Gold Just Hit an All-Time High
New record highs for gold are already here... Gold prices are 'running away'... The bear market could already be over... How to read our best gold research... P.J. O'Rourke gives presidential candidate Marco Rubio a pep talk...
Gold is trading at all-time record highs today...
If you're a U.S. investor, you may be surprised to read that. After all, while gold has rallied more to start this year than it has since the bull market peaked in 2011, it remains more than 35% below those highs.
But remember, the price of any asset is really just a ratio... It's how much of something you can buy in exchange for some unit of payment.
Here in the U.S., that's the U.S. dollar. But while gold is typically priced in U.S. dollars, it isn't only traded in the U.S. It's a global asset traded around the world.
In simple terms, it means that looking at the gold price in U.S. dollars tells you two things, rather than just one.
First, like all prices, it provides information about gold's value... It represents the balance of supply and demand. But some portion of it also represents changes to the value of the dollar.
As regular readers know, the U.S. dollar has soared versus most of the world's other currencies in the past couple years. In other words, a larger-than-normal portion of the gold price today is likely a reflection of the dollar's value rather than the value of gold itself.
To get a better idea of the true value of gold, it makes sense to measure gold prices in other currencies as well.
For example, as financial blog Zero Hedge pointed out yesterday, gold prices have been "running away" in some of the world's weakest currencies.
So far this year, gold has hit new all-time record highs in the Belarusian ruble, the Argentine peso, the Brazilian real, the Colombian peso, the Iranian rial, the Russian ruble, the South African rand, and a long list of other emerging-market currencies.
It's also on the verge of new record highs in several others, including the Australian dollar, the Canadian dollar, and the Mexican peso.
In a sense, you can think of these currencies as "canaries in the coal mine" for gold prices today. And according to them, gold has not only already bottomed... a new gold rally has been underway for two years or more already.
But it's not just the world's weakest currencies sending that message today.
As DailyWealth Trader editor Ben Morris shared in today's Growth Stock Wire, gold is rallying in the world's other major currencies, too...
We can see this by looking at the Kitco Gold Index. Kitco is a great free source for precious metals information. It makes a point to show how much of an asset's price change is due to changes in the dollar... and how much is due to fundamental factors like supply and demand.
The Kitco Gold Index measures the price of gold against the same basket of foreign currencies that the dollar is measured against in the U.S. Dollar Index. In the five-year chart below (pulled from Kitco's website), you can see the Kitco Gold Index (the blue line) and the price of gold in U.S. dollars (the red line)...
As you can see, the two prices began to significantly diverge in late 2014, when the big rally in the U.S. dollar began. Gold priced in all other major currencies has trended higher since then, while gold in U.S. dollars continued to fall.
This suggests that the new lows in gold during this period were a result of the U.S. dollar rally rather than a decline in the "real" value of gold.
More important, it means the bear market in gold could already be over, and a "stealth" bull market is here. As Ben noted...
Lots of people in the U.S. are predicting a new uptrend in gold, starting now. But gold is already in an uptrend around the world. It has been for two years.
Now, for the first time in years, we're seeing gold rally strongly in both the dollar and other major currencies. This is an incredibly bullish sign, and suggests a significant rally could be starting.
DailyWealth Trader subscribers are already up more than 40% on two gold stock trades... But Ben believes the uptrend is just beginning, and expects to recommend more soon. And he's not the only Stansberry Research editor preparing to profit from higher gold prices this year.
Stansberry Short Report editor Jeff Clark recently closed out two short-term trades for 14% and 47% in gold and gold stocks in less than one month. Like Ben, he believes the opportunities in gold are just beginning.
True Wealth Systems editor Steve Sjuggerud has recommended three "golden lottery tickets" – gold explorers with huge hoards of gold in the ground – that could soar hundreds of percent over the next few years as gold rallies. Steve says all three are still buys today.
And Stansberry Resource Report editor Matt Badiali recently published a list of the world's best gold and silver stocks – "bear market survivors," as he called them – that have remained profitable despite falling commodity prices, and are likely to lead the rebound during the next bull market.
For a limited time, you can now try all four of these services for yourself – along with all the rest of our 14 investing and trading services – as part of our Stansberry Flex "open house." Even better, you can try all of this research without paying the usual subscription fees.
Please note: The Stansberry Flex "open house" closes forever March 9. After that, we will never offer this opportunity again. Click here to learn more.
New 52-week highs (as of 2/19/16): Franco-Nevada (FNV), Kaminak Gold (KAM.V), and Sysco (SYY).
