More Good News for Gold
More good news for gold... Gold stocks are outperforming again... Prepare for more 'easing'... Last call for the Bull vs. Bear Summit...
Yesterday, we shared a big bullish sign for gold...
In short, over the past several months, the precious metal has been moving higher despite a strong rally in the U.S. dollar.
As we noted, this is unusual. Most of the time, gold and the dollar trade inversely. So seeing gold rally in spite of this headwind suggests this rally could have legs.
But this isn't the only sign that the recent move higher is different from others we've seen...
As longtime readers know, comparing the performance of gold stocks to gold itself – through the so-called "gold stocks to gold ratio" – can be valuable.
Because gold stocks provide leverage to the price of gold, they tend to rise much faster than gold during bull markets... and fall much faster than gold during bear markets. So if this were the start of a new uptrend in gold, we would expect to see this ratio moving sharply higher.
As you can see in the following chart, that's exactly what has happened...
Since making a new multiyear low last fall, this ratio has moved sharply higher. And it is now just shy of making its first "higher high" in nearly three years.
This is a big deal. It hasn't happened since early 2016. Over the next several months, gold moved roughly 25% higher, while gold stocks – as tracked by the VanEck Vectors Gold Miners Fund (GDX) – surged nearly 140%.
And there's good reason to believe it will happen soon...
You see, history shows gold stocks also tend to dramatically outperform the broad stock market during gold bull markets. And as the next chart shows, the ratio of gold stocks to the S&P 500 has already made a higher high for the first time since early 2016...
After the big rally over the past few months, we wouldn't be surprised to see gold take a "breather" soon. But it's looking more and more likely that a new gold bull market is already underway.
Now, we can't say for certain what's driving this move in gold...
But the similarities to the last big breakout in 2016 are striking.
That rally began as the world's central banks suddenly became more "dovish," following a China-led slowdown in the global economy.
Here in the U.S., the Federal Reserve suddenly halted its new plan to raise interest rates. The central banks in Europe and Japan went even further, doubling down on quantitative easing ("QE") and pushing short-term interest rates deep into negative territory. And the Chinese government unleashed unprecedented stimulus as well.
Sound familiar?
Today, there are once again clear signs of a China-led slowdown. The Fed has suddenly halted its rate-hike cycle. Europe and Japan are discussing additional easing. And China is again flooding its economy with massive stimulus.
The big difference this time is that it's happening despite a higher "baseline" of stimulus.
Outside of the Fed, none of the world's major central banks even attempted to pull back these efforts over the past three years... which means they'll have to resort to even more extreme measures if they hope to keep this global debt bubble inflated awhile longer.
We can't be certain what they'll try next... but we're willing to bet it won't be good for savers.
One last thing...
By now, most readers know our friend and colleague, TradeSmith CEO Dr. Richard Smith, hosted his first-ever 2019 Bull vs. Bear Summit last week.
But if you've not yet had the opportunity to tune in to the event... or to learn more about Richard's generous offer to try his proprietary TradeStops software at a massive discount to the normal price... it will soon be too late.
Both the full video replay of the event – and this special, one-time offer – will be taken offline this Friday at midnight Eastern time. Click here to view them now.
New 52-week highs (as of 2/19/19): CBRE Group (CBRE), Equity Commonwealth (EQC), Essex Property Trust (ESS), Kirkland Lake Gold (KL), Kinder Morgan (KMI), Lundin Gold (TSX: LUG), MarketAxess (MKTX), Motorola Solutions (MSI), Nestlé (NSRGY), Procter & Gamble (PG), Polymetal (LSE: POLY), Sandstorm Gold (SAND), Spirit AeroSystems (SPR), T-Mobile (TMUS), and W.R. Berkley (WRB).
The feedback on Porter's latest Friday Digest and mailbag follow-up is still pouring in. As always, send your notes to feedback@stansberryresearch.com.
"Porter, holy cr*p, even in sickness you're inspirational! I'm a relatively fit 52 year old, but I find that because I can 'get away' with eating the wrong types of food, I do, but I've felt for a while I need to change that.
"What you shared on Friday is my wake up call, it's time to stop 'letting myself off the hook' and bring a higher level of consciousness to the table. Thank you so much for what you bring to the world, it is truly extraordinary. Cheers from down under." – Paid-up subscriber Angelo C.
"Hi Porter, I just wanted to let you know that your response yesterday in the Digest brought me to tears. I am so happy to hear about your spiritual pursuits. Please know that you, your family and everyone at Stansberry are in my daily prayers. Your life's work has helped many people, me included." – Paid-up subscriber David L.
"Porter, I'm getting ready to retire and realized about 35 years ago that I mattered more to my family than my job did. I made sure to quit about 4:30 every day and exercise five days a week. I still did well at my job and was able to start investing. I have made the most money since becoming an Alliance member, and my family is in a very good position. I don't meditate, but turn to the Saviour daily. I figured I would out last you, but glad to hear you realize what is most important. Now you will probably out last me, and get to help my kids with their financial futures. Kudos!" – Paid-up subscriber Alan B.
"Porter, I was so relieved to learn (after reading the Digest you wrote) that you are okay. And more importantly, you're much better than okay. You're on the path to making vast improvements in your life, improvements that will pay huge dividends over time. As an Alliance member, I have been, and know that I will continue to be, an appreciative beneficiary of your efforts. You are like family to me, and I really appreciate the information you share with us, especially the personal info. What you wrote in Tuesday's Digest really resonated with me, especially the meditation part. Rest assured, you are loved by many, and please know that we are all pulling for you! Thank you." – Paid-up Stansberry Alliance member Bryan T.
"Wanted to thank Porter for his openness on sharing what he is doing to balance his life and enable greater happiness. I have always respected Porter's intellect and wisdom. I am very glad he is turning his attention to improving his life and the lives of others that he is able to influence. Thanks for building a great company and thanks for spreading your wisdom into a wider realm." – Paid-up subscriber Tim D.
"Porter, thanks for sharing. Your humility and openness are greatly appreciated. Even if it isn't financial advice, you are still 'learning' me." – Paid-up subscriber Matt V.
Regards,
Justin Brill
Baltimore, Maryland
February 20, 2019