By Justin Spittler, editor, Casey Daily Dispatch
Investors are piling into gold stocks.
But you wouldn’t know it by looking at the price of gold stocks. They’re still down big on the year.
The inflows, however, tell a different story.
Last week, investors plowed $529 million into the VanEck Vectors Gold Miners ETF (GDX). That’s the most money that went into GDX in one week since September 2013.
That alone should grab your attention. But it’s not the only reason why gold stocks should be on your radar.
As you’re about to see, gold stocks look poised for a massive breakout. They could even deliver “crypto-like” returns in the coming months.
I’ll show you how to set yourself up for those kinds of gains in a second. But let me first say a few words on gold…
• The price of gold is up 9% since July…
That’s a big move… but it’s hard to pin this rally on a single catalyst.
And that’s because there are a number of factors working in gold’s favor.
For starters, the U.S. dollar has plummeted over the last few months. It’s lost 11% of its value against a basket of major currencies over the past year. And a weak dollar is good for the price of gold. But that’s not all.
Inflation expectations are also rising. And we appear to be in the early innings of a new commodity supercycle.
Now, one would think all this good news would lift gold stocks, too.
But that hasn’t happened…
• GDX is up just 2% since July…
And it’s down 7% on the year.
This isn’t supposed to happen. After all, these companies are leveraged to the price of gold. They’re supposed to move with gold. But they haven’t.
Instead, they’ve been lagging far behind the price of gold. Just look at this chart. It compares the performance of gold and NYSE Arca Gold Bugs Index (HUI) over the last six months. HUI tracks major gold mining stocks.
• At this point, gold stocks have a lot of catching up to do…
To understand why, let’s step back and look at the big picture. This chart compares the gold price to HUI going back to 1998.
When this line is rising, it means gold stocks are doing better than the price of gold. When it’s falling, gold stocks are doing worse.
You can see gold stocks have been underperforming gold for more than a decade.
• Gold stocks are now a screaming bargain relative to gold…
They’re now cheaper than they were at the end of 2000, just before they went on a rally for the ages.
Between November 2000 and March 2008, the average gold stock soared 1,331%. The best ones soared even higher.
And that’s exactly why I wrote this essay…
You see, most investors take a “What have you done for me lately?” approach to investing. They only buy assets that have done well recently.
Legendary investors like Doug Casey do the exact opposite. They buy what other investors hate. That allows them to pick up world-class assets for dirt cheap.
• And right now, gold stocks are the most hated stocks on the planet…
According to Doug, “nobody” cares about them. That’s why we’re seeing this massive anomaly with gold stocks and the price of gold.
But anomalies don’t last forever. Sooner or later, they work themselves out.
So, consider speculating on gold stocks if you haven’t already. You can easily do this by buying GDX or another gold stock.
Just understand that GDX and funds like it take a “shotgun approach” to investing. They invest in good and bad stocks.
So, if you really want to make huge returns, you need to own the best-of-breed gold stocks.
Unfortunately, most investors can’t tell the difference between a world-class miner and a crummy one.
That’s where we can help. At Casey Research, we have teams of research analysts who scour the globe in search of the world’s best mining companies.
We even have an advisory dedicated to small mining stocks with massive upside potential called International Speculator.
For more details on this advisory, click here.
February 27, 2018
Chart of the Day: Bitcoin’s Recent Surge
By Joe Withrow, analyst, Casey Research
Bitcoin is on the rebound…
The world’s first cryptocurrency hit an all-time high of $20,089 back in December… and then plunged 70% to a low of $6,048 earlier this month.
But as you can see from today’s chart, bitcoin has shot up 78% from its February low. As of this writing, bitcoin is pushing the $11,000 mark once again.
But while the financial media focuses on bitcoin’s price, Crisis Investing editor Nick Giambruno takes a big-picture approach.
As Nick told his subscribers last month, bitcoin allows you to escape the matrix… and it has become an escape hatch for people living in crisis-stricken countries.
