Is the Great Bull Market in Gold Beginning?
Is the great bull market in gold beginning?... A short-term bounce, or something bigger?... Two big reasons gold could move higher... P.J. on the New Hampshire primaries...
Last Thursday, gold hit a one-year high of $1,263.37. The precious metal rallied 7.1% that week, its biggest rally since 2008, pushing prices up 13% this year.
Gold is on a tear. But it looks even stronger when you compare it with stocks...
Is this just a short-term bounce after a grinding, four-year bear market? Or is this the start of something bigger for gold? Both the macro environment and the technicals point to higher prices for gold. We'll look at the macro environment first...
The biggest strike against gold is that it doesn't yield anything. But thanks to a global race to the bottom for fiat currency, neither do government bonds.
In fact, one-third of global sovereign bonds sport negative yields today. Another one-third yield between 0% and 1%. Today, only one-third of global sovereign bonds yield more than 1%.
Yields on the 10-year Japanese government bond went negative for the first time in history this month. German government bonds are negative out to February 2024. And regular Digest readers are already aware of the near-record-low yields for 10-year U.S. Treasurys (currently 1.8%).
The environment for savers and yield-seekers is bleak. And negative yields make holding gold advantageous.
Further, it seems that investors are losing faith in central banks. Specifically, they're losing faith in central banks' ability to create prosperity through manipulating money.
The asinine announcements coming from our own Federal Reserve certainly don't inspire confidence...
As Steve Sjuggerud noted in yesterday's DailyWealth, the Fed is sending mixed signals today. And the so-called "Bond God," DoubleLine Capital founder Jeff Gundlach, is worried...
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Think about that: Yellen and the Fed are saying they will raise interest rates 12 times by 2018. But the smart money is betting (through interest-rate futures) that the Fed won't hike rates at all until 2017.
We've already pointed out financial stocks' poor performance, but it's worth highlighting again.
Big banks are the engine of an economy, taking deposits and making loans to business and individuals. When their share prices plummet, it's an ominous sign for the economy. And today, shares of bank giants like Deutsche Bank, Credit Suisse, and Standard Chartered are trading below their subprime crisis levels.
Again, a cratering financial system – backed by fiat money – is bullish for gold.
In addition to a soaring gold price, we're also seeing bullish action in gold stocks.
In yesterday's Digest, you may have noticed our recommendations in Kaminak Gold, NovaGold Resources, and OceanaGold all hit 52-week highs.
But they're not alone...
The sector as a whole – as represented by the Market Vectors Gold Miners Fund (GDX) – is up nearly 30% so far this year. Even the biggest gold miners are soaring... giants Goldcorp (GG), Newmont Mining (NEM), and Barrick Gold (ABX) are up 28%, 38%, and an incredible 60%, respectively, this year.
Steve recently told True Wealth Systems subscribers that the big gains in precious metals are only getting started...
True Wealth Systems, if you're not familiar, is Steve's exclusive trading service based on advanced, mathematical computer models. To put it simply, we invested a fortune in a computer system that tells you exactly when to buy and sell assets across the globe.
And right now, Steve's computers are saying gold prices could jump another 19% from here...
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True Wealth Systems normally costs $3,000 a year. But later in today's Digest, we'll show you how you can try this service for the next 30 days for a super-low fee.
Stansberry Resource Report editor Matt Badiali is also getting bullish on mining stocks. He wrote in his latest issue...
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In that issue, Matt put together a "wish list" of mining companies to start monitoring. And he's currently working on a special report with his top buys in the sector. It should be finished this month.
Meanwhile, DailyWealth Trader editor Ben Morris is also getting bullish on gold stocks. As he wrote in the February 11 issue, following gold's big upward swing...
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And Stansberry Short Report editor Jeff Clark has already been racking up big gains in the gold sector. He went bullish on gold stocks late last year, after GDX made a higher low in November.
Stansberry Short Report subscribers were able to lock in gains of 47% in just 11 days in gold, and 14% in 28 days in gold stocks, as gold moved higher into year-end.
Jeff then turned longer-term bullish earlier this month, when he called gold stocks the "only sector that looks promising" today. As he wrote in the February 4 issue of the Stansberry Short Report...
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As we often say in the Digest, when several of our analysts are bullish on the same thing, you should pay attention. That's often when the biggest gains come.
