The precious metals sector and gold stocks in particular have been extremely cheap for several years. The reason it has remained that way is Gold has not been able to begin a true bull market because the fundamentals have not been in place.
The driver for bull markets in Gold is declining real interest rates. The catalyst for that is either accelerating inflation and rising inflation expectations or Federal Reserve interest rate cuts.
Since the start of 2018, after conducting a thorough and exhaustive analysis, we predicted that precious metals would begin their next move higher when the Federal Reserve shifted policy from rate hikes to rate cuts.
In 10 of the past 12 rate cut cycles, gold stocks gained an average of 185%. Furthermore, when gold stocks were as cheap as they were now, they gained over 300% during the first rate cut cycle in the early 1960s and over 600% during the first rate cut cycle in the early 2000s.
Yes, as 2020 beckons, the gold stocks have begun to move, but let me explain why there is so much more upside and the best is yet to come.
First, the gold stocks remain extremely cheap on a historical basis.
The first chart shows how cheap gold stocks are relative to the stock market. The ratios are close to the cheapest ever.
Next, take a look at the S&P TSX Gold Index and its rolling return over various time periods.
Consider how oversold the gold stocks are on a very long-term basis. The only comparable periods are 2000 and the late 1950s.
Moreover, the index is trading around the same level it was 38 years ago! You have to go back to the early 1970s and early 1960s to find something similar. Those were spectacular buying opportunities!
Finally, note that the gold stock exchange traded funds GDX (senior producers) and GDXJ (juniors) are digesting their recent gains within very bullish consolidations.
Ultimately, a break above $31-$32 in GDX, projects to a technical target of $50 while a break above $50 in GDXJ, projects to a technical target of $82!
In other words, when the sector is ready to make its next move, it will become explosive once GDX and GDXJ break their resistance levels.
Gold stocks have begun to move off their historic lows but remain extremely cheap on a historical basis. At the only other points in history when they were this cheap, they delivered spectacular returns over the next 10 years.
Specifically, looking out to 2020 to 2021, there is strong potential for a significant move higher.
Gold and gold stocks are poised to perform very well but my focus is on the junior mining sector where select companies could rise 3-fold, 5-fold or even 10-fold over the next 24 months!
I'm Jordan Roy-Byrne, CMT, MFTA, the editor and publisher of TheDailyGold Premium. I'm a Chartered Market Technician, a Master of Financial Technical Analysis, a member of the Market Technicians Association and have spoken multiple times at major mining investment conferences.
I invest my own money and inform subscribers as to what I am buying and selling. My model portfolio is a real brokerage portfolio, which provides complete transparency and accountability to subscribers.
Since I started my newsletter in 2009, my portfolio has risen 5-fold. That is during a period when GDX and GDXJ have performed horribly! We have outperformed the sector by over 600%.
Had you subscribed a year ago, you would have had the opportunity to:
Buy a high quality junior gold producer in June 2018 which gained 248% over the next 17 months
Buy an exploration company in November 2018 that gained 102% over the next 8 months
Buy a junior Silver explorer in December 2018 which almost gained 100% over the next 8 months
Buy a little known nano-cap Silver junior in February 2019 which surged 210% over the next 6 months
Buy a high quality junior exploration company in June 2019 which surged 149% over the next 2 months
Buy a junior Gold producer that gained nearly 100% over the next 4 months
Buy a junior Gold and Silver producer which surged 100% in only 2 months
Buy a junior exploration company at the end of July which surged 155% in only 2 months.
Let me share with you some information relating to our process.
First, we look for the junior companies that own the projects or mines a larger company would want to buy. In short, these are projects with multi-million ounce potential and high margin potential.
Second, we want to buy value. The better values we can find, the less downside potential and therefore more potential upside there is.
With respect to the portfolio, we want to size positions correctly. We seek to overweight the positions we are most confident in while underweighting higher risk but higher potential companies.
Finally, the execution of buying and selling is extremely important. We always want to cut our losses before they become bigger losses. We use a mental stop loss of 20% on our positions.
Also, we should let winners run but periodically "trim" these positions when they become too big as a percentage of the portfolio.
"I have been following Jordan’s work for the past six years and can say he is absolutely one of the best analysts in the field. I am continually impressed by the volume and quality of content Jordan puts out on a weekly basis. His reads on both the fundamental and technical picture allow readers to understand the market and his company analysis and stock selection are excellent. He is one of the best in this industry at finding stocks that can rise 500%-1000%. Understanding the nuances and particulars of this sector requires a steep learning curve. It can take years to fully acclimate yourself. Best to learn from Jordan and let him do the work for you!"
— Collin Kettell, Partner & CEO Palisade Capital
"In an industry full of snake oil salesmen and fairy tale promises, Jordan Roy-Byrne's advisory services and deep comprehension of the precious metals market is second to none. He understands that markets have cycles, in particular highly volatile gold mining shares, and helps his subscribers navigate pitfalls by selecting the right securities which can dramatically outperform while cutting losses quickly. Highly recommended service for those with desire to invest in the gold mining sector."
— Tiho Brkan, Fund Manager for High Net Worth Individuals
"I have subscribed to many investment services over my lifetime. I can honestly say Jordan Roy-Byrne has developed not only one of the most analytically accurate, but also has hit the high water mark by making his analysis feel personalized. In addition to a detailed weekly report, he often sends additional emails with daily observations of not only the physical metals and miners, but also related metrics such as the market and currencies. His service is a great integration of history and future probability that has not only helped me make money, but also avoid losing. It truly is a 5 Star Service at a great price."
— Donovan P. CPA & Attorney
For less than $1/day you get my high quality, actionable research and you can invest right alongside me.
Join me now so you can position yourself to take advantage of the big move that is coming.
"I am simply a pure market-timer for a broad basket of gold stocks and precious metals. Jordan, on the other hand, has provided superior STOCK-PICKING abilities over the longer-term. I am familiar with most gold stock subscription services over the past 30 years. I rarely provide endorsements of any kind, but Jordan's ability to analyze individual gold/silver stocks has been among the top 5 services over the past decade. First and foremost, I respect his integrity. "
— Dr. Jeffrey Kern, Developer of SKI Gold Stocks Trading System