator.
Regular Casey readers know that International Speculator is our advisory focused on finding the best small gold stocks with huge upside potential. We’ve been publishing International Speculator for over 35 years. Over 6,400 people read it each month.
In just the past decade, International Speculator has given readers nearly 25 opportunities to make 100%-plus gains.
But unless you subscribe to International Speculator, you probably don’t know about its amazing performance in 2014.
We explained earlier that gold stocks are in one of the worst bear markets in history. The S&P/TSX Venture, an index that measures the performance of small gold stocks, fell by 26% in 2014. But despite this, the International Speculator portfolio gained 10% in 2014.
Given its amazing performance during a horrible bear market, we can’t wait to see what the International Speculator portfolio will do when this gold bear market turns into a bull market.
You should know one more thing about International Speculator…
We’re doubling the subscription price soon from $995 to $1,999 per year.
We’re doing this for two reasons. One, a higher price means that we’ll attract only sophisticated investors who can afford the speculations in International Speculator.
Two, a higher price limits our following. This will help our subscribers get the best prices for the speculations we recommend.
The good news is that if you subscribe today, you can still get International Speculator for the old price of $995 per year. And you don’t have to risk a penny. Review our research for three months, and if you don’t feel like it’s giving you opportunities to make triple-digit gains, just let us know. We’ll give you a full refund.
But we’re doubling the price of International Speculator very soon… so we urge you to act today.
Chart of the Day
As we mentioned earlier, the current bear market in gold stocks is the second longest in 76 years. The following chart compares the current gold-stock bear market to the seven others since 1939:
The bolded line is the current bear market. As you can see, it’s the second longest on record. And based on this data, it’s the most severe bear market in gold stocks in 76 years.
Delray Beach, Florida
July 27, 2015
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