But maybe you don't already subscribe to the Stansberry Short Report (which costs $3,000 a year), or True Wealth Systems ($3,000 a year), or DailyWealth Trader ($99 a month), or any of our other expensive trading services.
That's one of the reasons we created our Stansberry Flex program. It's a way for you to receive any five services we publish for life... And you can switch in and out of those five services as your investment goals change, or when we launch a new product, for example.
Let's say you're a Flex subscriber today and you want to profit from what we think is a coming rally in gold stocks. But you don't subscribe to the Stansberry Short Report. No problem. You can exchange one of your existing subscriptions for the Stansberry Short Report and follow along as Jeff continues to nail winning gold trades.
New 52-week highs (as of 2/16/16): Kaminak Gold (KAM.V) and Sysco (SYY).
In today's mailbag, a longtime Stansberry Flex subscriber shares his experience with the program. Send your questions and comments to feedback@stansberryresearch.com.
"I am going to keep this real simple. My Flex membership changed my life. Last year I began trading full-time and finished with an 87.6% win percentage. This year I am doing even better with only one losing trade so far. None of this would have been possible without learning, using the tools and research made available to me with the Flex [program]. I wasn't sure I could afford the cost. But the money I have made just this year paid for the entire membership, and I have a small account. Now, the results were not instant. It took time to research, study, and practice. Learning is never easy, but it is profitable." – Paid-up Stansberry Flex subscriber Bob Bailey
Regards,
Sean Goldsmith and Justin Brill
Baltimore, Maryland
February 17, 2016
New Hampshire: Giving the People What They Want... Times Two
By P.J. O'Rourke
I've been voting in New Hampshire primaries for 32 years. But I've never seen a race as strange as this.
The choice was supposed to be between names from the past: a Bush and a Clinton. Instead, New Hampshire has left American political elites and political pundits in a state of disbelief.
In America, we like to say: "Anyone can become president." This year, we've been trying to prove it.
Over the past two weeks, I followed candidates around New Hampshire as they shook hands and smiled until their faces cracked, hoping to persuade my state's infamously late-deciding voters.
To the rest of the world, Donald Trump may seem like a joke. And there are many Republicans saying, "Please, let's hope he is."
But is Trump just a prank the American electorate is pulling on the American political establishment?
To put it in the worst light, a lot of people are claiming to support a cartoon character – an overconfident Mr. Bluster, a self-inflated one-man business boom who claims he can make a deal with the devil that will have the angels of heaven lining up to buy condos in Trump Tower Hell.
But like many jokes, Trump is a manifestation of serious, heartfelt discomfort and anxiety. Trump's supporters are earnestly concerned about what's happening to their country.
America is actually a pretty good place. By world-historical standards, it's an excellent place. And yet, according to opinion polls, almost two-thirds of Americans think the country is "on the wrong track."
What has Americans so worried? The technological revolution is unsettling, as are rapid social shifts involving everything from immigrants to gender and sexuality. The middle class has been squeezed. Wages haven't kept up. The divide between the very rich and the very poor continues to grow. And America's political establishment is so bitterly divided that we can't get bipartisan agreement on whether the sun will come up.
One of the first candidates I had a chance to see was Ted Cruz. He's a conservative candidate in a more traditional mold than Trump.
Cruz is a cultural conservative, strongly opposed to gay rights, drug-law reform, and so forth. He's still fighting the Culture Wars. He's up on the front line bravely firing away without noticing that the other side has gone home to celebrate victory with legalized marijuana at same-sex wedding receptions.
In New Hampshire, however, Cruz was emphasizing defense of constitutional limits on government power more than he was emphasizing defense of traditional social values.
When Cruz was in his teens – before going to Princeton, then Harvard, then becoming a U.S. senator – he was part of a group of students called the "Constitutional Corroborators." They would tour civic organizations in Texas and deliver half-hour presentations on the U.S. Constitution from memory. (What I was doing as teenager was somewhat different, but then, I'm not running for office. And the Constitution is a big vote-getter among New Hampshirites.)
Except for Trump and Cruz, the Republican candidates were what might be called the "Muddle in the Middle." Moderate Republicans kept waiting for one of them to set him or herself apart from the crowd.
