-By Contributing Editor Doug Hornig
Paydirt editor Doug Hornig addresses exactly how a revaluation of gold could take place. There are already hints from the Fed itself, and the benefits to the government are many. What would happen to the gold price? And to gold stocks? Doug shows how a gold revaluation would make a lot of sense…
Ok, right up front, I do not know of a secret place where you can buy gold for one cent on the dollar. Sorry. But I’ll come back to that $42 number in a moment.
The gold price, which went flat in late October, has lately turned north again, adding $160, or about 4%, since November 20—as I write on December 2. The miners have more than kept pace, with the large-cap GDX rising 10.5% over the same period and the small-cap GDXJ vaulting higher by more than 13.5%.
Granted it’s a very short-term sample size, and by the time you read this, prices may have fallen back. But these are big moves. Is it just an anomaly? Or are we beginning the next leg up after the ongoing bull market in precious metals took a breather?
Or … might something
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-Jeff Clark, TheGoldAdvisor.com
Is a stock market crash coming? If so, how do we invest?
Many pundits have called for a crash for some time now, some right after the last one ended.
To be sure, another crash will come, sooner or later. I don’t pretend to know when it might occur, and trying to predict it is akin to a fool’s errand.
That’s why I’ve adopted this motto, one you might find helpful, too:
Prepare, Don’t Predict
We can speculate about it all we want. It can even be fun to debate. But short-term crystal balls everywhere are broken.
I encourage you to worry less about predicting when a crash might occur and a little more about actively preparing for one. It’s actually liberating, and heaps more important than trying to figure out, or worry about, the timing.
That begs the question, how do we prepare for a crash?
You Are Always Speculating
Think about it: every investment decision you make is a speculation.
Dump all your stocks? Doing so could mean you miss out on some big gains. Buy bonds? The 60/40 portfolio has proven to be unreliable.
Just own gold? Gold gets sold during crashes too,
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If Taylor Swift’s team can sell out stadiums, imagine what they could do with the top-performing asset of the year…
By Doug Hornig
-Paydirt editor Doug Hornig is back with an insightful chart on gold’s surges in the bull market so far, what technical analysis says is the intermediate top in the gold price, and how the diggers are on board, too…
Is your head spinning?
Mine, too.
The Calm Within the Storm
The past year has been a whirlwind of craziness: a presidential election with one candidate dropping out and the other winning handily; a continuing orgy of money creation; inflation that is or isn’t a problem, depending on whom you ask; an economy that is either booming or cratering, again depending; two major wars raging; an upheaval in international trade; historical alliances under threat; tariffs on, tariffs off; the rise of openly socialist politicians, both here and abroad.
And did I mention the federal debt careening past $37 trillion, with not the slightest intent in Washington to bring it down?
Whew.
Somewhere in there, is there one element of stability? There is. We are in the midst of a bull run in gold that has held steady through it all. And this year, those who pull it from the ground have joined the party. Let’s take a
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By Contributing Editor Doug Hornig
Should we really listen to what Goldman Sachs says? My friend and Paydirt editor Doug Hornig has an insight you might find interesting—and potentially useful as an investor.
The World is a Dangerous Place
I’m writing several days after Israel launched a massive air attack on Iran, with the intent of preventing that nation from developing nuclear weapons.
Obviously, this shakes up global markets.
Crude moved higher, since there is concern that Iran might attack tankers in the Strait of Hormuz, or close that waterway with some combination of mines, drones and surface suicide vessels. About 20 million barrels of oil a day pass through the Strait—nearly one fifth of global shipments. But the rise has been only about 10%.
Stock prices initially slid lower, though not dramatically, and have recovered much of the lost ground. The gold price jumped, as we would expect, edging toward $3500/oz., but it too has since pulled back.
Uncertainty reigns. The world wonders whether this new war will expand, and by how much. Will the U.S. get drawn in and become a more active player? If Iran attacks any American bases in the Middle East, that’s a
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-Doug Hornig, Contributing Editor
Accomplished fiction and nonfiction author and Paydirt Editor Doug Hornig has a message about those who are watching gold’s volatility and are tempted to trade it—and what the credit market is warning…
Panic
For a couple of weeks, Everyone’s Selling Gold was one of the dominant headlines in the financial sector—as the gold price tumbled by over three hundred dollars an ounce from its all-time high on April 22.
