Uranium prices are up another 10 cents this week. The US is meeting with China in Washington, hoping for progress on the trade war, which could boost all commodity prices. On the other hand, Italy is in recession—and EU powerhouse Germany might be as well.
There’s a lot going on that affects resource speculators, and I’ll have more to say on these other topics soon, but I want to stress the opportunity I see in precious metals today.
Before I do, however, I want to remind readers that I’m not a cheerleader. Read through my past work, and you’ll see that throughout 2018, I said I was mid- to long-term bullish, but was concerned about near-term weakness. And indeed, gold ended the year in the red.
But markets change. I’ve become much more bullish on precious metals in the near term. As I wrote yesterday regarding the “Powell put,” whether it’s real or merely perceived, a more dovish Fed policy is bearish for the US dollar and bullish for gold.
This is happening right now.
That’s already having a very positive impact on the gold and silver stocks in my portfolio. It’s the bigger picture, however, that prompts me to write this call to action today.
As you can see—and as long-suffering gold stock speculators know—gold has been rangebound for years. Taking out the 52-week highs in the $1,350 range would certainly help today’s profitable producers have a great quarter and would boost gold stock prices. But it wouldn’t show gold breaking out of its range. It wouldn’t make investors view gold any differently.
Gold rising and staying above $1,400 would make investors around the world sit up and take note.
Breaking out of its multi-year price range could create a lot more demand and drive prices even higher. I think that’s the likely outcome if Wall Street is slumping and global markets are retreating at the time.
However, if the Fed really does ease monetary policy, we could see another rally in mainstream equities. Gold’s rise would still be notable, but with the parry back on Wall Street, it wouldn’t be as urgently compelling for most investors. So it’s no sure thing that gold goes vertical after breaching the $1,400 level. It might enter a new phase of consolidation in a new range, or even start retreating again until something else changes.
Fortunately, we don’t need gold to keep on heading north after taking out $1,400 in order to make a lot of money. Remember what happened in 2016?
After the bear mauling of 2015, gold rose almost 30% in 2016—but many gold stocks rose by triple digits.
Notably, this was with gold barely coming within range of its 2014 highs. Gold topping $1,400 would be a new six-year high and a potential game-changer.
Of course, I have no crystal ball. I cannot tell you what will be. And past performance is never a guarantee of future results. My only promises to my readers are that I’ll do my best, I’ll tell the truth, and I’ll put my money where my mouth is.
But… I am a speculator.
I fully expect every gold and silver stock in my portfolio to deliver triple-digit gains as gold heads up toward $1,400.
The very best stocks could see four-digit gains if gold keeps heading higher.
If that sounds too good to be true, look at the 2016 chart again. Exactly what I’m saying happened just three years ago. And that fits a pattern I’ve seen many times.
If I sound too excited—if this article sounds like hype—I urge you again to read over my past work. You’ll find that I warned against getting too excited about vanadium prices going vertical last year (and I was right). You’ll find that it took me months to be convinced that the uranium rally was sustainable.
So when I say that I think right now is the time to speculate on gold and silver stocks, it’s not just the same old song.
I really mean it.
If we see the first scenario I described above—of gold continuing to head higher after topping $1,400—there would be time to wait and see, and still profit from the next leg up. Speculators wouldn’t make anywhere near as much money as they would buying in now, with many great gold and silver stocks still on sale, but they could still bag some great wins.
On the other hand, we could see this second scenario I outlined, in which gold consolidates for some time—or maybe even heads lower again, as it did in 2016. If that happens, waiting for gold to hit $1,400 will be too late. The possible triple-digit profits like the ones we saw in 2016 will be gone.
This second possibility is why I fully intend to take profits as I go, by the way. No matter what happens after the next major breakout, I don’t want my readers or myself to get hurt.
Bottom line: I sincerely believe that every speculator who understands precious metals but has been waiting for the right time to buy should get into the market now.
Buy on down days, of course. There’s always another down day. Just because we’re bullish, that’s no need to throw discipline out the window and chase stocks.
If you want to see what I’m buying, you’re welcome to subscribe to The Independent Speculator. You’ll get full access to all my write-ups and current guidance on my favorite stocks—the ones I’m putting my own hard-earned money into.
But if you want to go it alone, that’s fine too. I hope you make a ton of money. And I hope you’ll remember that I gave you this buy signal.
Thursday, January 31, 2:03pm, EST, 2019