Rachel’s note: Regular readers know we’re bullish on gold. It’s real money… and the ultimate safe-haven asset to protect and grow your wealth during a crisis. If you’ve been following along in the Dispatch, you know our professional geologist and commodities expert, Dave Forest, believes we’re in the early innings of a historic gold run.
But a gold run isn’t the only trend Dave’s been following. He’s pinpointed an overlooked aspect of the tech boom… and several tiny companies set to profit. (In fact, he believes one company is just days away from securing a deal with Tesla… which could send it on a run for the ages.) For all the details, go here.
Then, check out today’s guest essay. We’re handing the reins over to our colleague Chris Lowe, editor at The Daily Cut. He’s worked with Dave for years, and has seen firsthand the strategies he uses to predict gold’s next move… and discover the best plays to take advantage.
By Chris Lowe, editor, The Daily Cut
Few investors have been paying attention to gold miners…
Even after its V-shaped recovery, U.S. stock market bellwether, the S&P 500, is down 4% so far in 2020.
By contrast, gold mining stocks – as measured by the VanEck Vectors Gold Miners ETF (GDX) – are up 25%.
Despite these gains, gold stocks are still off the radar for most investors.
But as I (Chris) will show you today, that’s because they don’t have access to insights from our globetrotting commodities expert Dave Forest.
This year’s 25% gain for GDX – a broad play on the gold mining sector – is just the tip of the iceberg.
As you’ll see, Dave has given his readers the chance to make 117%… 196%… and even 825% gains on gold miners.
A megatrend we called early…
I (Chris) first put gold on my readers’ radar in August 2018.
It’s hard to imagine today how bearish investors were on the metal at the time.
The price of gold bullion was down 37% from its peak. Gold mining stocks – as measured by GDX – were down 72%.
Things had gotten so bad that the Vanguard Group shuttered its flagship precious metals fund.
Investors were so done with gold… there wasn’t enough interest to keep the fund open.
But as mom-and-pop investors were throwing in the towel, industry insiders were turning bullish.
As we put on your radar at the time, our globetrotting geologist, Dave Forest, was picking up on some interesting chatter in the mining industry…
Insiders with deep pockets were starting to invest big money into new gold mining projects.
Dave isn’t your typical “desk jockey” newsletter writer…
I think of him as the “Indiana Jones of Legacy.” He spends his time crisscrossing the world looking for buried treasures.
He even looks the part. Here’s a shot of Dave in Nevada, examining the rocks in an area that his NASA gold satellite system indicated was positive for copper and gold.
Legacy’s own Indiana Jones hunting for copper and gold in Nevada
Dave travels more than 85,000 miles every year looking for new discoveries.
He helped develop the sixth-largest platinum-producing district in the world. He discovered more than 1 billion pounds of copper in Asia and South America. And he was the first natural-resource explorer licensed by the government of Myanmar (formerly Burma).
This gives him insights you won’t find in Bloomberg or The Wall Street Journal.
And Dave nailed it with his contrarian call on gold two years ago…
Public investor sentiment was in the ditch. But Dave was picking up on stories of mining industry insiders opening their wallets to fund new mines.
Here’s how he put it back in August 2018:
Many traditional brokers and funds have turned out the lights and closed the door on gold over the last few months. But the fall in the gold price has increased investment interest in some corners of the financial world.
For instance, after the gold price hit $1,250 in July – the lowest it’s been since December 2017 – it didn’t take long for me to find a group that was happy to commit $5 million to a gold mining project in Brazil.
They told me, “We really like gold. It’s so unpopular right now.”
That kind of enthusiasm among the industry’s inner circle – at a time when mainstream investors were crying uncle – made Dave prick up his ears. As he put it…
Public sentiment is horrible at a time when insider deals in the gold sector are running hot. And that’s extremely bullish.
Since then, the price of an ounce of gold bullion is up around 41%. And our proxy for the gold mining sector, GDX, is up by about 73%.
And Dave has given his readers the chance to make even bigger gains on gold miners, like 117%… 196%… and even 825%. (To learn more about how to access Dave’s recommendations, go here.)
Gold stocks give you extra oomph over physical gold…
When the gold price goes up (or down) by 1%… gold mining stocks tend to go up (or down) by more than 1%.
Sometimes a lot more.
You see, gold mining companies have a fixed cost to mine. It doesn’t matter if gold is selling at $1,000 or $1,500 an ounce… that cost stays the same.
But a mining company’s profits explode as the price of gold rises. Let me show you what I mean…
Let’s say a mining company is mining gold at $900 an ounce… and the gold price is $1,000 an ounce. The company will book a profit of $100 an ounce.
But if the gold price climbs to $1,500, that company will now book a $600 profit.
That’s a 500% jump in profits – even though gold went up only 50%.
That surge in profits makes that company’s shares surge, too. It makes gold miners some of the most explosive stocks in the world when conditions are right for a rally in the underlying metal.
If you haven’t acted yet, there’s still time…
Dave believes the rally in gold will play out over several years. And it’s still in the early innings, so it’s not too late for newcomers to get involved.
If you’re already an International Speculator subscriber, you can find the full list of Dave’s individual gold stock recommendations in your model portfolio.
And if you’re not yet a Dave subscriber, don’t worry. You can find out more about how to access his recommendations here.
In the meantime, as a second-best option to the best-of-breed gold mining stocks he recommends, you can buy shares in the VanEck Vectors Gold Miners ETF (GDX). It’ll give you broad exposure to the sector… and position you to profit as gold stocks continue to skyrocket.
Just remember to position size accordingly, and never bet more than you can afford.
Editor, The Daily Cut
P.S. Dave is always thinking about his next discovery. I found that out at our first annual Legacy Investment Summit in Bermuda in 2018.
I bumped into him at the hotel bar the night before the summit. He’d just come back from Brazil, where he bought rights to one of the highest-grade gold mines ever found.
But Dave wasn’t doing small talk. He was staring intensely at the Google Maps app on his phone. I asked him what he was looking for. He told me he was using satellite images of the Earth to hunt for ore deposits under the ground.
If you’ve used Google Maps, you know how crazy that sounds. And I have to admit, the details didn’t make a lot of sense to me. But Dave showed me the kind of lines and shading on the map that are telltale signs of ore deposits.
Dave told me how he’d found cobalt and nickel this way in Nevada. He “staked” the deposit. He went there with physical stakes and a camera to mark the area he’d spotted on the map.
Just 48 hours after claiming his stake legally in this way, Dave sold it for $370,000.
Dave will do whatever it takes to pick the best companies for his readers. And recently, he’s homed in on a group tied to the critical metals that will power the tech boom… including one tiny company that’s critical to the electric vehicle revolution.
Dave believes it’s on the verge of a multibillion-dollar deal with Tesla that could happen any day now. And savvy investors could pocket a fortune. For all the details, go here.