The Fed Is Making Gold Cool Again
The hair-color indicator... The case for owning gold in a recession... The Fed is making gold cool again... What to buy? Let our analysts show you the way... 'Mr. Doody, you make me millionaire'...
One of our founding editors, Dr. Steve Sjuggerud, likes to tell this story...
Steve was speaking on stage at Gold Stock Analyst editor John Doody's annual invite-only gold-industry conference in Florida this year. He looked around the room and noticed something telling about the tops of the heads in the crowd before him...
Gray hair... White hair... No hair at all.
You always want to know your audience, right? But to Steve, what he saw on this day indicated something beyond the obvious demographics of the CEOs and other stakeholders in the industry he was talking to...
You could call it a kind of contrarian indicator. As Steve describes it...
I can't remember if I called it the hair-color indicator or amount-of-hair indicator. Most of the people in there – let's just say they weren't young.
And what that tells me is that there's still an extraordinary amount of upside.
Most investors today have never lived through a great gold bull market.
And in that truth – that the last great gold bull market happened at the end of the 1970s, when the price of gold quadrupled in less than two years – is an opportunity today because few investors are aware of the potential for it to happen again.
We wrote about this golden opportunity in yesterday's Digest...
In brief, the economic conditions are ripe for a monster run higher in gold prices over the next few months and years.
The Federal Reserve and other central banks around the world have done their part already with endless money-printing. And they're not stopping anytime soon.
(On a related note, our Stansberry NewsWire team updates readers, for free, every day on all the stimulus happening around the world. Click here for more information on their updates.)
The Fed alone has pumped more than $3 trillion into the economy than was there just a few months ago. So to not consider the consequences would be a mistake...
Especially if you hear the rationale from guys like Steve, John, and John's business partner, Garrett Goggin, who joined Stansberry Research Publisher Brett Aitken for a special "Gold Rally Kickoff Call" yesterday.
During the videoconference, John detailed why he thinks gold prices can shoot to $3,000 per ounce and maybe more in the near future... and how he has witnessed this crisis-response gold-boom cycle several times before during his illustrious career.
The last of these cycles – after the 2008 financial crisis – actually helped John buy the waterfront home that he lives in now... a Ferrari that he drives... and the speedboat he takes out, too. (We urge you to check out the video conference for free right here.)
John says he has made around $20 million in gold stocks alone...
That should be enough to get any investor's attention – even the mostly bald, but not yet-gray-haired ones like me (Corey McLaughlin).
You see, it's easy to overlook gold, especially after 10-plus years of a bull market.
In a bull market, a lot of inexperienced investors can look really smart owning stocks...
Stocks across various sectors keep hitting new all-time highs all the time. The indexes keep heading higher and higher... It's literally the definition of a bull market.
But in a bear market and a recession, stocks aren't super-cool anymore...
(Unless you're excited, like we are as long-term investors, about buying high-quality businesses at cheap prices.)
In the intermediate term, if you're lucky, the major stock indexes churn along sideways until a recovery and new highs are hit again.
And on the worse end, there's compelling evidence for a Great Depression-like outcome over the next year. Ten Stock Trader editor Greg Diamond showed that in two simple charts in last Wednesday's Digest.
Either way, it usually takes some time for the market's longer-term direction to play out...
If you're a believer in history repeating itself, at least somewhat, the average bear market since the Great Depression has lasted about 13 months. But they've varied in length from a few months in the 1960s and 1980s to nearly three years during the Great Depression.
Of course, we haven't seen this exact scenario before...
Talking about recessions now – which we're effectively in, at the same time as this bear market – the average peak of unemployment has been about 8%.
Today, roughly 20% of the U.S. population is unemployed. The only time the number has been higher was in 1933... during the Great Depression.
And now, different parts of the cascade of "knock on" effects to the economy from the virus outbreak are still emerging...
You can pick an example depending on the day. But most recently, we're thinking of delayed mortgage payments from everyday Americans and an increasingly fragile meat-supply chain because of sick workers...
So, what do you do between now (last month) and then (whenever we see a bull market in U.S. stocks again)?
Well, gold is one of the few assets you want to make sure you own in a bear market or a recession...
While every time is "different," there are certain hallmarks of bear markets and recessions that have consistently appeared in times like these...
One is how "safe haven" assets like gold – and things like government-backed high-quality bonds – have performed relative to stocks...
Five-year U.S. Treasury notes, for instance, have returned an average of about 11% in the last eight bear markets since 1948... compared with a 35% loss, on average, in the S&P 500 Index during the same time periods.
But aren't interest rates near rock-bottom today? And isn't that concerning for Treasurys?
