By Justin Spittler, editor, Casey Daily Dispatch
You might want to take cover.
I say this because stocks have been taking a beating.
The S&P 500, for one, is down 5.2% since the start of May. The Dow is down 5%. And the Nasdaq is down 7.4%.
Naturally, this has many investors worried. They’re wondering what to do. There’s just one problem…
There aren’t many places for investors to hide.
Practically every sector is getting whacked… even defensive ones like consumer staples and utilities.
In fact, real estate was the only sector that ended last month in the green. It gained 1%.
That’s not nearly enough to offset the broad market downturn we’ve experienced. But there is another kind of stock that’s delivered big returns during the recent bloodbath.
• I’m talking about gold stocks…
Gold stocks refer to mining and streaming (or royalty) companies.
These companies are leveraged to the price of gold. So it doesn’t take much for them to get going.
You can see what I mean below. This chart shows the performance of the VanEck Vectors Gold Miners ETF (GDX) since the start of May. GDX invests in a basket of gold mining stocks.
GDX has soared 8% since the start of May… and all it took was a 3% jump in the price of gold.
• GDX is now up 22% since September 2018…
And gold is trading above $1,300 again.
That’s important. After all, humans think in round numbers. They’re psychologically important.
Because of this, investors often get scared when a stock, index, or asset falls below a big round number. When they rise above one, the opposite happens. We get excited.
This happens all the time with stocks. Back in January 2018, the Dow rose above 25,000 for the first time ever. It was a big psychological win for the bulls. “Dow 25,000” hats were everywhere.
And this philosophy applies to commodities as well.
The fact that gold’s trading above $1,300 after a rough April should get many investors off the sidelines and back into gold.
But there’s an even bigger reason to be bullish on the yellow metal.
• The fundamental case for gold gets stronger by the day…
Before I get to why, I need to say a few words on gold.
Gold is the ultimate safe haven. It’s survived everything from currency crises to stock market crashes.
Because of this, many investors buy gold when they’re worried about stocks or the economy.
And we have reason to be nervous about both right now. Let’s start with the obvious…
• The trade war is heating up…
Actually, that’s an understatement. The trade war is getting out of control.
Regular readers know what I mean.
Last month, President Trump raised tariffs on $200 billion worth of Chinese imports from 10% to 25%. As a result, $250 billion worth of Chinese goods is now subject to U.S. tariffs.
China responded by slapping tariffs on $60 billion worth of U.S. goods.
Unfortunately, the trade war has intensified since the last time I wrote.
On Thursday, Trump threatened to impose tariffs on Mexico, one of America’s biggest trading partners. And all signs point to that happening.
I don’t need to tell you why this is a problem.
Tariffs are essentially taxes on imported goods. They disrupt the free flow of goods. They make everyday items more expensive.
In short, they’re bad for business, as we’re now seeing.
• U.S. manufacturing activity is grinding to a halt…
Last month, the U.S. Manufacturing Purchasing Managers’ Index plunged by more than two points.
This index, which measures activity in the manufacturing sector, is now sitting at its lowest level since September 2009.
As if that weren’t bad enough, new factory orders also fell last month. That hasn’t happened since August 2009.
Keep in mind, the U.S. was experiencing its worst economic downturn since the Great Depression in 2009.
• And manufacturing isn’t the only part of the U.S. economy struggling…
The auto industry is also slowing down. Just look at U.S. auto sales. They fell 6% in April… their worst monthly drop in eight years.
The housing market is also weakening. In fact, existing home sales have now fallen 14 months in a row. In April, they plunged 4.4% year over year.
These are serious problems. That’s why we’ve seen a broad sell-off in stocks…
• It’s also why we’ve seen a flight to gold…
And I see no reason why this won’t continue.
After all, neither Trump nor the Chinese seem to be backing down on trade. So don’t rule out more protectionist measures.
If that happens, stocks will likely head even lower. At the same time, the trade war could ignite a fire under gold and send gold stocks through the roof.
So consider speculating on gold stocks if you haven’t yet.
You can easily do this with a fund like GDX. There’s just one problem with this approach. You’ll own both good and bad stocks. That will hurt your upside.
• Another option is to buy the best of the best…
Unfortunately, the average investor doesn’t know where to begin with gold stocks.
That’s where Dave Forest can help.
Dave, as you may know, is the editor of International Speculator. He’s also our in-house geologist.
He spent the last 20 years of his career searching for new discoveries and breakthroughs in the resource space.
He also founded his own mineral exploration and development companies. To accomplish this, he raised over $80 million from some of North America’s most prominent resource investors.
In short, Dave’s a true industry insider. It pays to listen to him.
• He, too, believes now’s the time to speculate on gold…
Here’s what he told me in April:
Gold is a good place to invest in before and during crises. Based on our research, gold outperformed all the other precious metals. It tends to perform really well ahead of financial crises. For example, gold had a huge run in 2007 and 2008, rising over 50% in under 12 months.
So gold is a perfect place to hide if you think there’s a crisis on the horizon. You could make a lot of money in the period leading up to the crash. If you sit on the sidelines, you’re going to miss that.
Of course, Dave hasn’t just been telling readers this. He’s put his subscribers in a position to profit.
Right now in his International Speculator portfolio, he has a handful of the world’s most explosive gold stocks… primed to rip higher as more people flock to gold in the months ahead.
Unfortunately, I can’t tell you the names of those companies. That would be unfair to Dave’s paying subscribers.
But you can get all the details on these companies by signing up for Dave’s advisory, International Speculator. Not only that, by signing up today, you’ll also get your hands on Dave’s brand-new report that details another metal set to soar… one no one’s talking about.
You’ll want to hear about this huge opportunity from Dave himself. He explains everything you need to know here.
Delray Beach, Florida
June 4, 2019
P.S. And keep your eyes peeled for tomorrow’s Dispatch.
As you’ll see, Dave isn’t the only Casey Research guru excited about gold.
Casey Report chief analyst Nick Giambruno just released an urgent issue that details eight specific reasons why a huge gold mania is about to begin.
As Nick says, “Any one of these catalysts alone would be great news for gold. But the fact they are all converging at the same time means an epic gold bull market is on the menu in 2019. And the time to get positioned is now”…
This is so important, we got permission to share all eight reasons in full as a special two-parter tomorrow and Thursday. Stay tuned.