It was a mini-panic, and I had to chuckle. All that it really proved is that financial pundits and prognosticators need something to write about. Otherwise, you know, what would they do with their days?
For whatever it may be worth, most commentators ascribed gold’s meteoric rise since 2023 to concurrent global uncertainties of various economic and political kinds. Will wars be settled or rage on? Is the U.S. economy robust or on the brink of recession? Has inflation been tamed or about to shoot higher?
Obviously, those are questions which can be answered only with the passage of time. Sure, we’d all love to know in advance what happens next. But making a prediction, as Yogi Berra allegedly said, is difficult, especially about
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-Contributing Editor Doug Hornig
-If you don’t recognize the name, Doug is a good friend and was the editor of Paydirt, who helped take the book to the next level after my first draft. You can read about him in the acknowledgements, including my absolute favorite novel of his. He’s been in the precious metals industry since dinosaurs stopped roaming the earth and has a wealth of knowledge to share with us, starting with a question some investors have asked. -Jeff Clark, TheGoldAdvisor.com
Off the top, I’d like to thank Jeff for giving me the wonderful opportunity to directly communicate with current and prospective followers of TheGoldAdvisor.com. I expect to be doing so on a regular basis, and aim to be both informative and entertaining.
Now to business.
In order to determine why it isn’t too late to buy gold, we need to consider why many people might be inclined to think that it is too late.
First and foremost, gold has been on an explosive bull run, as you can see in the chart below. After being essentially flat for the first 3½ years of the 2020s—with strong resistance at $2,000/oz.—it took off for higher ground
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-Jeff Clark, TheGoldAdvisor.com
You don’t need me to tell you that mining stocks are at depressed levels.
But how cheap they are right now just might shock you…
CHEAPER THAN DIRT—FOR REAL!
I joked to someone at a conference back in 2018 that mining stocks were probably as cheap as dirt. It got me thinking, so when I got back to the office I had a researcher run the calculations—and was stunned at what we found.
Even better, I liked how mining stocks performed shortly after we reported how cheap they were. Over the next 18 months GDX gained 101%. You basically doubled your money in a short period of time by investing in a static index fund.
Why? They were dramatically oversold and poised to jump at the smallest catalyst—much like the setup we have today, as you’ll see.
Since we’re still near the bottom of the typical mining cycle, I updated our tables and calculated the price of price per tonne of each explorer and developer in our portfolio with a Resource and compared it to the price per tonne of topsoil, mulch and compost. (These forms of dirt are typically sold by the cubic yard,
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-Jeff Clark, TheGoldAdvisor.com
How safe is your money?
I’m not talking about your portfolio’s performance. I’m referring to its accessibility, its privacy, but most importantly, how vulnerable it is to other entities getting access to it, restricting it, or even confiscating it.
Did you know that more bank branches closed during Covid than in the previous recession? Many banks around the world closed during the Great Financial Crisis, too. Cyprus was the most notorious example: withdrawals were banned, closures lasted weeks, withdraws were severely limited when they did reopen, and transferring money out of country was forbidden. And they were considered a world class banking country!
- Whenever there’s a crisis, banks are not on your side. Neither are governments—they may say they are, but your money could be part of their “solution.”
You need a plan to get through crises, when your money is at its most vulnerable.
But it’s about more than the banking system…
Political Insurance
The whole idea behind international diversification with gold is that no one government has total control over your financial options. It allows you to escape the whims of a single governing electorate. It frees you from
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-Jeff Clark, TheGoldAdvisor.com
I’ve seen many charts over the years. Most are interesting, but to really grab my attention requires something exceptional.
It’s got to be compelling, of course, but what makes the most gripping chart for me is this: something that could directly affect my life or my investments. One that makes me ponder it long after I first saw it.
This is one of those charts.
That’s because if it plays out as it’s currently unfolding, it has huge ramifications for us, both as consumers and investors.
This chart shows the path of the CPI from 1966 through 1983 (black line). The gold line tracks the CPI from 2013 to today.
The correlation is eerie. They basically have followed the same pattern for the past 12 years.
The path of the CPI today is very similar to the path of the CPI back then. The correlation is over 90%.
Also notice there were multiple jumps of prices in the older CPI. And each spike was higher than the one before, until it got under control. If we were to track what happened back then, it’s not hard to see we could be headed
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