Backing Up the Gold Stock Truck

Written by Nick Hodge
Posted July 17, 2019

I have been backing up the truck on quality gold names.

We could tiptoe around it… We could talk about negative rates and global debts and currency crises…

But the fact of the matter is we’ve been talking about those things for years. 

The golden goose has now come home to roost. 

We are technically in a gold bull market, having closed out June above the key technical level of $1,362. 

And gold stocks are starting to have their turn.

The Dow Jones and S&P 500 are setting records. People are wearing “Dow 27,000” hats. 

But guess what?

Gold stocks are outperforming the record-setting broad market for the year. 

Gold vs Dow 2019 YTD

With gold and the broad market now moving higher in tandem, you have to ask yourself: What gives? How can stocks and safe havens be moving higher together?

The answer, as we’ve written to you about in these pages before, is that the unprecedented monetary policy experiment of the past decade is approaching its endgame. To get the safety of bonds, investors must now submit to negative yields, at which point mattresses become “safer” than bonds. 

Rich investors no likey that. If bonds are negative then gold looks infinitely better by comparison. 

So you’re starting to see a rotation of capital in both traditional and newfangled safe havens, which is one reason Bitcoin is back in bull territory. 

A few points… 

First... I’m not talking about your dumb neighbor here. I’m talking about the early money starting to rotate out. Main Street isn’t supposed to know about this yet. 

Second... It doesn’t take much capital to move the haven markets as they are much smaller relatively. Throw a whale into a farm pond and it’s going to spill over. Gold stocks are about to spill over.

Third… I said about to. While gold stocks are up 20-25% this year, they have a heckuva runway and some catching up to do. 

9-year Gold Stocks vs Dow JonesAnd finally… This isn’t four horsemen stuff. Propelled by global central banks, the broad market could go higher still. 

That isn’t the point. 

The point is that the rotation into gold has begun and the game is back on. 

And that means you need to be buying the quality gold names now.

Call it like you see it,

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Nick Hodge

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Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.

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