The Morgan Report Blog

Why You Need to Own Gold In 2015 and Beyond

 
Why You Need to Own Gold In 2015 and Beyond
By Clint Siegner

Debt is a rock, and spending reform is a hard place. The taxpayers of today and tomorrow are saddled with crushing obligations. Yet we must watch helplessly as leadership in Washington DC continues expanding government — borrowing what they can and simply printing what they cannot.

Each day more Americans sense a reckoning is coming. Our government is increasingly insolvent. The unbacked dollar is certain to be worth less, and it may not survive at all.

The problem is dishonest money. Federal Reserve officials are free to print as many dollars as they wish, completely unaccountable for the purchasing power stolen from your savings.

Honest money in the form of physical gold is the solution. Gold coins, bars, and rounds represent value that cannot be inflated away. In the long run, no other asset offers the same track record — particularly during turbulent times. Families who save using private, portable, and enduring gold have been passing wealth from one generation to the next for literally thousands of years.

Also, during key periods in history, investments in gold did more than simply hold value; they produced real profits. We are likely living in the next of these periods now. Inflation is a worldwide phenomenon forcing entire populations to look for alternatives to the paper in their wallets. As more and more turn to finite gold, its purchasing power will rise — perhaps dramatically — as people bid more aggressively for available stocks.

We’ve seen it before. If history is a guide, now is a particularly opportune time for wise investors to buy physical gold coins and bars — both for protection and profit. To understand why requires some background.

Gold is beautiful and rare. Our ancestors picked up the first golden nuggets thousands of years ago and found themselves delighted. Virtually everyone wanted some of their own — a fact not lost on people seeking to trade. A person with gold to offer could bargain for all manner of valuable goods. A little of the beautiful metal went a long ways in terms of buying power. Gold became money — the preferred medium of exchange when trading locally and across the world.

Gold Represents Timeless Value

Gold’s universal appeal across continents makes the metal extraordinary. But it is gold’s appeal across time that makes it unique.

People navigate in a world of cycles and change. Investment manias come and go. Societies move inevitably from relative peace and prosperity to crisis and war and back again. Governments rise and fall. In recent centuries these governments began introducing paper currencies in their ascendance then inflating them away in their decline. Through all of these cycles, gold remained sought after and highly valued — making it one of history’s few constants.

An anecdote, often told, highlights gold’s relatively constant value. In 1916, just after the Federal Reserve was established and before politicians decoupled the U.S. dollar from gold, a man with a $20 bill or a $20 “Double Eagle” gold piece (containing very close to 1 ounce of gold) could walk into a men’s clothier and buy a fine suit, shirt, belt, shoes, socks, and a tie with either the bill or the coin. Today, the gold coin will still buy the same thing. But the $20 bill may not even be enough to purchase a belt.

This constancy is the reason politicians and bankers, the purveyors of fiat currency, began a concerted effort to divorce gold psychologically from its role as money. It is hard to maintain the illusion of value in a paper currency with gold acting as a foil. John Maynard Keynes, the British economist most admired by the advocates of big government and unlimited borrowing, declared the gold standard a “barbarous relic” in 1924.

A few generations later, bureaucrats talk about sophisticated monetary tools which supposedly render gold irrelevant. Ultimately, the talking will fail. It doesn’t change the true nature of gold, nor the true nature of the paper they want you to use as money.

Paper currency is supported only by confidence — its value resides exclusively in people’s minds. Intrinsically, the bills we all carry are simply colored bits of paper whose supply is limitless. They are designed and managed by officials to lose value over time — a stealthy tax benefiting politicians and those they favor, to the detriment of ordinary earners and savers. That is why governments inevitably get larger while the value of the currency they issue inexorably declines. It is the ultimate confidence game.

Paper Money Is Losing Credibility by the Day

But the essential trust in fiat currencies is beginning to fade. People look aghast at the “debt clock” in Times Square now surpassing $18 trillion. Their minds are boggled at the trillions of new dollars created by the Fed via extraordinary maneuvers such as Quantitative Easing. Today, there are real questions about the solvency of the U.S. government, and the value of the scrip issued on its behalf.

Meanwhile, gold is reasserting itself. Citizens in places like Venezuela, Holland, and Germany are clamoring for the repatriation of gold reserves stored outside of their borders. Perhaps most telling, we find the same central bankers who publicly denigrate gold quietly adding bars to the stockpiles held in their nations’ vaults… stockpiles most of them somehow never quite got around to liquidating.

Despite all this, today most Americans still do not own gold bullion. We are conditioned by Wall Street to focus on conventional assets — stocks, bonds, money markets, and mutual funds. Less than 2% of people in the U.S. own any physical bullion according to most estimates. Even fewer hold a position significant enough to provide a meaningful defense against inflation.

