A year ago, we told you gold prices were headed higher.
This didn’t jibe with the mainstream view on gold.
At the time, the metal was trading at $1,211 an ounce. And it was down 36% from its all-time high, set in September 2011.
Mom-and-pop gold investors were more bearish on the metal than ever. And The Vanguard Group, the largest provider of mutual funds in the world, had just shuttered its flagship precious metals and mining fund.
As David Neuhauser, the founder of Chicago-based hedge fund Livermore Partners, told the Financial Times after the Vanguard news…
Investors have essentially run away from investing in [gold]. In Canada, which has typically been a gold haven, all the talk is about cannabis and bitcoin. It’s extremely contrarian today to invest in gold.
But “extremely contrarian” is our favorite type of play here at the Cut.
And as we noted at the time, while mainstream investors were running scared, industry insiders were piling in.
And when the “dumb” money (mom and pop) is turning its back on an investment… and the “smart” money (industry insiders) is backing up the truck… that’s when you want to buy.
Gold is up 27% since our call on August 27, 2018.
The S&P 500 is flat over the same period.
In short, despite almost no coverage in the mainstream media, unloved gold has been a much better place for your money than overhyped stocks.
But don’t worry if you missed out on the gains so far.
As he’s been telling Casey Research readers, he believes gold is setting up for a monster rally… one that could take gold back above its all-time peak of $1,900 an ounce.
We’ll get to E.B.’s investment case for gold in a moment. But first, if you don’t already know him, a quick introduction…
E.B. heads up our Strategic Investor and Strategic Trader advisories. He’s also a gold industry insider.
He’s on the board of a gold mine financing company. And before joining the team here at Legacy, he comanaged a fund that invested in gold mining stocks.
And he’s tracked the gold market closely for nearly two decades.
And as he’s been telling his readers, we’re nowhere near the top of this bull market cycle…
The most important thing to understand about gold is it’s a cyclical market. When gold was at $1,900 an ounce back at its peak in 2011 you had Mr. T doing gold commercials. You had “Cash for Gold” signs everywhere. Those were overenthusiastic conditions.
At the bottom of the market, you have the opposite. You have guys who have been in the business for decades saying there’s no way any price jump is real.
And despite the recent gains, that’s where we are now. The guys running the leading gold mining companies are demoralized. They’re beaten. They just can’t believe the gold rally is real. Fear is still the dominant emotion. So now is the time to make your investment in gold… and sit tight.
Another bullish catalyst, says E.B., is that summertime is usually a slow time for the gold market…
People take summer vacations. They’re out of the office. So professional investors and hedge funds don’t have time to have committee meetings to make decisions about buying gold. And these are the guys that really move the needle on prices.
This is important because most of these funds have no gold. Because of all the negative news around gold… and the hype around Bitcoin… they’re more likely to have a crypto allocation than a gold allocation.
So this gold rally has caught the pros off guard. They were unprepared for the spike that we saw over the past six weeks. That tells me we’re going to see price rises accelerate, as these institutional funds chase gold higher.
As his colleague, I (Chris) know it pays to listen when E.B. talks gold. He has a track record of nailing calls like this.
In May of last year, E.B. added the world’s best-run gold mining firm, Agnico Eagle Mines (AEM), to the Strategic Investor model portfolio.
Subscribers who acted on his recommendation are up 56%.
And last August, E.B. recommended speculating on Aurion Resources (AU-V). Aurion is a Canadian-listed gold exploration company.
Since E.B.’s recommendation, shares are up 161%.
(Note: AEM and AU-V are both above E.B.’s recommended buy-up-to prices of $55 and C$1.10, respectively.)
And another gold stock E.B. added to the model portfolio just a month ago, on July 29, is already up 30%.
Last December, in an interview with gold industry news network Kitco, E.B. said gold would hit $1,500 before the end of 2019.
With gold trading for just $1,236 at the time, it seemed like a long shot. But sure enough, three weeks ago, it crossed the $1,500 milestone.
E.B. says the first step is to make sure you own some physical gold…
Physical gold has limited downside and big upside from here. Not only that, it has also survived every major financial crisis in history. This makes it the ultimate safe-haven asset.
Owning physical gold is also one of the only ways to prevent the government from having total control over your financial life.
Today, nearly every transaction is tracked by the government. Every time you withdraw money, deposit money, trade a stock, cash a check, or make a wire transfer, the government knows about it.
Gold also lies outside the control of central banks like the Federal Reserve. That makes it an important way to preserve some of your financial freedom.
So if you own no gold right now, investing in the physical stuff is your best option.
There are two types of gold coins – rare coins (or “numismatics”) and bullion coins.
If you’re just starting out, E.B. recommends avoiding numismatics. E.B…
A numismatic is a coin that is no longer produced. It can be tens… even hundreds of years old. Many rare coins date from the mid-17th century. This is when coin makers stopped hand-striking coins and started striking them by machine.
But here’s the real trouble with numismatic rated coins. You often pay significantly more for them than regular coins. You’re getting the same amount of gold. But numismatics cost more because of their collectible value. For a novice, that’s hard to judge.
Fraud is much more common in the numismatic market. Rare or collectible coins can turn out to be fake. Or, if the gold is real, sometimes the rarity rating is not.
That’s why E.B. recommends starting out with bullion coins…
A bullion coin is a coin valued primarily for the gold it contains, not for its rarity. Bullion coins come in various weights. But the most popular coins contain one ounce of pure gold. And they allow you to store tremendous wealth in a small space.
That’s why E.B. asked coin dealer Gainesville Coins to create a page of discounted options for bullion coins as a jumping-off point.
The page was originally only for paid-up readers of our Strategic Investor advisory.
But because of gold’s recent moves, E.B. is making it available to all Legacy readers.
(E.B. and Legacy don’t receive any compensation from Gainesville Coins for bringing you this offer. It’s purely as a service to readers.)
Once you have some physical gold, you should consider speculating on gold mining stocks.
That’s because of the “leverage” – or extra oomph – they give you over the price of the gold coins and bars.
We’ll be diving into that tomorrow. As you’ll see, if you’d bought gold stocks last summer, you would have nearly doubled the returns of physical gold.
And that kind of extra oomph is still available… as the monster gold rally E.B. predicts plays out.
Stay tuned.
Regards,
Chris Lowe
August 28, 2019
Dublin, Ireland