John Kasich, Jeb Bush, Marco Rubio, and Chris Christie are seasoned, pragmatic, center-right candidates. Before she dropped out of the race, Carly Fiorina was the same, plus being a woman, minus the seasoning.
In Milford, New Hampshire, I caught a bit of Chris Christie. But the crowd seemed to be not so much there to support the candidate as there looking for a candidate to support. Apparently, most decided that candidate wasn't Christie. He suspended his campaign after getting 7% of the vote in New Hampshire.
Jeb Bush was another candidate who inspired mild interest rather than wild enthusiasm.
There's something about Jeb that I think of as the "Great American Failure Story." Here's Jeb with all the Bush influence, all the Bush political connections, all the Bush campaign funding, and he can't seem to make much headway. This kind of failure would be almost impossible for the son of a rich, aristocratic family anywhere else in the world. Isn't America a wonderful country?
Marco Rubio is young (by political standards) and fresh-faced (by political standards). Middle-of-the-road Republicans hoped he would emerge as vigorously moderate or, at least, moderately vigorous.
But Rubio faltered at a debate three days before the primary. He suffered from a form of stuttering. Except, instead of repeating a sound, he repeated a whole chunk of campaign boilerplate several times in a row. Then he did the same thing again the next day. The effect was disconcerting – indicative, at the very least, of nervous inexperience on the campaign stump.
Ohio governor John Kasich placed second in the Republican primary. I confess I was a little surprised. I hadn't been paying much attention to Kasich, who looks as much like a generic candidate for president as a generic candidate for president can look.
But Kasich is the popular conservative governor of Ohio, a not-so-conservative state.
Ohio is a microcosm of American conflicts: labor versus management, nativists versus immigrants, blacks versus whites, "Occupy Akron" versus "the 1%." They all hate each other, but they don't hate Kasich.
Kasich beat an incumbent Democratic governor and was re-elected by a landslide. Before that, he served nine terms shoveling important manure in the House of Representatives' barn. He was on the House Armed Services Committee for 18 years and spent six years as the chairman of the House Budget Committee.
Kasich is a good candidate. But he came in a distant second to Trump. It seems that Republicans are in no damn mood for a competent, experienced politician with broad popular appeal.
New Hampshire was not, of course, just about the Republicans. The Democrats were having a primary, too. And the same dynamic was at work – political insiders versus political outsiders (though just one of each in the Democrats' case).
However, when it comes to being an "establishment" Democrat, Hillary is probably the most established Democrat on Earth.
And her opponent was Bernie Sanders. He may have been involved in politics all his life, but he's an outsider's outsider because of his political ideas, which are way out in left field.
Bernie repeats the pieties of the 1960s New Left with a straight face. Trump can be clownish. Bernie is perfectly deadpan.
Most of Bernie's support comes from people who weren't born when his ideas were in vogue. They're too young to know that what Bernie says may sound like it makes sense during the dorm-room bull session, but sooner or later, you have to put the bong down and exhale.
Bernie is hardly the right man to break America's political deadlock. It would be like electing Angela Merkel as Prime Minister of Greece.
Hillary, on the other hand, is a seasoned, pragmatic, center-left candidate. Her nomination by the Democratic Party was supposed to be inevitable. But it turns out that "evitable" is a real word in the English language. I checked the dictionary. We should start using it.
In the morning on the day before the Primary, I went to a Hillary event. It was held in the auditorium of a junior college. In the evening, I went to a Trump event. It was held at a sports arena.
Several hundred people came to see Hillary. It wasn't much fun. At least 5,000 people came to see Trump. Fun was had.
What Trump presented was more of a performance than a political rally. What Trump had to say was more of a shoutout to his fans than a speech to his political supporters. And there was great music. The loudspeakers in the sports arena boomed with early Rolling Stones, Elton John, and "Revolution" from the Beatles' White Album...
But if you go carrying pictures of Chairman Mao,
You ain't going to make it with anyone anyhow.
On primary night, the voting trend was so clear that the Associated Press declared Donald Trump the winner of the Republican primary two minutes after the polls closed. And Bernie Sanders was anointed the Democratic victor just as quickly.
American voters want a different kind of presidential candidate than they've ever seen before.
And here in New Hampshire, we've certainly given America what it wants – times two.
Regards,
P.J. O'Rourke
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