He says bitcoin is an inherently international asset. It flies across national borders as if they didn’t exist… and there is nothing anyone can do to stop it.
As he says, “The cat is out of the bag.”
And that’s one reason why Nick thinks bitcoin’s use is going to explode… sending its price much higher. In fact, Nick thinks bitcoin could double in price in 2018.
It’s not too late to get in. If you haven’t already, now is a great time to build a position in bitcoin.
Today, many readers write in to share their thoughts on Doug’s essay, “Chung Kuo”…
I think Doug is actually spot-on with his assessment of America and China. I believe if America the country (not the idea) wasn't able to bully the world as it has for so long with its military and petrodollar, other countries would have stopped kicking the ass-kissing can long ago.
I've lived in 5 different countries outside of America over the last 30 years and America is no longer respected. As an American all I can say is my government and some of the dumbed-down society is a shame!
Lucid, insightful and very important on several levels. I appreciate the opportunity to provide feedback.
Doug's layout of China's progression makes sense except the part where they become like Americans because of their success. I am sure they are capable of curbing the terrorism stuff though.
Doug, demography is destiny. In about a generation the population of China will peak and then begin an inexorable decline. The one-child policy will result in a decline of the population, and the age of the country will be an inverse pyramid. They cannot and will not be able to afford the care that an aged population requires and will collapse.
Having watched the rapid ascendance of the Chinese here in British Columbia, your essay holds great merit. One must be impressed with the growing (worldwide) Sino influence that we are witnessing.
Did you really need the crack about the Arkansas trailer parks? I expect more from you. I doubt you've ever been to one, but some of the nicest, hardest-working, most sincere and trustworthy people you could ever meet might be characterized as “Arkansas trailer trash.” That they have been victimized by the avarice of a liberal progressive elite run amok is not their fault.
But I guarantee you that the vast majority of these economically disadvantaged, unsophisticated, poorly educated people have the Confucian or Protestant work ethic of which you speak and will give you the shirt off their back. Someday, they will have their day.
And others respond to Jim’s recent comment, where he called Doug a liberal…
That Jim guy is an ignorant fool. He spent 6 years on a submarine not to protect the American people but because he got a paycheck and traded his time for money, because he wanted to, not because he had to. And, if he protected anything, then it was the ruling class in Washington.
So tired of US Soldiers claiming to ‘protect’ the USA, when in all reality they spread US imperialism across the globe. All Doug’s insight is very well received and appreciated by me and many others. Thank you.
I don't think anyone can argue with Doug's perspective, at least anyone with half a brain. What they could argue with is his timing, (that's if he made an attempt to time this catastrophe, he didn't) and that's about it. Even here in this essay, one guy thinks Doug is a bleeding liberal and how the hell he got that out of what Doug wrote is beyond me.
My guess is we are on the doomed (but righteous) path due to our widely accepted cultural principles, (eat whatever the government throws at you, believe it makes sense to bristle your arms at anyone that YOU think might be impressed, support the military industrial complex as if it is protecting us, etc.), and our lack of a cohesive education system, the caught afire new idea that we can fence in our concerns and fence out the bad guys in an exceedingly electronic world, etc.
So much idiocy around it's hard to say when it will unravel. The only astonishing thing is that it hasn't unraveled yet.
And finally, some great feedback on John Hunt’s new essay, “Health Insurance Is the Problem, Not the Solution”…
This is one the best articles I’ve read on the broken status of our health care system. I have shared this amongst friends. Thank you for sharing.
His article today on 'health insurance' is without question one of the finest I have ever read! He hit the problem right on the head. I practiced pharmacy for 24 years when insurers became prolific. In virtually every instance, if the insurance company paid for the brand name they always wanted the champagne, when they had to pay it was Bud Light. It is no surprise that we are in the mess we are in, great article!
In Case You Missed It…
Bitcoin has taken the spotlight in the financial world. But while most investors are focused on the cryptocurrency itself, the companies that use its technology will also be big winners in the years ahead.
To learn more about these companies—and how you can invest in them today from an ordinary brokerage account—click here.