Roughly 10% of the population owned gold or silver in 1980 — the end of the last bull market in metals. Decades before that, everyone carried some in their pockets. The current cycle moved the entire world into fiat currencies and away from money backed by gold. When will this cycle reverse — perhaps suddenly — and gold ownership return to vogue? What will happen to the gold price when masses of cynical people tire of holding dishonest money and look for an incorruptible alternative?

Smart investors aren’t waiting to find out. Every day more Americas buy their first physical gold coins or bars, no matter what the financial elite say about it.

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Clint Siegner is a Director at Money Metals Exchange, perhaps the nation’s fastest-growing dealer of low-premium precious metals coins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon, puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 

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Catch the 2015 Silver Tsunami Return-Wave (DHS)

 
Catch the 2015 Silver Tsunami Return-Wave (DHS)

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 

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David Morgan – Gold, Silver, The Market & The Dollar

 
David Morgan – Gold, Silver, The Market & The Dollar

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 

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Sound Money and the Ring of Truth

 
Sound Money and the Ring of Truth
By Guy Christopher

We Americans no longer carry gold and silver money in our pockets and purses as our grandparents did during their lives. But we still carry the history, legacy and spirit of those gold and silver coins in our language – with more meaning than you might imagine.

“Sound money” has a clear message recognized for centuries around the world. It describes the musical, metallic ring of a gold, silver, or copper coin dropped on any hard surface of glass, stone, wood, or metal. Sound money literally refers to real wealth, with a natural, unmistakable signature of honesty and integrity, as opposed to the swishy paper and plastic debt used almost exclusively today.

The term “sound money” is believed to come from Ancient Rome, where small silver coins were standard in everyday commerce, for paying Roman soldiers to buying exotic goods from all corners of the known world. As Rome squandered its wealth, it found what seemed an easy shortcut to shore up the treasury. It gradually debased those silver coins with common metals, ultimately cutting the silver content to just 5 percent.

But that didn’t fool anyone for long, most of all disciplined Roman soldiers, who did not appreciate being paid with worthless mystery metal in return for risking their lives on Rome’s bloody battlefields.

Do You Want True Money or a Debased Dud?

Not every Roman soldier had room in his gear for a touchstone, usually fieldstone or slate, also used to test the purity of metals. But they quickly discovered the difference in the sound of true money and a debased dud.

They recognized that real silver had a distinctive melodious ring when bounced on a hard surface, such as the blade of a handy sword, a bronze breastplate, or an ornate marble floor. Sound money carried the ‘ring of truth,’ while debased coinage landed with a dull, disappointing thud.

The debasement of Rome’s silver currency unmasked the deceit of a bankrupt empire, which ended with the fall of Rome, a pattern repeated many times. Sound money’s “ring of truth” had found its place in the history of money and of nations.

As the United States grew westward to the Pacific Coast and north to Alaska, gold, silver and copper coins of all nations were legal tender in the young United States until the 1850’s, and were in use even long after that. Americans with no formal education in reading, writing and arithmetic relied on the sight, sound, and feel of the only money they knew. Learning the different musical ringing sounds of those coins could easily qualify even a prairie settler fresh off the wagon train as an economic expert.

In the Old West of the range roving American cowboy, the ring from that silver dollar tossed on the bar of polished oak told the saloon keeper he was pouring whiskey for sound money, and not for a counterfeit forgery.

The sound money test unmasked one of the most famous counterfeiting schemes in American coinage history. The Liberty Nickel (1883-1913) was originally struck without the words “Five Cents,” bearing instead only the Roman numeral “V.” Gold plated Liberty Nickels were passed off as a newly designed $5 gold piece, but the sound money test quickly identified the scandal. Within six months of issuing the first “V” nickels, the U.S. Mint added the words “Five Cents.” But for the next many years, every Liberty $5 Half Eagle in town was tested for its ring of truth.

Sound money means simplicity, honesty, and trustworthy recognition. It stands for strength and durability which were also characteristics of those pioneering Americans who built our nation.

The ring of sound money for centuries has transcended borders and nationalities by singing its own melodic language. No matter what words were stamped into a precious metal coin, that ring of sound money certified its value, or exposed the deception.

Governments Have Distorted the Meaning of Money

“Sound money” carries such a powerful message there’s little wonder that governments issuing paper fiat currency have attempted to corrupt its meaning, with help from unimaginative and lazy educators and journalists.

“Hard currency” first referred to metal coins, not paper money, but the term over the years has come to mean that flimsy, paper, folding cash is more trustworthy than a handwritten check or IOU.