Sure is. The broader point, though, is that these traditional safe assets buoy the risk elsewhere in a portfolio.
Along those lines, the case for owning gold has possibly never been better...
As Garrett reminded us in a private e-mail yesterday, in eras of low interest rates and prolonged negative "real rates" (accounting for inflation) from 1974 to 1980 and after the 2008 financial crisis, gold shot to new all-time highs both times.
Today, the Fed is making gold cool again...
Interest rates are at 0%, which feels almost like a given and an afterthought at this point while new stimulus packages are still being drawn up.
And as unprecedented trillions of "fake money" Band-Aids flood the economy in the form of central bank-printed dollars, yen, and euros, it takes more money to buy the same amount of assets like gold and silver.
This is a big part of the reason why many of our editors have long considered gold a "chaos hedge." DailyWealth Trader editors Ben Morris and Drew McConnell, for example, wrote in their April 3 issue...
Gold and silver (and to a lesser extent, platinum and palladium) can soar during a crisis. Like U.S. Treasurys, gold and silver are seen as safe-haven assets. They're especially valuable in a currency crisis... or when folks are worried about one.
Today, the central banks of the world are pumping unprecedented amounts of money into the financial system. It may not happen overnight, but over time, this will reduce the value of our paper currencies... especially relative to hard assets that central banks can't print, like gold and silver.
As we explained in yesterday's Digest, in times of crisis and afterward, gold prices shoot higher after a brief "confusion period." We recently saw that happen in March... Gold dropped along with the broader market to a low of $1,500 per ounce.
Today, the spot price of gold is back to $1,700 per ounce. And John firmly believes it will reach new highs at or above $3,000 in the near future.
Of course, the stocks of gold companies that are well-positioned in the precious metals industry benefit, too. Even more, these companies – if you know which ones are good, like John and Garrett do – will pay dividends.
So, if you want to preserve and grow your wealth while riskier assets drop in a prolonged bear market...
It's critical that at least some of your portfolio is allocated to gold today...
Some of our editors, like Ben and Drew, suggest putting as much as 30% of your portfolio in precious metals today, along with a healthy allocation to cash. Others may say less. You must make decisions based on your own situation, time horizon, and risk appetite.
But the bottom line is... owning at least some gold or precious metals is something we can say should be a part of a well-allocated bear-market investment strategy.
And you're not going to find better guides and experts to explain the trends in precious metals to you – and recommend which gold stocks to own – than John and Garrett.
John and Garrett have fine-tuned a gold-stock portfolio system over the years that has generated incredible results...
Their model portfolio returned a cumulative 923% from 2001 to 2019, beating the major gold exchange-traded funds ("ETFs"), surpassing the average gold stock by nearly three times, and nearly doubling the return of the S&P 500.
They do it by fully vetting and researching only the best stocks in the gold universe, comparing them to each other with a standard set of metrics, and then compiling a short list of stocks that often outperform even big rallies in the price of gold itself.
From 2008 to 2011, for example, the price of gold jumped 163%. But industry leaders like Seabridge (SA) went up 225%. That's great, if you knew about Seabridge in advance.
John and Garrett's work is read by more than 40 of the top professional money managers at the world's largest hedge funds, as well as a host of other industry leaders. Our Steve Sjuggerud is one of their followers. And as he says...
I don't have to put my name and reputation behind anybody. But John and Garrett are the real deal. These are the guys that you want to listen to if you want to make money in gold and gold stocks.
After listening to John explain his system in our free videoconference, you'll actually have the information to do the work yourself... if you're retired and that was ALL you did with your time.
But we suspect many of our Digest readers either don't have that kind of time or would rather be doing something other than researching stocks that John and Garrett could tell you about much quicker.
If that's you, the best thing you can do right now is to let them put their decades of experience into the information you'll receive.
Bringing it back to where we started...
In the Gold Rally Kickoff Call, John tells a story from a conference he spoke at a few years ago...
I was in New York, and a little old Asian woman stood up in the middle of the audience in the middle of my talk and said, "Mr. Doody, you make me millionaire."
I'm certainly pleased by that. But that's why I love stocks so much, gold stocks. Because I'm convinced that we have the absolute best system out there for making a fortune in the right gold stocks.
If you're interested in hearing John and Garrett detail their latest thoughts on the gold sector today, we encourage you to watch the replay of their presentation.
Gold has never been cooler. And they explain how you can make big returns in this overlooked part of the market, which is critical to understand while building a bear-market portfolio.
As we said earlier, John and Garrett's video is absolutely free to watch. Click here to get started.
