Gold Is the Ultimate Haven

Written by James Dines
Posted February 22, 2020

Publisher's Note: Gold soared past the $1,600-per-ounce mark this week and has shown no signs of letting up as it approaches $1,650.

With this kind of dramatic bull market, we turn to "the original goldbug", Mr. James Dines, and an excerpt from his newsletter, The Dines Letter, for guidance on gold for this year.

Call it like you see it,

Nick Hodge Signature

Nick Hodge

"Nothing is so dangerous as being too modern. One is apt
to grow old-fashioned quite suddenly." — Oscar Wilde

The serious winds of change wafting over the entire world are reflected in “group rotation,” where making money can often depend on buying before a sector gains popularity.

After a long period of rising markets, during which time investors ignored gold and silver, signs that their time is approaching again are becoming evident. See the awesome gains, invisible in a short-term chart, in any long-term gold chart. A major new bull market is coming for the precious metals (gold, silver, palladium, platinum, and rhodium), believe the unbelievable or not, and there’s money to be made.

In the general stock market, almost everybody is directed toward buying stocks these days, but this is the longest bull market in American history, and nothing lasts forever. People once wanted to be rich, but now they seem just to live as if they were.

Many stocks are overvalued, so optimistic investors must confront the question of what to buy amidst the overpriced leftovers and slim pickings. Unafraid to be first, our answer is gold and silver shares, because many of them are still cheap, overlooked and historically underpriced. TDL (The Dines Letter) will explore gold/silver thoroughly this year, and you’ll be getting our conclusions from “The Original Gold Bug.”

“Havens” are favored by concerned investors when they seek safety of capital rather than an unceasing rush toward capital gains. If anything goes wrong, triggering a serious market decline, there would also be a shift to these so-called “havens.” U.S. Treasury bonds are a classic haven, especially when there are higher interest rates, but bonds are sky-high now and, as “The Original Bond Superbear,” we predict bonds are headed for a bear market. We expect that some haven capital will go to Bitcoin. But first let’s focus on what we call “the ultimate haven,” gold, which has provided financial security for eons, such that its value is deeply embedded in the mass psyche.

A new generation of millennials is not totally familiar with gold as a hedge, so we do not expect younger investors to react until fear actually afflicts markets deeply enough. TDL is no longer alone on gold. Even mighty Goldman Sachs has recommended that portfolios include some gold ahead of rising demand, due to market concerns. Goldman is the first large broker to have boldly picked up on our theme, and more Wall Streeters will come.

Goldman sees “gold rising by 9% by the end of June 2020,” and noted that, “Central banks eat up 20% of the global gold supply.” Goldman advised investors to diversify their long-term bond holdings into gold, citing fear-driven demand for the yellow metal, a point TDL covered long ago.

Furthermore, not everyone appears to be aware of the Dines Rule of Gold Countertrend (DIGROC), which is TDL’s discovery that gold often does rise during a declining stock market. Rising gold is a just-in-case haven against the possibility of a stock market decline in 2020 due to unforeseeable concerns.

Another one of TDL’s pioneering theories has been that the entire precious metals group tends to run together, explained by DIWPAT, The Dines Wolfpack Theory. TDL is “The Original Silver Bug,” having pioneered the theory that silvers would generally follow gold’s price. It amazes us that all eyes are on the stock market, yet even those who own some gold are nonetheless oblivious to the raging rises right now in silver-mining stock. As for other precious metals, palladium has been skyrocketing to new all-time high levels, still virtually unmentioned in the mass media.

TDL became “The Original Gold Bug” at $35/oz on the theory that unlimited printing of paper money would eventually fail without inherent value and only gold could maintain it. Because gold is a limited resource and could be increased by laborious and expensive mining. TDL predicted what we call a “Super Major” gold bull market, consisting of several Major ones combined; that has begun to come true.

We're entering a phase of a bull market that ordinarily should carry gold to a new all-time high and, depending on the world’s various geopolitical situations, the sky would then be the limit as to how high gold goes. For example, in July 2018 gold sold in Iran at 137.2M rials when the U.S. reimposed a series of sanctions that stifled Iran’s economy and restricted its access to the world’s commodity markets. Iranians learned how valuable gold is and how hard it is even to locate a seller in such times. The price of gold in Iran rose to infinity because no amount of paper money was worth enough to part with gold bullion.

Owning some gold is deadly serious because it would be a shame to lose your wealth if markets suffered a crash, as in 2008, and no preparations had been made. Our recommendation is to hedge your other assets with some gold.

Those who are interested in investing in gold might not be certain as to how, whether in coins, mining stocks, or bullion. We divide the field of gold into two areas: actual gold bullion, and financial instruments, such as gold-mining stocks

James Dines is legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community. He is the author of five highly regarded books, including "Goldbug!," in addition to his popular newsletter, The Dines Letter, and videotaped educational series. Dines' highly successful investment strategies have been praised by Barron's, Financial Times, Forbes, Moneyline, and The New York Times, among others.

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