'September could get ugly'... History says a pullback is likely... What about the 'Melt Up?'... The next big gold rally could be starting right now... 'The time to buy is now'... Last call for the 'Melt Up Millionaire' project...

'September could get ugly'...

Longtime Digest readers know September is historically the worst month of the year for U.S. stocks.

And it isn't even close... It's the only month in which the Dow Jones Industrial Average has closed lower on average over the last 20, 50, and 100 years, according to data from research firm Bespoke Investment Group.

But this year adds several additional wrinkles to the usual seasonality...

According to Jeffrey Hirsch – editor of the Stock Trader's Almanac – September has been particularly weak in years following U.S. presidential elections. And this weakness has been even greater in the first year of a new Republican administration. He believes "September could get ugly" this year.

In addition, Hirsch notes two other patterns that apply this year as well. And they send a slightly different message...

In years when all three major U.S. indexes – the Dow, the S&P 500, and the Nasdaq Composite – were positive in January, September has closed higher on average. Likewise, in the seventh year of a decade, September often performs better than usual.

But it's important to point out that in both of these scenarios, October then tends to be far weaker than usual.

In other words, all five of these patterns suggest the market could struggle over the next month or two.

We continue to believe a pullback is likely. Stay long, but keep a close eye on your stops.

What about the 'Melt Up?'

Now before we receive another flood of angry e-mails, let us be clear...

As we've discussed in several recent Digests, our near-term caution does not necessarily contradict Steve Sjuggerud's Melt Up thesis.

In fact, both of our resident "bulls" – Steve and Dr. David "Doc" Eifrig – have said a pullback or correction is possible. But Steve believes the "Melt Up" will continue either way.

No one can predict the future of course, but Steve follows a number of long-term indicators closely... and none are signaling trouble right now. The market's "vital signs" say the bull market will continue awhile longer. (And Doc Eifrig agrees.)

This means any weakness we do see in the next couple of months is likely to be a buying opportunity, rather than a reason to sell.

Last call for the 'Melt Up Millionaire' project...

If you want to earn the biggest profits during the final "inning" of the bull market – or more important, if you missed out on the big gains of the past several years and need to make up for lost time – you owe it to yourself to learn more about Steve's Melt Up Millionaire project.

Again, this service involves some risk, and it isn't for everyone... But if you're looking to speculate on the Melt Up – and get out safely before the meltdown begins – there is no better or easier way to do so.

The Melt Up Millionaire removes all the guesswork... It shows you exactly what stocks to own... what percentage of your portfolio to allocate to them... and when to sell.

Steve believes this portfolio will produce weighted gains of at least 100% over the next 12 months or less... And he's so confident, he's willing to guarantee these gains in a way we've never offered before.

But if you're interested in learning more, we need to hear from you soon. The Melt Up Millionaire project will close to new subscribers tomorrow. Click here for the details.

The next big gold rally could be starting now...

Regular readers know our colleague Ben Morris has been watching gold closely for months. In particular, he's been waiting for gold to break out of a long-term pattern before turning super-bullish again. We shared the following excerpt from his excellent DailyWealth Trader advisory back in the April 12 Digest...

When we look at a longer-term chart of gold, we see that gold faces a big resistance level at about $1,300 per ounce...

So even if gold breaks through its shorter-term resistance, we won't get aggressive in the sector until gold breaks though this longer-term resistance level.

This week, after months of fits and starts, gold finally broke above this critical $1,300 level...

And Ben believes this could finally be the start of the next big rally in precious metals. As he wrote in yesterday's DailyWealth Trader...

On Monday, gold jumped $17 per ounce (or 1.3%) to a 10-month high of $1,315 per ounce. It took out a major resistance level that we've been watching for close to a year...

Gold has been trading within a giant "wedge" (also called a "triangle") since 2007. Here's a quick recap of what that means...

"Support" and "resistance" are two of the most important concepts in chart-reading. "Support" is a level at which folks tend to buy an asset and prices often stop falling. "Resistance" is a level at which folks tend to sell and prices often stop rising.