“Good as gold” is another aberration of “sound money,” usually referring to credit worthiness, even though there is no credit as good as gold.

When Washington and Wall Street began pushing plastic credit cards, which are nothing more than debt disguised as wealth, Americans were introduced to the gold card along with the credit rating and FICO score as a false measure of one’s financial worth. Today, the newest edition of the $100 Federal Reserve note carries a golden inkwell and feather pen, as if to sarcastically say money itself is a masquerade of paper script and not precious metal.

Americans today have no memory of those times when gold, silver, and copper coins were tossed across a store counter, or counted out by hand, to pay for everything from penny candies to Ford Model-T automobiles. That era began ending when President Roosevelt in 1933 outlawed the use of gold coins in everyday American commerce.

The separation of Americans from their Constitutional heritage to true money continued through 1964, with the end of small coinage containing 90% silver. The deception was complete by 1982 when copper quietly disappeared from the Lincoln penny.

But no government could remove the ringing echo of sound money from history, or from us. And government cannot camouflage its counterfeits with gold colored paint. You can experience sound money’s evident ring of truth for yourself. Toss any gold or silver coin on your kitchen table and you will hear the history of honest money ringing down through the centuries.

And perhaps, thanks to grassroots projects like the Sound Money Defense League, you will hear the trumpeting of better days to come.

Money Metals columnist Guy Christopher is a veteran writer living on the Gulf Coast. A retired investigative journalist, published author, and former stockbroker, Christopher has taught college as an adjunct professor and is a veteran of the 101st Airborne in Vietnam.

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 
 

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Gold Stocks Shine in 2015

 
Gold stocks have suffered a miserable few years, becoming a laughingstock even among contrarians. But this despised sector’s seemingly-endless downward spiral has left gold stocks vastly undervalued relative to gold, which drives their profits. The fundamentally-absurd disconnect between gold-stock price levels and gold can’t last. And it sure looks ready to end, making 2015 the year gold stocks shine again.

Any stock is a fractional ownership stake in a corporation, entitling shareholders to participate in that company’s profits. So over time, any stock price ultimately reflects a reasonable multiple of these very underlying earnings. If a stock price falls too low relative to corporate profits, investors step in to buy shares cheap bidding their prices higher. And the opposite is true if a stock grows too expensive relative to earnings.

In the gold-mining industry, the price of gold is the dominant driver of corporate profits by far. Mining costs are largely determined by the particular deposit being mined, and are largely fixed when any mine is designed and constructed. So gold miners’ profits are almost totally dependent on the price of gold. The higher it happens to be, the larger their margins grow since their costs generally don’t change much.

This dynamic is what has long made gold stocks attractive to investors. When the gold price rallies, the profits of gold miners rocket higher much faster. If a miner can produce gold for $900 an ounce, and sell it for $1200, its profits are $300. But if gold merely climbs 25% higher to $1500, that same miner’s profits double to $600. This inherent profits leverage to gold makes the gold stocks really amplify gold’s moves.

But as in all stock-market sectors, this key fundamental relationship between earnings and stock prices can be temporarily derailed by sentiment extremes. Sometimes investors get greedy, and bid gold-stock prices up far higher than their gold-driven profits could ever support. And other times they get scared, selling so aggressively that prices fall far below their earnings-supported levels. Great fear has plagued gold stocks.

This has hammered this sector to truly fundamentally-absurd levels relative to the metal that drives its profits. The leading gold-stock index is the NYSE Arca Gold BUGS Index, widely known by its symbol HUI. Back in early November, this gold-stock-sector measuring rod was crushed down to 146.8. The last time this index had been lower was a whopping 11.3 years earlier all the way back in July 2003.

The problem was these recent extreme lows were spawned by overwhelming fear, not underlying profits fundamentals. In early November 2014, the gold price fell just under $1150. But the last time the HUI had been so low over a decade earlier, gold was trading near $350. Does it make any sense at all for gold stocks to be trading at the same levels despite gold being 3.3x higher? No, it’s a crazy fear anomaly.

Gold stocks are priced as if gold was just 30% of its prevailing levels today. Imagine this same kind of vast fundamental disconnect in another industry. What if Apple’s stock was trading at levels reflecting it selling just 30% of the iPhones it’s actually selling? Investors would rush to buy it, knowing full well that extreme sentiment-driven fundamental anomalies never last for long. Why should gold stocks be any different?