In today's mailbag, kudos for Doc Eifrig and his Retirement Trader service... an angry subscriber questions our "worship" of a great investor... and another longtime subscriber shares his experience with the Stansberry Flex program. Send your questions and comments to feedback@stansberryresearch.com.
"Dear Dr. David Eifrig, Jr... Purchased first stock (Brown Shoe Company) in 1960. From then on always in the Market never backed off. Pretty much seen it all from 100% margin portfolio (bust) to selling stocks to buy rental property. I knew that I did not have the expertise, knowledge, or the time (always worked full time – railroad trainman) to figure it out. Up until 1997 dealt with Brokerage houses and Account Executives, and this seemed to always be a disaster.
"So in 1997 I decided to do it myself and took my business to Charles Schwab (one of the smartest things I ever did) – great company can't say enough about them. Searched and searched and tried every service and then Stansberry and lo and behold after watching for a year or two realized you guys knew what you were doing. Signed up, I'm a lifer and started doing options (still don't profess to know what I am doing). In the last two and a half years, I have realized about $80,000.00 in premiums mostly small contract options. Doc, I think I have read most of what you have written, and just wanted to express my appreciation. I am eighty now and just goes to show if you hang long enough good things can happen." – Paid-up subscriber Richard D.
"Nauseating. Your worship of the 'Bond God' if only you knew what I knew. I'll cancel your letters now you have no clue. Goodbye." – Paid-up subscriber Serena C.
Brill comment: We're not sure where you got "worship" from... We've simply pointed out that Jeffrey Gundlach, the so-called "Bond God" and founder of DoubleLine Capital, is one of the most successful investors in the world today.
After all, he reached $50 billion in assets under management faster than any other investor in history... He has outperformed 99% of his peers for the past five years... And he has made a number of incredible (and correct) calls over that time. Excuse us for thinking you might want to hear what he has to say.
"Hi, Porter... I've been following the saga of the issue of a few miscreants abusing the Flex program. I've been a member of the Flex Alliance for a few years now, and I'm also a Private Wealth Alliance member. And I separately purchased a lifetime subscription to Stansberry Venture. I'm also a lifetime subscriber to TradeStops, and I subscribe to DailyWealth Trader. I'm basically all-in, so I actually have nothing to switch in and out of. As a result, I have no dog in this fight, but I'll weigh in, anyway. First of all, after about 5 years subscribing to various (and now all) of your publications, there is no doubt whatsoever of the Incredibly high value of the research, the quality of the writing, the accuracy of the analysis, or the learnings you and your team impart (yes, I know there is no teaching, only learning, but it's a two-way street. You can't learn if there isn't also teaching going on, and you guys do amazing work on the teaching front.)
"The services you provide are uniformly outstanding. And there are life lessons interspersed that are also quite valuable. I've learned more in the 5 years with you than I did in decades of subscribing to other publications. Just a few examples: I've learned to trade options the right way, and now do it all the time; I understand how to decide what position size to take based on the risk; I use trailing stops; I no longer consider precious metals to be an investment, but rather a hedge (this is a very valuable concept, in my opinion); I just bought my first bond; I've done a little bit of short-term trading with Jeff Clark; I've done a couple of Alpha trades; I've bought things that are cheap, hated, and in an uptrend; I have world dominating dividend growers in my portfolio. This is all great stuff.
"One metaphor is golf: if you try to play with one club (going long stocks), you probably won't do as well as if you have a bag full of clubs and know how to use each one in different situations. I have you and your team to thank for having learned how to use all of these different tools.
"The issue around the Flex program is a little complex. It is clear, after all of these years, that you are a man of absolute integrity. You would never intentionally violate an agreement you have made. You allow people to try all of your products, and cheerfully refund their money if they request it. It has to be incredibly offensive to you when people demonstrate they have no integrity, and are just going to take advantage of any situation they find themselves in. These kinds of individuals are not people you would want to be around, and I'm certain you would prefer to give them back all of their money so they are no longer part of your world in any way.
"But, you made a deal, and you will honor it, even though you know what they are doing is wrong. Believe me, the vast majority of your subscribers know it's wrong, too. We respect the way you run your business. We trust you to always do the right thing. We know you have our best interests in mind in all you do. And we know you are always looking for ways to deliver more than you promised.
"I'm certain you have made the right decision, although it's sad that new people won't be able to take advantage of an offering that is certainly the best deal available in investment research, analysis, and 'teaching' anywhere. I know this whole saga has been upsetting to you on a personal level, and support your decision about how to deal with it." – Paid-up Stansberry Flex subscriber Bob K.
Porter comment: Bob, I can't tell you with enough gratitude that I appreciate this note. It gives me tremendous pride to know that I have been able to serve people like you.