A "wedge" is a chart pattern in which the asset's support is a rising trend line and its resistance is a falling trend line. The asset bounces around within a smaller and smaller range. And when it breaks out, it often does so in a big way.

It's like letting go of a compressed spring. And the bigger the wedge, the more the asset is likely to move. In the chart below, you can see that gold just broke out of a massive wedge...

As Ben explained, when an asset breaks out of a wedge – either to the upside or to the downside – you can figure out a rough price target based on the breakout point. And in this case, it suggests gold could be headed much higher...

To keep things simple, let's say the first point on the bottom of gold's wedge was $700 per ounce (it was right around there in 2007). The first point at the top of the wedge is $1,900 per ounce. That's a $1,200 range.

You can use $1,200 from the breakout point as a price target. Since gold broke out of its wedge at about $1,300 per ounce, the chart pattern suggests a price target of $2,500 per ounce.

That's an extremely optimistic price target... But it is possible. And importantly, you don't need gold to reach anything close to $2,500 per ounce to make a lot of money... When gold starts to rise, the gains in gold stocks can be huge.

As longtime readers know, this is because gold stocks are leveraged to the price of gold. This means they can rise many times more than the price of the underlying metal. More from Ben...

Think about it this way... If a gold miner makes a $200 profit per ounce when gold sells for $1,300, it will make closer to a $300 profit (a 50% increase) when gold sells for $1,400. Costs don't rise with the price of gold... Only profits do.

The same is true for the miners of other precious metals and the prices of the metals they mine. And as I've said before, both silver and platinum are cheap relative to gold right now. So those metals and stocks may have more upside.

Of course, this breakout isn't the only reason to own precious metals today...

As Ben reminded readers, they're also one of the most dependable forms of "financial-disaster insurance" you can buy. And like us, he believes it would be incredibly foolish not to own some today...

Gold and silver have been used as money for thousands of years. They are "safe-haven" assets. And they have a long track record of preserving wealth. So both are natural choices in the event of a global crisis...

If you didn't trust paper bills issued by governments, where would you turn? What would you accept for your goods or services? A digital currency, like bitcoin? Maybe... but widespread acceptance of digital currencies is still a long way off. Around the world, people would accept gold and silver... just like they've always done.

With North Korea firing missiles and with U.S. stocks trading near all-time highs, more and more investors will be looking to preserve the wealth that they've accumulated. More and more people will buy gold and silver.

The chart above shows that the story is starting to play out. It's the market confirming what we've been saying all along... You want to hold some of your wealth in precious metals, just in case...

In short, if you've been waiting for a low-risk buying opportunity in precious metals, Ben says you now have it. But as always, proper position sizing is important...

As a general guideline, I suggest holding 5%-10% of your net worth in a combination of physical precious metals and related stocks, with the majority in the physical metals.

Now that gold has broken out, though, you may want to increase your holdings a bit. I'm not recommending anything crazy... If you were at 10% of your net worth before, a 12%-15% allocation may make sense.

Remember, as prices rise, the percentage will likely grow. And the metals and stocks will experience plenty of volatility along the way. You don't want to hold so much that a big drop will keep you up at night...

What should you buy? If you don't own any physical metals, start there. If you don't own any gold and silver stocks, a diversified fund like GDX is a great place to start...

Whatever you do, make sure you have some exposure to precious metals. Gold just broke out of a 10-year-long wedge... And much more upside is likely. This time to buy is now.

"New 52-week highs (as of 8/29/17): Apple (AAPL), PowerShares Chinese Yuan Dim Sum Bond Fund (DSUM), Euronet Worldwide (EEFT), National Beverage (FIZZ), iShares China Large-Cap Fund (FXI), iShares U.S. Aerospace and Defense Fund (ITA), iPath Bloomberg Copper Subindex Total Return Fund (JJC), KraneShares E China Commercial Paper Fund (KCNY), Lockheed Martin (LMT), iShares MSCI Global Metals & Mining Producers Fund (PICK), ALPS Medical Breakthroughs Fund (SBIO), Guggenheim China Real Estate Fund (TAO), ProShares Ultra FTSE China 50 Fund (XPP), Direxion Daily FTSE China Bull 3X Fund (YINN), and short position in Brinker International (EAT).

