Gold is having its biggest rally in months…
Gold popped up 1.5% yesterday after the Federal Reserve released the minutes from its July meeting. It’s now up 6.2% since hitting a low on August 5.
No big surprises came out of the Fed’s meeting. The Fed said it wants to “see more evidence” of strong economic growth before it raises interest rates. Most investors took this to mean the Fed won’t raise rates next month.
Regular Casey readers know the Federal Reserve hasn’t raised rates since before 2008, when it cut rates to essentially zero. Many investors thought the Fed was finally getting ready to raise rates in September. Before the meeting, the market was putting the odds of a September rate hike at 50%.
But after the meeting, that number sunk to 38%. With the markets looking shaky (the S&P 500 plummeted 2.3% today), it’s unlikely that the Fed will raise rates in September.
There’s no way to know for sure when the Fed will raise rates. But whenever it does, we don’t expect it to hurt gold…
Conventional wisdom says that rising rates are bad for gold. But the data says otherwise. The price of gold actually increased the last four times the Fed lifted rates.
• Ultimately, the major driver of higher gold prices is the global race to devalue currencies…
Right now, governments around the world are desperately trying to stoke their economies with low interest rates and outright money printing.
The Bank of Japan is printing trillions of yen each month as part of its longtime battle against deflation. The European Central Bank is also printing money in an effort to grow its stagnant economy.
Easy money policies will ultimately destroy these currencies. Real money – gold – will be the winner.
Owning physical gold is the best way to defend your wealth from destructive monetary policies.
But if you’re looking for huge upside in gold, look at gold-mining stocks.
Gold miners are leveraged to the price of gold. In a gold bull market, these stocks usually rise many times higher than gold itself.
We’ve seen a small example of this recently. The price of gold is up 6.2% since early August. In that same time, GDX, a popular ETF which owns gold-mining stocks, has jumped 21%.
Our Senior investment strategist Louis James knows which gold miners could increase 20-to-1 or even 30-to-1 during the next gold bull market. He shares these opportunities with readers in International Speculator.
• Low oil prices are crushing some investors, but they're good for readers of The Casey Report…
E.B. Tucker, editor of The Casey Report, is bullish on oil tankers. He expects the world’s oversupply of oil to be great for business.
Oil producers are sitting on the biggest oversupply of oil in 17 years. The oil is already out of the ground and in barrels. Now producers need to sell it…and they need oil tankers to ship it to customers.
So far this year, the tanker business has been good. Charter rates have more than doubled. Today, we got another positive sign that the tanker business is gaining momentum. E.B.’s favorite oil tanker stock, Euronav (EURN), released quarterly results…and they’re excellent.
Sales more than doubled during the first half of the year, hitting $416 million. EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a good measure of a company's ability to turn sales into profit, and Euronav’s EBITDA quadrupled to $273 million. Euronav is sharing that profit with shareholders in the form of a fat dividend.
Euronav will pay a dividend of $0.62 on September 20…more than double the $0.25 dividend that it paid last quarter. It’s now paying a 13.7% annualized dividend yield.
E.B. predicted this in a recent issue of The Casey Report. He was dead-on…
The tanker business has been strong. But the collapse in oil prices has overshadowed it…
The company will announce its second dividend payment for the year on August 20. It has an explicit policy of paying 80% of annual net earnings to shareholders. The first dividend payment this year was $0.25 per share. Earnings were higher in the second quarter. We expect the dividend to be too.
Euronav is the best-positioned oil shipping company right now. It has one of the largest and newest fleets in the industry. Its stock is already up 9% this year, and we expect it to go much higher. You can learn everything you need to know about Euronav…and get in on this trade with us…by taking a risk-free trial to The Casey Report.
Chart of the Day
After hitting a five-year low on August 5, the price of gold has rebounded 6.2%. Today’s chart shows the big move.
As noted, gold popped yesterday after the Fed released minutes from its July meeting. It jumped another 2.2% today as US stock markets sold off.
We can’t know for sure if gold has bottomed. But its recent price action is a promising sign.
Delray Beach, Florida
August 20, 2015
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