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, and a member of the Market Technicians Association. I have the highest credentials among all technical analysts who cover precious metals.
More importantly, 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. No other newsletter does this.
Since I started my newsletter in 2009, my portfolio has risen over 5-fold. That is during a period when GDX and GDXJ have losses. We have outperformed the sector by over 600%.
"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
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 317% over the next 18 months
Buy an exploration company in November 2018 that gained 175% over the next 13 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 300% over the next 10 months
Buy a high quality junior exploration company in June 2019 which surged 149% over the next 2 months
Buy a junior Gold producer in June 2019 that gained 175% over the next 6 months
Buy a junior Gold and Silver producer in June 2019 which surged 100% in only 2 months
Buy a junior exploration company at the end of July 2019 which surged 155% in only 2 months.
Let me share with you some information relating to our process and how we select companies.
There are 100s of companies to choose from. Therefore it's essential to narrow your focus to the fraction of companies that have the best chance to make you the most money.
First, when it comes to junior producers, you need to look for production growth and production growth potential.
Strong production growth often results in a higher valuation in the future. That is a one-two punch for explosive rise in the stock.
The holy grail is exploration success driving organic production growth.
Second, you need to understand the life cycle of a typical junior exploration and junior development company.
The following chart details the life cycle of your average junior company.
As you can see, timing matters, and there are two buy points.
The best time to buy a junior exploration company is when it makes an economic discovery or when it is in the process of growing or adding value to that discovery.
The best time to buy a junior development company is when the company is at the bottom of the curve and getting ready to build the mine.
Finally, you need to learn how to execute buying and selling, which is extremely important.
You should always cut your losses before they become significant losses. We use a mental stop loss of 20% on our positions.
Also, you should let your winners run, but periodically "trim" these positions when they become too big as a percentage of the portfolio.
"I have read Jordan’s work for 8 years and have benefitted from his timely calls for a long time, including in 2019. His understanding, through his extensive research, convinced me to make large bet in precious metals in 2018 with positions in the Gold ETF, Central Fund of Canada ETF, NovaGold Resources and First Majestic Silver. All of these bets paid off handsomely, especially the mining stocks.
As a private investor running my own family office and co-investing up with other HNWIs, my primary goal has always been to make a profit for myself and my clients. Performance is everything. When it comes to the precious metals sector, Jordan one of the only people I go to for guidance and analysis of the market. He understands the market so well (including its history) and knows its pulse better than most."
— 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
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Join me now so you can position yourself to take advantage of the big move that is coming.
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"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