Regards,
Justin Brill
Baltimore, Maryland
February 22, 2016
Getting Passionate on Moderation
P.J. O'Rourke
The GOP is still the "Land of the Bland."
Despite a spicy 2016 presidential primary campaign, the Republicans continue to be a political party of moderate people – responsible, conscientious, careful, and not in their first youth. I know, I'm one of them.
Therefore, a moderate Republican presidential nominee remains a possibility. Moderate Republicans can't stand Cruz and can't understand Trump.
Given Rubio's photo finish for second place in the South Carolina primary and Jeb being scratched from future races, Marco Rubio seems to be the moderate with the edge.
Not that it's much of an edge. As a moderate Republican, what I don't like about Rubio – or Kasich, either – is moderation.
Damnit, I'm passionate about responsibility, conscience, and care. I want to hear bold attacks on the politics, policies, and programs that are making our nation irresponsible, unconscionable, and careless.
There's nothing wrong with Rubio's platform. Cutting the U.S. corporate tax rate to 25% is truth. Simplifying the tax code is beauty. And eliminating taxes on capital gains and dividends for new investments is the American Way. Most of the rest of what Rubio proposes makes sense, too.
But I want my candidate to be more than sensible. I wanted him to be incensed. My candidate should be making an angry statement on behalf of the electorate to the elected. My candidate should tell the government, "It's not your money!"
Please, Marco, get up there and declare, "People make! Governments take!"
And Marco, I wouldn't mind you having a little fun while you're at it. You should be laughing at the political establishment.
The Washington Insider Circus performers in fright wigs and grease paint (and greased palms) have been sticking their big red rubber noses into everyone's business, treading on our Constitutional rights with their huge floppy shoes of government overreach, and dousing the economy with cold water squirted from their tax-and-regulation boutonnières.
Marco, you should be showing us what a bunch of clowns we have in government.
You're against raising the minimum wage. You note that it hinders commerce and kills jobs. But Marco, you ought to be making your case by showing how ridiculous government attempts to control wages are.
You should say: "$15 an hour? Ha! Let's raise the minimum wage to $1,000 an hour. We'll all be rich! Sure, a Big Mac meal will cost $400. But we'll be so rich we won't care. And no, we're never going to hire anybody with wages that high. But no one will ever have to hire anyone again because we'll all be so rich we can retire!"
Marco, you want to rein in the Federal Reserve and reduce the national debt. Excellent goals. But the underlying issues are abstract. Use humor to make them concrete.
Tell the voters: "Excuse me, there's something I don't understand about U.S. monetary policy. If I have a printing press and I print a whole bunch of $100 bills, I go to jail. If the president has a printing press and prints a whole bunch of $100 bills, he gets re-elected."
Marco, you understand the fundamental truth of a free society: The government works for us.
Taxes are a payment to government for services rendered – protecting property, maintaining public order, and defending our nation. It's a straightforward deal, no matter how sideways and crooked people in government want to make it.
But you need to deliver that message with passion. Make us laugh! Make us cry!
You're good at memorizing speeches. Maybe a little too good. Marco, here is a speech I want you to memorize:
What if we paid a kid – paid him a lot – to mow our lawn? And what if we came home from work and found our lawn looking like Hell's Half-Acre?
That's us, in America, right now.
The kid we paid to mow the lawn is a bright kid. He went to Columbia and Harvard Law School. But when we got home, he was in our kitchen raiding the refrigerator and talking BS.
The BS that kid is talking is the same BS all the Washington insiders feed you.
"Your lawn is bigger than it should be. It causes other people's lawns to be too small. There are people in the apartment building across the street who have no lawn at all," he tells you. "So I mowed their lawn instead of yours. And I gave them your mower."
The Washington insiders say: "I found an invasive species in your herbaceous border. The fine is $500. You can pay the fine to me."
They say, "The people next door have crabgrass that is invading your lawn. I held talks with them. They've agreed not to complain about your crabgrass if you let them grow more of their own crabgrass and give them $1 million."
They say, "You may need more lawn care in the future. I signed you up for lawn care insurance."
And they say, "Do you want my friend Hillary or my friend Bernie to come tomorrow and wash your car? Your car is emitting greenhouse gases that cause climate change. They'll stuff a wet sponge up the exhaust pipe."
Then, Marco, finish the speech by saying: "Send me to Washington, and I'll make the government shut up!"
Marco, if you start talking to us like that, maybe you'll win the nomination. Perhaps you'll be elected president.
Or at the very least, you'll get a talk show on Fox TV – "Uh-Oh, RubiOs."
Regards,
P.J. O'Rourke
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