A Stealth Bull Market Is Now Confirmed

A stealth bull market is now confirmed... Sjug and 'Doc' aren't alone... Why Porter's team believes the gold rally will continue... Another big win for Dave Lashmet's Stansberry Venture Technology subscribers... A chance to go 'behind the scenes' with Dave and his research team...

We'll begin today with some good news for gold...

Regular Digest readers know we've been highlighting the bullish case for precious metals for several months now.

In short, for the first time in nearly three years, everything needed for a massive rally has finally fallen into place. And while it may not feel like it, gold has been moving higher. As we noted in the December 20 Digest...

Since its bottom in mid-August, gold has quietly rallied more than 6%. And as you can see, as of today, it has now broken back above its 200-day moving average for the first time since falling below it early this year...

This is a positive sign... and further evidence that a new rally is now underway.

Today, we can add another reason for optimism to the growing list...

As our colleague Steve Sjuggerud explained in the January issue of True Wealth Systems (TWS), published last Thursday, a brand-new "buy" signal has now been confirmed. From the issue...

Gold has been marching higher for months. It jumped almost 5% in December alone. And that move prompted a new "buy" signal from our TWS computers. We now officially have a stealth bull market underway in gold.

But like we mentioned last month, Steve noted that most folks still haven't noticed this bullish price action...

This opportunity in gold would surprise most investors. The metal hasn't soared... not yet, at least.

Instead, gold has been quietly marching higher in recent months. And the move intensified in December, as U.S. stocks unraveled. You can see the consistent move higher in the chart below...

No one has been paying attention to gold. But the TWS computers are always watching. And as of this month, we have an official uptrend.

As Steve explained, this is big news...

Regular readers know he personally started getting bullish on gold last fall. But seeing his proprietary TWS computers now turn bullish as well is powerful confirmation. History shows that these buy signals have produced tremendous gains in the past. More from Steve...

Take a look at the chart below. It shows our trend system for gold. The green lines are when we're in the trade. The red lines are when we're out...

Simply following the trend in gold leads to capturing the big moves higher and avoiding the busts...

Our historical system has led to 24% annualized returns using leverage when in buy mode. That's a stellar return for catastrophe insurance. Even better, our system has just flashed a buy signal this month.

Right now, gold is in an uptrend. It's been marching higher for months, with its biggest gains coming in December, when stocks fell hardest.

Of course, Steve isn't the only Stansberry Research editor who has become more bullish on gold lately...

As we noted in our Digest holiday series, our colleague Dr. David Eifrig is, too. In fact, "Doc" recently recommended his Retirement Millionaire subscribers buy more gold for the first time in years.

And as of last week, we can now add the Stansberry's Investment Advisory team to the list as well. As analysts Alan Gula and Mike DiBiase explained in the January issue, out last Friday, the case for owning gold today is as strong as it has ever been...

Modern currencies are "fiat" – they aren't backed by anything. The value of a fiat currency is dependent upon the government, which effectively controls the amount of money in circulation – either physical or electronic.

If policymakers spend recklessly, take on too much debt, or otherwise compromise the faith in the currency, then its perceived value declines. The result is higher prices for goods and services. In extreme situations, like Venezuela, the currency swiftly becomes worthless.

Whether it occurs quickly or slowly, inflation is unavoidable. Even the U.S. dollar has lost 93% of its purchasing power over the past century. Let's say someone purchased $10 worth of food and clothing in 1918. Those same items would cost you about $170 today.

The point is, currencies – even the U.S. dollar, the reserve currency of the world – don't hold their value well over the long term. Therefore, putting cash under your mattress and leaving it there for a long time isn't a good idea. But leave an ounce of gold in a safe place, and it will still have value for your grandkids... and their grandkids.

In other words, gold has proven itself as a reliable store of value over thousands of years...

And that remains as true as ever today. Unlike fiat currencies, governments can't simply "print" more gold out of thin air. So while gold doesn't pay dividends or produce any cash flows like an investment in a high-quality company, the precious metal still has plenty of desirable qualities for serious investors. More from the issue...

Yes, the market price of gold fluctuates. But what's really changing is the value of the currency that gold is priced in... As we've written many times over the years, gold's real value doesn't change. For thousands of years, an ounce of gold has purchased the equivalent of a fine men's suit.

Gold is an economic constant. There's no chance gold will become worthless over time like a fiat currency. Gold has no chance of going to zero like the stock of a bankrupted company. It's even safer than owning debt. There's no risk of default, unlike a bond.

It's a time-tested store of value. That's why central banks around the world hold portions of their reserves in gold bullion.

In addition, many investors consider gold a 'safe haven'...

And history shows gold tends to perform well during periods of economic uncertainty like today.

After the dot-com bubble burst in early 2000, the benchmark S&P 500 Index fell by nearly half. Gold prices, meanwhile, increased about 12%.

That wasn't an isolated incident, either... During the last financial crisis, the S&P 500 fell 57%, while gold prices rose more than 25%.

And sure enough, as the market fell nearly 20% from late September to late December last year, gold prices were up about 5%.

Like us, Porter and his team believe the recent volatility is likely to continue, which means gold should continue to do well. More from the issue...

The stock market is up slightly from its pre-Christmas low. But don't expect a new bull market... at least, not yet... The Federal Reserve is ending its "easy money" policies. It's raising interest rates and shrinking its balance sheet. The European Central Bank just recently ended its own "quantitative easing" stimulus program.

