Canvas Secondary

  • As Seen On:
  • Kitco
  • Barron's
  • Investing.com
  • Mining.com
  • The Gold Report

Gold & Gold Stocks are the Last Hope for Most

Tell this to a baby boomer or a middle aged person and they would be quite skeptical. Their neighborhood financial advisor or planner doesn’t advocate Gold. It is too dangerous. It could drop to $500. Gold stocks? Hell no! After failing to get you out of stocks not once but twice in the last ten years, your advisor tells you its time to play it safe. You need to save more.

As we should know by now, when it comes to the capital markets, conventional advice is eventually deadly. It identifies trends too late and fails to warn when risk increases and reward diminishes. However, most people would rather feel more comfortable than be a contrarian. Most people are too weak minded to find the answers, which usually oppose the herd.

Look at the capital markets today and the trends are clear. With global growth likely to remain low to stagnant for quite some time, stocks and commodities will not help your portfolio. Treasury bonds are performing well but the threat of severe inflation and sovereign bankruptcy looms. Precious metals are the only winner, yet the herd doesn’t see it that way. To them, the bull market in precious metals isn’t even a bull market. It is an aberration. It is a mistake.

The vast majority looks at the 1980s and 1990s as the norm. This is especially true of the financial industry. They don’t make any money from Gold and Silver so they don’t pay attention to it. It is only a nuisance. When will the financial media care about Gold? The answer is when it can make money selling Gold-related ads and products.

It is interesting how much has changed. Fifty or sixty years ago you were supposed to have 10% invested in Gold and that was regardless of market conditions. Today, the mainstream advisors and analysts that like and recommend Gold, own less than 10%. They like it but they are afraid of it. It reminds me of a quote: The philosophies of one age have become the absurdities of the next.

Most people look at the last 30 years as the norm, when the norm was the 170 years before that. Monetary systems are restructured several times per century. It’s nothing new. A monetary system without an anchor will ultimately fail. The greatest generation and their forefathers knew this and owned Gold. It paid off in their time. Those with a long view of history know that the real risk is the current monetary system and not Gold/Silver. Every fiat currency in history has failed. Is it doom and gloom to expect the current monetary system to fail? No, its just prudence and foresight.

Now that we’ve established this let’s refute the bubble calls. Because of the recent collapse in so many markets and industries (technology, internet, homebuilding, mortgage finance, banking, oil) investing professionals and the public are now quite wary of any market that rises materially. Most will miss the coming explosion in precious metals because they are too scared of an eventual collapse. Yet, they don’t even realize that precious metals are not even close to bubble territory.  If precious metals were really in a bubble then please explain this chart to me:

As of last year Gold and gold shares were 0.8% of global assets. If we are in a bubble then what was 1981? A volcano?

And how are we in a bubble when the gold stocks have yet to breakout to new all time highs. (See the chart below). In fact, one of the best times to buy is when a market is on the cusp of a breakout to new all time highs. There are numerous examples of this in history.

Moreover, gold stocks are still much closer to historic lows when compared to common stocks. See the chart below of the Barron’s Gold Mining Index against the S&P 500.  It is highly probable that gold stocks will outperform common stocks over the next five years.

Meanwhile, even though Gold has outperformed stocks for 10 years, this chart suggests that outperformance has much more room to run. This is why one has to look at 100 years of history and not 10.

The reality is that too many investors will continue to make terrible decisions either on their own or through a mainstream advisor. They are convinced that precious metals are risky. You can’t even get them to put 5-10% of their assets in precious metals. We are talking about the only bull market! This isn’t 2003-2007.

Going forward, it is a near certainty that precious metals will outperform. Why? This is what happens in a major credit contraction. There is a run for real money. It doesn’t matter if there is hyperinflation or deflation. Since the crisis began we’ve had strengthening deflationary forces. Gold has advanced to a new all-time high and even higher against most currencies. Quality gold stocks have surged to all-time highs. Silver has outperformed nearly everything except Gold.

Amazingly, there is still time to get involved before the precious metals accelerate, leaving other markets in the dust. Looking to learn more? My publishers and I are hosting a CME-sponsored educational Webinar that will explain and educate on all things Gold, Silver and the mining stocks. It is completely free and you can sign up here.

We also maintain a professional service, which helps guide traders and investors through this bull market. We offer a free, no risk 14-day trial, which gives you access to a month’s worth of updates!

