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Gold zig-zagged over the past week, sliding over the $2,000 only to slip back down to $1,932 this morning, leaving many investors feeling frustrated.
I don’t blame them.
But rather than grind your teeth, I recommend you see this for the opportunity is it. We’re at the beginning of a bull market in precious metals. This pullback is a chance to buy.
At least, that’s what the smart money is starting to see.
Warren Buffett’s Berkshire Hathaway Corp. announced it was taking a stake in Barrick Gold (NYSE: GOLD).
Mr. Buffett has company. Big funds and big investors including Bridgewater Associates, DoubleLine Capital, Paul Tudor Jones and more have all recently announced they are upping their gold and miner holdings. Welcome to the party, boys!
Then, the Wall Street Journal interviewed Mark Bristow, the CEO of Barrick Gold. In the interview, he ticked off some facts on the gold industry that investors should be aware of:
Fact 1: “We are definitely past peak gold,” Bristow said. He estimates that new metal added to miners’ reserves since 2000 replaces only half of the gold they mined in that period.
Fact 2: The gold industry’s exploration budget was $4.44 billion last year, 63% lower than its record high in 2012. The average cost to find an ounce of gold was $62 between 2009 and 2018, more than double the cost for the previous decade.
Fact 3: The average mine grade (at gold mines) has fallen from over 10 grams a ton in the early 1970s to around 1.46 grams a ton last year, according to Metals Focus, a precious-metals consulting firm.
As I’ve said before, I think we’re in the early stages of gold’s bull market, and it seems like the big boys are finally starting to notice.
There are many forces driving it. But it’s against the backdrop of a weaker economic recovery in industrialized countries and a weakening dollar. That “background noise” will incentivize investors to stay in gold, with its "safe-haven" status.
I recently sent my Gold & Silver Trader subscribers my “Dazzling Dozen,” a list of miners, developers and explorers. In other words, my short list of stocks I want to own for the next blast-off in gold.
And the blast-off is coming — there’s little doubt about that. I’ve pounded the table about incredible forces lining up to push gold to $3,000 and beyond.
The thing all the stocks on my list have in common — besides being gold miners — is that we’ve owned them all in Gold & Silver Trader before.
That’s part of our strategy in that service — buy a stock, watch it go up (hopefully) and then set a protective stop to lock in gains. That way, if gold and miners continue going higher, we can go along for the ride to profit town. If gold and miners pull back, we get stopped out with a gain.
To sum it up: I’m making my list. I’m checking it twice. When gold ramps up again, owning these stocks will be oh-so-nice.
Sure, we can see a deeper pullback in gold before the next ramp-up. Gold always zig-zags. That’s okay. The metal is in a big bull market. This is going to be SO much fun.
So get started on your own gold wish list.
All the best,
Sean