And make no mistake, investors will return. Between the birth of gold stocks’ secular bull in November 2000 and its peak in September 2011, the HUI skyrocketed a mind-boggling 1664% higher! This nicely leveraged gold’s own 603% gain over that span, and trounced the benchmark S&P 500’s 14% loss. The investors who were willing to buy gold stocks cheap back in the early 2000s earned vast fortunes over a decade.

But sentiment started to turn in 2012, when the HUI slipped 11% despite gold gaining 7%. And 2013 was the year of QE3, the Fed’s wildly-unprecedented debt-monetizing money printing that spawned an incredible stock-market levitation. As the US stock markets inflated dramatically on nothing but Fed hot air, alternative investments like gold were wholesale abandoned. Why buy gold when stocks are soaring?

So in 2013 the HUI plummeted 55% to gold’s 28% loss. Truly gold stocks should have bottomed after such an extreme down year, as fear in this sector was off the charts. And indeed they spent most of 2014 regaining ground, but that great progress collapsed in recent months. Now year-to-date, the HUI has dropped 20% to a mere 2% gold loss, reflecting the ongoing extreme and irrational fear in this sector.

But gold stocks can’t fall relative to gold forever, they can’t be forced into a situation where their various earnings multiples are merely a fraction of the broader stock markets’ indefinitely. Like everything else in the markets, the relationship of gold-stock prices to gold levels is forever cyclical. Greedy uplegs push gold stocks well above reasonable levels relative to gold, then fearful corrections hammer them back below.

As this chart reveals, that relationship has swung the latter direction for far too long. Which means a major reversal is imminent, certainly in 2015. Plotted here is the popular GDX Gold Miners ETF as a gold-stock metric, in addition to the relationship between this and the GLD SPDR Gold Shares gold ETF. The GDX/GLD Ratio shows where gold stocks are trading relative to gold, which ultimately drives their profits.

Just this week, the GDX/GLD Ratio slumped to 0.149x. In other words, GDX’s share price was trading at just over 1/7th of GLD’s. Incredibly this is the lowest level ever witnessed, in these terms gold stocks have never been cheaper relative to gold! GDX was born in May 2006, the last time gold stocks were in favor. And even during 2008’s once-in-a-century stock panic, the GGR merely plunged to 0.227x at worst.

And that stock panic was almost certainly the greatest fear event we’ll witness in our lifetimes. The VIX fear gauge skyrocketed up to an astounding 81 in November 2008, epically high. So it’s mind-boggling that gold stocks are now much cheaper relative to gold than they were even in that incredible fear super-storm. That is supremely irrational and reflects the extreme fear-driven fundamental anomaly dogging this sector.

In absolute terms, GDX’s price fell to $16.59 in early November 2014. That was its worst levels in 6.0 years, since a single day near the stock panic’s climax in October 2008 where GDX briefly fell to $16.37 before bouncing sharply higher. So gold stocks have never been or almost never been more out of favor than they are today when measured in both relative-to-gold and absolute terms. It’s just a crazy anomaly.

And this devastating sentiment trend has been in place since late 2007, as evidenced by the GGR’s secular-resistance line shown above. When this key fundamental gold-stock ratio is falling, gold stocks are losing ground relative to gold. Gold, as represented by GLD, has been outperforming gold stocks on balance ever since. But gold stocks’ relationship to gold is forever cyclical, making this an extreme aberration.

In gold-stock uplegs, the equities outperform the metal so the GGR rises. In gold-stock corrections, the metal doesn’t fall as fast as the stocks so the GGR falls. So if you think of the gold price as a straight line, gold-stock price levels oscillate around that like a sine wave. Outperformance is always followed by underperformance which soon yields to outperformance again. And this cycle continues into perpetuity.

Typically this sentiment-driven oscillation sees gold-stock uplegs that run for up to several years on the outside, followed by gold-stock corrections that typically take 6 months or so. But incredibly today, the gold stocks have been underperforming gold on balance for an astounding 7.1 years! This makes zero sense fundamentally given prevailing gold prices of recent years, so it is solely the product of extreme sentiment.

The main thing that pushed this gold-stock underperformance into such extreme bear territory is the Fed’s hyper-manipulative QE3 campaign. Note above that gold stocks had bottomed and were climbing sharply in 2012 before the Fed hatched its QE3 scheme. But as QE3 convinced stock traders the Fed would arrest any material stock-market selloff, they abandoned alternative investments including gold stocks.

As the general stock markets soared with the Fed’s implied backstop in QE3, gold and its miners’ stocks were crushed. The worst of the selling came in 2013’s second quarter, when gold plummeted 22.8% in its worst quarterly loss in 93 years! GDX collapsed 35.3% in that span, the most extreme selling seen in gold stocks since late 2008’s panic. And they’d started recovering nicely this year, until recent months.