Good Investing and Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com
http://www.thedailygold.com


[ad#Webinar-sidebar]

, , , , , , , ,

12 Responses to Gold & Gold Stocks are the Last Hope for Most

  1. Jason 07/06/2010 at 7:55 pm #

    Jordan,
    Based on your chart of 0.8% of all total assets on gold and gold stocks, the value of these assets would have to go up 25 times higher to be in those historic bubble territories for gold. I will say this again, but 99.99999% of Wall St professionals do not understand gold and what gold is really all about. They HATE gold in fact.

    They will change their minds the higher gold rises. It might be the only game left in town for a little while while the money system resets and world governments figure out how to replace the dollar as WRC. Although I don’t think the world will stop so Silver, Oil, Copper, High Grade Iron Ore, Nat Gas and others will also do well. Those commodities will be even more volatile though.

    Also, gold is being repriced by the market as money. It’s not just a commodity. When economies are doing well and there is prosperity abound, gold does not get its monetary premium. Most Wall St professionals do not understand this either…

  2. Jordan Roy-Byrne, CMT 07/08/2010 at 6:24 pm #

    Jason, I enjoyed your comment.

    I agree about Silver…not sure when other commodities will outperform Gold. The economy will need to recover for that to happen.

Trackbacks/Pingbacks

  1. More Clueless Mainstream Commentary on Gold. « Timeandcycles - 07/12/2010

    […] zero research to back this claim, because there isn’t any! Barely anyone owns precious metals. Take a look at the charts in my last editorial. Less than 1% of global funds are invested in the precious metals sector. By the way, that figure […]

  2. More Clueless Mainstream Commentary on Gold - 07/12/2010

    […] zero research to back this claim, because there isn’t any! Barely anyone owns precious metals. Take a look at the charts in my last editorial. Less than 1% of global funds are invested in the precious metals sector. By the way, that figure […]

  3. Why So Much Ignorance on Gold? | Gold Blog - 07/13/2010

    […] zero research to back this claim, because there isn’t any! Barely anyone owns precious metals. Take a look at the charts in my last editorial. Less than 1% of global funds are invested in the precious metals sector. By the way, that figure […]

  4. More Clueless Mainstream Commentary on Gold | J&T Coins LLC Blog - 07/14/2010

    […] zero research to back this claim, because there isn’t any! Barely anyone owns precious metals. Take a look at the charts in my last editorial. Less than 1% of global funds are invested in the precious metals sector. By the way, that figure […]

  5. Gold Stocks and Silver Nearing Huge Breakout | The Daily Gold - 08/25/2010

    […] of a historic move in precious metals and precious metals companies. Don’t believe me? Consider that at the end of 2009, 0.8% of global assets were in the precious metals complex. Folks, …Despite what you may read or hear, virtually no one owns precious metals, and those that do […]

  6. Gold Stocks and Silver Nearing Huge Breakout – 8/26/10 « Silver and Gold outlook - 08/26/2010

    […] inception of a historic move in precious metals and precious metals companies. Don’t believe me? Consider that at the end of 2009, 0.8% of global assets were in the precious metals complex. Folks, …Despite what you may read or hear, virtually no one owns precious metals, and those that do don’t […]

  7. Gold Stocks and Silver Nearing Huge Breakout | Gold Blog - 08/26/2010

    […] inception of a historic move in precious metals and precious metals companies. Don’t believe me? Consider that at the end of 2009, 0.8% of global assets were in the precious metals complex. Folks, …Despite what you may read or hear, virtually no one owns precious metals, and those that do don’t […]

  8. Don’t Get Shaken Off the Gold BullInvestor Cafe - 09/28/2010

    […] we can’t forget the anemic money flows into this market. Even after a 10-year bull market, less than 1% of global managed assets are in this sector. Barrick Gold came up with 0.7%. As of the end of 2009, $400 Billion (of $55 […]

  9. Welcome to GoldInstitute.net » Posts » Don’t Get Shaken Off the Gold Bull - 10/02/2010

    […] we can’t forget the anemic money flows into this market. Even after a 10-year bull market, less than 1% of global managed assets are in this sector. Barrick Gold came up with 0.7%. As of the end of 2009, $400 Billion (of $55 […]

  10. Barometers For Investments | Finances and Investments - 09/23/2011

    […] Because when the stock market becomes a scary place to invest, a lot of investors turn to gold. See chart. In general, when the stock markets becomes depressed, the price of gold goes […]

Leave a Reply