Huge Bull Market in Gold Stocks about to Begin!
Gold has recently been thrown out of the limelight by bitcoin, but it still hasn’t lost its shine, according to the opinion of analysts at Stansberry Research.
In a recently published note to investors, compared to last years impressive increase of 30%, this year it has only appreciated 4%. A miserable profit in comparison to what was achieved last year.
However, according to the analysts at Stansberry Research, gold could be on the brink of a new bull market.
Looking at previous trends in the commodities market, tracked by the S&P GSCI Commodity Index, and comparing them to stocks on the S&P 500, Stansberry Research determined that we may soon see a dramatic increase in the price of gold.
(Source: Stansberry Research, The Stansberry Digest)
Using the Commodities-to-Stocks ratio over the past 47 years, Stansberry Research concluded that we might just be on the verge of another major bull market.
Today, the ratio is currently at a low that has seldom been seen in 50 years. And based on historical evidence, we could be seeing the precursor to a major gold bull market. The last time the ratio registered such an extreme was just before the dot-com bubble burst. Following the burst, commodities rallied while stocks fell for a near decade. When the ratio was this low in the 1970s Nixon had taken the U.S dollar off the gold standard and over the following several years commodities shot higher and stocks entered a ferocious bear market.
Having also analysed trends from previous bull markets in mining stocks, Stansberry Research also suggested that we are likely only in the early phase of this bull market. They indicated that for gold stocks to meet even the lowest of past rallies, gold stocks would have to double from current levels. In previous commodity bull markets, gold stocks have gained hundreds-of-percent in short amounts of time.
Stansberry Research deduced that, given unprecedented bank stimulus around the world, it is entirely possible for this bull market to well outperform all previous commodity booms.
(Source: Stansberry Research, The Stansberry Digest)
Furthermore, they claim that precious metals have been extremely valuable for centuries and gold is no exception. According to them, it has been used as a store of wealth for over 5,000 years with very little chance of that ending. They also state that analysts at Goldman Sachs reported that even with the craze in crypto-currencies, there has been “no discernible outflow of gold” from exchange-traded funds (ETFs), and that holdings of gold in ETFs recently hit their highest levels since mid-2013.
At UGC, we too have been seeing the same trends unfold in the gold market. And as with uranium, while we are not “ALL IN” at this stage, over the past 12 months we have been recommending clients gradually build a position in a small gold company with the largest undeveloped gold and copper deposit in the world. Should the price of gold increase, as outlined above, this stock could potentially increase in value by many multiples of its current share price.
If you are looking to invest and would like to know which stocks we’re buying that have huge upside potential, contact United Global Capital today for a no cost, no obligation consultation on 03 8657 7640 or email [email protected] to learn about our Quality, Value, Trend (QVT) investment selection methodology.
The information contained in this article is General in nature and has been prepared without taking into account your objectives, financial situation and needs. When assessing any investment you should also consider that past performance is not a reliable indicator of future performance.