Quietly Bullish on Bullion
Thursday, 1/30/2014 17:25
And on precious metals mining stocks...
BEAR MARKETS always end. Has this one?
asks Jeff Clark at Casey Research.
Evidence is mounting that the bottom for gold may be in. While there's still risk, there's a new air of bullishness in the industry, something we haven't seen in over two years.
An ever-growing number of industry insiders and investment analysts believe the downturn has come to a close. If that's true, it has immediate and critical implications for investors.
Doug Casey told me last week:
"In my lifetime, the best time to have bought gold was 1971, at $35; it ran to over $800 by 1980. In 2001, gold was $250: in real terms even cheaper than in 1971. It ran to over $1900 in 2011."It's now at $1250. Not as cheap, in real terms, as in 1971 or 2001, but the world's financial and economic state is far more shaky."Gold is, once again, not just a prudent holding, but an excellent, high-potential, low-risk speculation. And gold mining stocks are about to create a whole new class of millionaires."
Just a couple of months ago, you would have had a hard time finding even one analyst saying something positive about gold and gold stocks – even some of the most bullish investment pros had gone silent.
But that's changing. Case in point: When our chief metals & mining strategist Louis James and I attended last week's Resource Investment Conference in Vancouver, we witnessed quite a few very optimistic speakers.
Take Frank Giustra, for example, a self-made billionaire and philanthropist who made his fortune both in the mining sector and the entertainment industry. He's the founder of Lionsgate Entertainment, which is responsible for blockbuster movies like
The Hunger Games, but he was just as heavily involved with mining blockbusters such as Iamgold, Wheaton River Minerals, Silver Wheaton, and others.
"I'm telling you, you've seen the bottom of the gold market," he told the rapt audience at the conference, offering a bet to the Goldman Sachs analyst who claimed gold is going to $1000.
The stakes: Whoever loses has to stand on a popular street in downtown Vancouver dressed in women's underwear.
Tom McClellan, editor of the
McClellan Market Report, stated in a recent interview on CNBC:
"The commercial traders are at their most bullish stance since the 2001 low, and they usually get proven right. It's a hugely bullish condition for gold, and I'm expecting a really large rebound."The moment we see a major gold producer announce that it's curtailing production or it's going out of business," McClellan continued, "that'll be the moment we mark the low in gold. I expect to have one of those announcements any minute. We're getting down to the production price of gold right now, and they won't continue producing gold at that level for very long."
Are they just guessing? To answer that, first consider the historical context of this bear market – it's getting very long in the tooth:
- The current correction in gold stocks is the fourth longest since 1879. The decline of 66% ranks in the top 10 in history.
- In silver, only two corrections have lasted longer – the ones that ended in 1936 and 1983. Some technical analysts have pointed to positive chart formations, most notably the powerful "double bottom" that can portend a strong upward move. Based on intraday prices...
- Gold formed a double bottom last year, hitting $1180.64 on June 28 and $1182.60 on December 31, a convincing six-month span.
- Silver formed a higher low: $18.20 on June 28 vs. $18.72 on December 31, a bullish development.
- Gold stocks (XAU) formed a slightly lower low: $82.29 on June 26 vs. $79.73 December 19, 2103, a difference of 3.2%. However, as our friend Dominick Graziano, who successfully helped us earn doubles on three GLD puts last year, recently pointed out...
- The TSX Venture Index, where most junior mining stocks trade, has stayed above its June low. In fact, it recently soared above both the 50-day and 40-week moving averages for the first time since 2011.
Meanwhile, Goldcorp (GG) sent a huge bullish signal to the market earlier this month. It decided to pounce on the opportunities available right now, launching a takeover bid of Osisko Mining for $2.6 billion. The company wouldn't be buying now if it thought gold was headed to $1000.
As Dennis Gartman, editor and publisher of
The Gartman Letter, says, "It's time to be quietly bullish."
The smart money, like resource billionaire Rick Rule, is not just quietly bullish, though – they are actively buying top-quality junior mining stocks at bargain-basement prices to make a killing when prices rise.
To make sure that you can invest right alongside them, we decided to host a sequel to our
2013 Downturn Millionaires event, titled
Upturn Millionaires – How to Play the Turning Tides in the Precious Metals Market.
Back then, we made a strong case for this once-in-a-generation opportunity – but it was still undetermined when the bottom would be in. It looks like that time is now very near, and we believe it's time to act.
On Wednesday, February 5, at 2 p.m. EST, resource legends Frank Giustra, Doug Casey, Rick Rule, and Ross Beaty, investment gurus John Mauldin and Porter Stansberry, and Casey Research resource experts Louis James and Marin Katusa will present the evidence and discuss the possibilities for life-changing gains for investors with the cash and courage to grab this bull by the horns.
Why do we believe the absolute bottom is in? I'll answer that with a quote from a recent Mineweb interview with mining giant Rob McEwen, former chairman and CEO of Goldcorp:
"I'd say we're either at or extremely close to the bottom, and as an investor I'm not prepared to wait to see if the bottom's there because it's very hard to pick it. Because...if you're not taking advantage of it right now, you're going to miss a big part of the move. And when you look at the distance these stocks have to travel to get to their old highs, there's some wonderful numbers in terms of performance that I think we're going to see."
Granted, these voices are still in the minority – but that's what makes this opportunity wonderfully contrarian. After all, once "Buy gold stocks" is investor consensus, we'll be approaching the time to sell.
Our
Upturn Millionaires experts believe that our patience is about to be rewarded. Even if you don't have time to watch the premiere, register anyway to receive a video recording of the event.
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