Mark your calendar, the gold bear market could be over now...
Mark your calendar, the gold bear market could be over now... Incredible news for gold... This hasn't happened since the bull market ended... What to do if you missed the rally...
It came to be known as the "Brown Bottom"...
In 1999 – after gold had plunged more than 60% in one of the longest bear markets in history – British Treasury official Gordon Brown decided to take action.
In a move to "diversify the assets of the U.K.'s reserves," Brown started selling his country's gold. Over the next three years, Brown sold nearly half of all the gold reserves in Britain.
Of course, we know now that this period marked the end of the brutal bear market in gold... and the beginning of an historic bull market that took gold to new all-time highs...
If you know history, you know events like this aren't uncommon...
After all, governments are made up of individuals. And like most individuals, government officials tend to make emotional decisions.
They're just as likely to get bullish when markets go higher... and just as likely to get bearish when markets fall.
But because of their size and bureaucracies, it often takes governments much longer to act... meaning they're often the last to jump into a trend, and the last to jump out.
We couldn't help but think of this story this morning. Apparently, Canada, too, has been "diversifying" its reserves...
To be fair, Canada sold off a huge percentage of its reserves in the 1980s and 1990s. But in February, the financial media reported that it had unexpectedly sold off half of its remaining gold reserves.
And now, data directly from Canada's Department of Finance this morning confirm it has sold the rest.
That's right... Canada has "officially" sold all of its gold... after gold prices have plunged nearly 35% since the bull market ended in 2011.
(We say "officially" because while Canada lists its gold reserves at 0, a footnote says it still holds 77 ounces. If you live in Canada, perhaps you can inquire about buying the rest.)
We're not saying this is THE bottom in gold... but we wouldn't bet against it.
Fortunately, that's not the only reason to think the bear market in gold is over...
Longtime Digest readers are familiar with our friend Richard Smith. Richard is a mathematics PhD – and former Stansberry Research subscriber – who built the excellent TradeStops trailing stop loss software we often recommend (and proudly call our corporate affiliate).
As we've mentioned, over the past couple years, Richard has quietly transformed TradeStops from a simple trailing-stop tracker (which it still does incredibly well) to a full-featured portfolio-management system. It's still as easy to use as ever, but it now has some incredible new features you might not believe...
For example, it has "smart" trailing stops that take the guesswork out of choosing the right trailing stop for any stock... it has simple tools to help you decide how much money to invest in any position based on the size of your portfolio and risk tolerance... and it can even alert you to the best time to buy back into a stock you previously stopped out of, or when to buy a stock for the first time.
It's this last feature – what Richard calls his TradeStops "re-entry rule" – that we want to mention today. The math behind this tool is beyond the scope of the Digest, but in simple terms it uses an asset's price history and volatility to help you know the difference between false breakouts or "head fakes" and real trend changes.
Last Friday, Richard alerted his subscribers that gold – as represented by the SPDR Gold Shares Fund (GLD) – had officially triggered his re-entry rule for the first time since the bull market ended.
Based on gold's history, this means there's a high probability the bear market has ended, and a new rally has begun.
Of course, there are never any guarantees in the market... Richard is brilliant, but even his indicators aren't perfect. But as you can see in the chart below, his re-entry rule helped his TradeStops subscribers avoid the "whipsaws" in gold over the past few years...
As Richard noted, waiting for the re-entry rule to trigger means you won't be buying at the exact bottom... but it also means you won't have to put up with the frustrating "head-fake rallies" along the way.
If you don't own any gold, Richard says this is a great time to buy some. But if you're looking to add to your holdings, or make a major purchase, Richard says an even better opportunity is coming soon. As he wrote to TradeStops subscribers last Friday...
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He says he'll be looking to "back up the truck" when GLD falls into his "low-risk buy zone" near $110. (If you'd like to put Richard's incredible TradeStops program to work for yourself, click here.)
Stansberry Short Report editor Jeff Clark says a similar situation is setting up in gold stocks right now...
As you likely know, gold stocks have been on a tear. While gold is up more than 15% since mid-January, gold stocks – as represented by the Market Vectors Gold Miners Fund (GDX) – have gone up nearly 60% over the same period. Many individual gold stocks are up even more.
But if you missed out on that move – or if you've been waiting for a great, low-risk buying opportunity – Jeff says you could soon get your chance. In this morning's Growth Stock Wire, Jeff explained why...
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If you aren't familiar with those terms, don't worry. All it means is a pullback in gold stocks is likely, and GDX shares could move back to the $15-$16 range.
It's important to remember Jeff is a trader. Most of his advice focuses on short- and intermediate-term opportunities, so it may not be applicable to investors with a longer-term horizon.
But he says this pullback could offer a great longer-term buying opportunity in gold stocks as well...
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As you can tell from the rally so far this year, folks who simply buy GDX could easily see triple-digit gains if gold continues higher.
But history says those who buy a handful of the highest-quality individual gold stocks could do much, much better.
Fair warning... As longtime readers know, if you're going to buy individual gold stocks, you must know what you're doing. Folks who buy the wrong gold stocks could easily lose money even as gold moves higher.
If you're looking for help with gold stocks, there is no better guide than our friend John Doody and his excellent Gold Stock Analyst advisory.
John is the most knowledgeable gold stock analyst in the entire industry. He has followed gold stocks on a daily basis for more than 30 years, and his independently audited track record speaks for itself... From 2001 to 2015, John's proprietary strategy returned a 369% gain, beating the performance in gold, gold-stock funds, and the S&P 500.
You can learn more about John's research, and how to claim a special offer for Stansberry Research readers, right here...
Have you taken Porter up on his offer to try the all-new OneBlade luxury razor for FREE? This limited-time opportunity ends in just 23 days. Click here to get yours.
New 52-week highs (as of 3/2/16): Public Storage (PSA), Seabridge Gold (SA), Sysco (SYY), and AT&T (T).
In today's mailbag, an infectious-disease researcher shares his thoughts on yesterday's Digest about the Zika epidemic... and two other subscribers comment on our gold-stock recommendations. Send your notes to feedback@stansberryresearch.com.
"I want to congratulate Justin and the editors on the very good write up on the Zika epidemic... This happens to be my field and I currently serve as an advisor to CDC where I worked for 25 years, and the WHO International Health Regulations Emergency Committee, among others. Keep up the good work." – Paid-up subscriber D.J. Gubler
"Porter, I just wanted to say 'thanks!' for the gold recommendation you made last fall. I was able to phase into 8 of the 10 stocks (unable to trade Toronto exchange) by the beginning of September. Overall, the 8 have returned 28.6% on invested capital since September! This has allowed my overall portfolio to weather the down market quite well! Sleeping at night is NOT a problem! Thanks again, and keep these recommendations coming!" – Paid-up subscriber Grant I.
"Hi Porter, I think you are doing fine work for your clients in continuing to share John Doody, a true diamond in the rough. Keep up the great work." – Paid-up subscriber Marc R.
Regards,
Justin Brill
Baltimore, Maryland
March 3, 2016
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