With central banks pulling in the reins, the global supply of money isn't growing anymore. (At least not the base money supply, which the central banks control.) That's a tremendous headwind for stocks. It's also bad for corporate bonds, and it's why we expect more credit distress in coming months.

As the stock market continues to remain volatile amid heightened uncertainty, gold should continue to do well. And if global central banks start to stimulate again – which they'll have to do before long – real yields will fall and the dollar will weaken again. That will cause gold to soar.

We wrote it. Did you buy it?

In the June 2017 issue of his elite Stansberry Venture Technology advisory, our colleague Dave Lashmet recommended subscribers buy a small developmental drug company named Loxo Oncology (LOXO).

In short, the firm had three new cancer drugs in clinical trials, including its lead drug, LOXO-101 – an FDA-designated "breakthrough drug" – which Dave believed could become a multibillion-dollar blockbuster. As he explained at the time, Venture Technology subscribers had two likely paths to 50%-plus returns.

First, the company could partner with a "Big Pharma" company to bring this drug to market...

Based on stellar clinical data (including multiple complete remissions) from three pooled trials that we saw at ASCO, this seems like a profound new addition to the tools we use to fight cancer. And given its mild side-effect profile, we expect LOXO-101 to get a quick FDA review, then approval.

If we predict a 50% revenue split with no upfront cash or royalties – a lean deal – then Loxo should trade at an enterprise value of $2 billion. Further, if we hone the 50% royalty revenue received by Loxo to cover the company's other operating costs, that yields approximately 90% margins...

The upside here is based on the incentives that the company receives as Big Pharma companies compete to be Loxo's marketing partner. For example, we could see a $500 million upfront payment, plus another $500 million in milestones, which should give us a 50% upside with little downside risk.

Alternatively, Dave said one of these same potential Big Pharma partners could decide to buy Loxo outright...

The advantage of a buyout is that a Big Pharma company is not on the hook for future milestone payments – but of course, it has a higher upfront cost. Typically, we would see a 50% premium to market on this sort of acquisition...

Bottom line, Loxo has a new targeted cancer therapy heading to the FDA for review and, as we think, near-term approval. It's cash-rich with no debt. And it's in a strong position with respect to potential marketing partners from Big Pharma.

The company currently trades at a fair price, so we see little downside risk and potentially 50% upside on a deal with Big Pharma – maybe more.

This morning, we learned that Dave was exactly right...

Pharmaceutical giant Eli Lilly (LLY) officially announced a deal to buy Loxo Oncology over the weekend. However, as optimistic as Dave was on this company, it turns out he wasn't optimistic enough. As the Wall Street Journal reported...

Eli Lilly said it is buying Loxo Oncology for $8 billion in cash, a deal that expands the biopharmaceutical company's oncology-treatment portfolio and adds to a string of recent deals in the cancer-treatment space.

Lilly, based in Indianapolis, will pay $235 a share, a 68% premium to Loxo's closing price of Friday at $139.87. The $8 billion deal valuation includes the company's shares outstanding as well as stock options.

LOXO shares surged more than 66% on the news today...

But Venture Technology subscribers are sitting on significantly higher gains.

You see, shares had already rallied substantially since Dave originally recommended them last year for a little more than $80. All told, Dave's subscribers have earned a massive 185% return in about 18 months.

Congrats to Dave for another great call.

Speaking of Dave...

As we write, he and his team are on their way to Las Vegas for the International Consumer Electronics Show – or "CES" – the world's largest annual technology event.

The CES is where Dave has uncovered some of the most lucrative tech recommendations in Stansberry Research history... And this year's event promises to be no exception. It will feature more than 4,400 exhibits showcasing new technologies, including artificial intelligence ("AI"), advanced robotics, self-driving cars, next-generation 5G wireless networks, and much, much more.

We can't share all the details just yet... But this year, we've arranged a way for Stansberry Research readers to go "behind the scenes" with Dave and his team as they look for their next great tech investments.

Stay tuned for more information soon.

New 52-week highs (as of 1/4/19): none.

In today's mailbag, a subscriber weighs in on our colleague Mike Barrett's Friday Digest missive. As always, send your notes to feedback@stansberryresearch.com.

"Somewhere between 50 and 60 years ago, in late high school or early college, I was a 'paper' investor. To encourage my interest in stocks, my father gave me a copy of a publication called The Bowser Report that greatly influenced my investing philosophy. My dad gave me that newsletter mainly because it specialized in penny mining stocks and 'cats and dogs' in general, and he knew I was interested in them. The one piece of advice that stuck with me from that one newsletter was their recommendation always to sell half of a position as soon as it doubled. That, for the most part, has stood me in good stead throughout decades of investing and not just with penny stocks. Just this past year, though it pained me at the time, I took money off the table in solid stocks like Interactive Brokers, Universal Corp. and National Presto, which are now no longer doubles.

"The only downside is that it reduces your potential future gains by 50%, but it limits potential future losses to zero. In my book, that's a pretty good trade-off. Like any dictum, it can be tweaked a little here and there, but it's usually dangerous to ignore it. Occasionally, if a stock is really hot, I'll let it ride a bit beyond a double, but not for long. Following that rule certainly would have helped your friend Bill. He might not have been a multi-millionaire, but he probably still would have been a millionaire." – Paid-up subscriber Kurt H.

Regards,

Justin Brill
Baltimore, Maryland
January 7, 2019