New 52-week highs (as of 4/27/20): Alamos Gold (AGI), Quest Diagnostics (DGX), Digital Realty Trust (DLR), DocuSign (DOCU), Equity Commonwealth (EQC), MarketAxess (MKTX), Novo Nordisk (NVO), Sprott Physical Gold Trust (PHYS), Sandstorm Gold (SAND), Sea Limited (SE), Scotts Miracle-Gro (SMG), Belo Sun Mining (VNNHF), and Wheaton Precious Metals (WPM).
In today's mailbag, a message for Gold Stock Analyst editor John Doody and more comments on Porter's "Big Lie" essay and his response to recent feedback. Do you have a question or comment? As always, shoot it to feedback@stansberryresearch.com.
"I am so happy to see John Doody back. I have been an Alliance Member for years and was disappointed to see John briefly leave PSA. I do like his commitment, vigor, and enthusiasm but most importantly, I like his advice.
"I feel his commitment, knowledge, and conviction. I cannot think of anyone else who is willing to give such specific advice on a handful of stocks that can change your life without risking your future. Welcome back John Doody. Keep doing what you do so well." – Stansberry Alliance member Mitchell F.
"Porter, et al, I just want to commend Porter and Stansberry for telling the truth about the government and the media and their lies regarding Covid-19. There is more than ample independent clinical data and analysis to back up everything Porter said. The average American can't do simple math or think for themselves. Keep fighting the good fight!" – Paid-up subscriber Greg A.
"Porter, Thank you for opening a path for a rational discussion on this subject. However, I think you neglected an item that is absent from our public discourse, and that is, the objective. An agreement on this subject should precede any discussion about action plans.
"It seems to me that your objective can be stated as: Reach herd immunity as soon as possible.
"I would propose another objective: Avoid death due to scarcity of medical facilities.
"We both agree that the current government restrictions are a gross overkill, but our differing objectives lead to different actions. Reaching my objective does require government action, but that action will be minimal: Logistic support to hospitals, and public education (not legislation). It will not infringe on individual rights and will not hurt the economy. On the other hand, if your assumptions are wrong, your proposed non-action could lead to tragic hospital overload.
"For reference, we can turn to Korea. There, the government closed only schools and major tourist attractions. It also investigates and alerts people who were in close contact with infected persons. The infection rate now, is about 10 new cases per day. I believe that this achievement is due not to herd immunity, but to the voluntary participation of the public. Almost 100% of people wear masks and avoid large gatherings." – Paid-up subscriber Isaac O.
"I am totally with Porter on this... this is total madness!!" – Paid-up subscriber Rick H.
"My sincerest Thank You to the medical professionals who have written feedback about COVID-19, in response to Porter's Digest. I have read those stories with particular interest, because I made my own model for COVID-19 and have been looking to falsify it, so far without success. I would love to know if results for critically ill patients are improved significantly with the use of ventilators versus without. So far it seems like ventilators do nothing more than prolong life a couple weeks. If hospital care doesn't help, there's no point flattening the curve.
"A deep love of liberty along with recent data convinces me Porter is right. The virus has spread beyond all hope of containment. Therefore, the best way to protect the old and/or frail is to get everyone else through the disease and out the other side to immunity, so the virus burns out. Let people decide for themselves what their personal strategy will be. I recommend the young be immediately unleashed.
"According to the April 22nd Daily Data Summary from NYC Health, the number of COVID-19 patients aged 0-44 who were ever hospitalized there is 5413. Gov. Cuomo said April 23rd that 21.2% of NYC residents tested positive for antibodies. Therefore, if ONLY those remaining unexposed New Yorkers aged 0-44 were to get COVID-19 all at once, they would require about 20,000 hospital beds at some point. NYC had 20,000 hospital beds even before the pandemic, and they have since doubled capacity.
"Millennials and other young people already got screwed by the Fed and their politically-connected cronies in the aftermath of the 2008 GFC. This pandemic is an absolutely ideal opportunity for them to gain valuable skills and self-respect, and earn very high wages working all those critical jobs out in the world, which the old or frail should stay at home and avoid right now. Healthcare, meat processing plants, PPE manufacturing, teaching school, truck driving and delivery, grocery stores, warehousing and order fulfillment, etc. Finally, we NEED Millennials."
"The 0-44 age group is over 58% of the U.S. population, and their futures and livelihoods are being mercilessly crushed by old people propagating fear and authoritarianism. For shame! Stop caging up the young and start hiring them!" – Paid-up subscriber Deane M.
All the best,
Corey McLaughlin
Baltimore, Maryland
April 28, 2020