In today's mailbag, thoughts on the "death of retail"... and several folks respond to paid-up subscriber Frank T's accusations. What's on your mind? Let us know at feedback@stansberryresearch.com.

"In regard to your recent comments on Amazon vs. everyone else, I thought you might like to hear about my latest experience with them. I recently shopped for an electric razor online. Some of the big name brick and mortar retailers which also sell via websites priced the item ABOVE suggested retail. Some by almost double, I kid you not. Amazon was 9 dollars below suggested retail. Then the other retailers wonder why they can't compete??? Apparently they're making up for declining sales by raising prices. Yeah, that should work well. Hard to believe some people actually get paid to make decisions like that. Best regards." – Paid-up subscriber B.D.

"Loved your response to unfounded criticism [about Steve]. Another positive China indicator; a friend noted the crowds of Chinese in St Petersburg, Russia on a trip this summer. Apparently travel restrictions have been eased." – Paid-up subscriber Mark Totman

"Justin, awesome response to Frank '30 years experience as a FA.' Thanks." – Paid-up subscriber Jim Callahan

"Justin's response to this guy was awesome... I love it." – Paid-up subscriber Cord K.

"Porter, I read your reply to Frank. I think one line that you wrote tells all... 'As I believe anyone who has been reading our work for 10 years or longer would tell you... ' The fact that you have readers that have been loyal customers for 10 years – and I know I am getting close – says everything about the value Stansberry gives. I wonder how many other letters can say they have readers that have been with them for 10 years? I hope to be reading for many 10 year periods to come. Thank you." – Paid-up subscriber Neil S.

"Honestly, I didn't read Frank T's original complaint, but can gather its meaning based on Porters response. I'm writing to say thank you... I've been subscribed to True Wealth for a long time, maybe ten years, and I'm shocked at the quality information for the price. I've subscribed to other, more expensive products in the past and True Wealth is by far the best publication in my opinion. Not only Steve's recommendations, but his information that motivates you to read between the lines and do your own research on the areas/sectors he talks about. True Wealth is the best value at Stansberry. Thanks for that!" – Paid-up subscriber Chris

"Count me in as one of the investors who has received ideas from True Wealth that have turned into lucrative investments. I have come to see the advice from Steve and Porter to be incredibly thoughtful and accurate. I consider all the advice, in hind sight, to be well worth the money. Just the education alone is more valuable than the cost of True Wealth. I have received more in profits and education than what I will pay for my subscriptions. I look forward every day for what I might learn next. Thank Porter, Steve, and staff. Frank is among the minority as to satisfied customers. Keep up the good work. Don't let individuals like Frank ruin it for the rest of us." – Paid-up subscriber W.B.

"Response today to Frank was very well written. A few years ago, I paid $6,000 to be a Flex lifetime member. I'm a retired school psychologist who never earned more than a teacher's salary. I retired a few years ago, and after going through the drops of 2001 and 2008, I realized that nobody cares more about my money than I do. So I took my 403b and put it into a self-directed IRA.

"The learning has not come easy. I've subscribed to other services that did not make me any money (nor did they teach me anything). It was a hard decision to spend that much money, but today I do not regret one penny of it. Over the last few years I've gotten a University-style education. It was a lot of reading and studying but I have learned so much in the process. Years ago, someone said to me 'Ignorance is cheap, education is expensive.' Education is what I feel that I get from Stansberry.

"Steve's service is without a doubt worth the money. I now love seeing the green in the stocks in my account that Steve has recommended. The last 'professional' money manager I used made a lot more money from me than I made from his recommendations. I lost a substantial amount of money. Steve told me exactly what percentage of my account to put into his recommendations. What could be easier? I guess giving your money to someone else to manage could be easier. Every day I read and study everything I get from Stansberry. Thank you." – Paid-up Stansberry Flex member I.Z.

Regards,

Justin Brill
Baltimore, Maryland
August 30, 2017