With the Fed’s QE3 manipulations enticing or forcing most investors into the dangerously-overvalued US stock markets, investors have largely been absent from the gold market. This has given American futures speculators carte blanche to run amuck. So in the last couple years the gold price has been dominated by their leveraged trades, particularly short-side bets. And recent months saw extreme gold-futures shorting.

As gold temporarily broke below its $1200 support zone in late October and early November, many remaining gold-stock investors capitulated. After years of misery, they finally gave up on this seemingly cursed sector. But that in itself is a major bottoming indicator, a major downside washout after years of falling prices. And that is one of the key components setting us up for a massive gold-stock upleg coming in 2015.

Why 2015? The sole reason gold suffered such an extreme down year in 2013 was the Fed’s stock-market-levitating QE3 campaign. Every time the stock markets started to sell off, the Fed either stepped in to jawbone them back higher or traders assumed it would. But after being born in September 2012 and ramping up to full steam in December 2012, the Fed finally killed off QE3’s new bond buying in October 2014.

With QE3 gone, and any QE4 a political impossibility for the Fed with the new Republican Congress, the stock markets just lost their driver that pushed them to such wildly overextended and overvalued levels. So sooner or later here, a major stock-market selloff is going to erupt and start cascading. And the Fed won’t be able to act to slow it down. It lost its window to monetize more debt, and interest rates are already at zero.

As this stock-market selloff persists, likely gradually growing into a new cyclical bear, the Fed-devastated alternative investments led by gold will return to favor. And as gold inevitably rebounds, the radically-undervalued gold stocks are going to soar. The Fed’s stock-market levitation killed gold in 2013, and the end of the Fed’s stock-market levitation in 2015 will restore gold. Gold stocks will simply amplify gold’s ride higher.

And their upside potential is truly epic. Once again, this week the GGR slumped to an all-time low of 0.149x. In the initial two-and-a-half years after the stock panic, this gold-stock valuation metric averaged a far-higher 0.419x. Merely to return to those normal-year levels, GDX (and the HUI) would have to nearly triple with a massive 182% gain! Can you imagine any other stock-market sector with such potential in 2015?

And the last time gold stocks were actually in favor with investors was before the stock panic. The pre-panic average GGR in the first eight calendar quarters of GDX’s existence was 0.591x. If gold stocks actually returned to favor again, which is certainly possible in a weak general-stock environment, they would at least quadruple from current levels. And I say at least for a couple reasons, gold and smaller gold stocks.

When the lofty US stock markets inevitably roll over and enter their overdue down cycle, gold is going to catch a major bid. Once again investors will start remembering the millennia-old wisdom of prudent portfolio diversification, so capital will flood back into the yellow metal. And given the extreme degree of underinvestment in the gold asset class today, this re-diversification is going to launch gold much higher.

As of the end of November, the 500 elite stocks of the S&P 500 had a collective market capitalization of $19,217b. Meanwhile GLD, the vehicle of choice for stock investors to gain gold exposure, was valued at just $28b. For centuries at least, the best investment advisors have recommended everyone have at least 5% of their portfolio in gold. But for our purposes today, let’s assume that can rise to merely 1%.

Today stock investors have just 0.15% of their capital in GLD as compared to their S&P 500 allocation. To get to 1%, which is still quite low historically, the amount of capital in gold at today’s prices would have to soar 6.9x! That much buying alone, not even counting traditional physical-gold investment, would certainly catapult the beaten-down gold price far higher. And that would flow through to the GGR.

As gold rallies, so will GLD which tracks the gold price. That means any given GGR will necessitate much-higher gold-stock levels. For example, back in 2012 before the Fed’s QE3 manipulations goosed the stock markets and decimated alternative investments, gold averaged just under $1675. That’s an amazing 41% above today’s levels! If gold just returned to pre-QE3 levels, gold-stock prices would soar accordingly.

Because of GLD’s annual 0.4% management fee over its decade since inception, it now trades at about 96.1% of the gold price. So let’s call $1675 gold $161 in GLD-share-price terms. At those levels and the initial post-panic-average GGR of 0.419x, GDX would have to rocket over $67. That’s a 275% upleg from current depressed gold-stock prices! Again, what other sector can quadruple from stock-market highs?

But gold-stock investors’ gains are likely to be even larger if they choose the right stocks. GDX and the HUI are dominated by the major gold miners, which have less upside potential than smaller gold miners. The large elites are so massive that it will take far more capital to overcome their inertia and drive their stock prices higher. The greatest performers in the next gold-stock upleg will be the best of the smaller miners.

GDX’s biggest holdings are mega-miners Goldcorp, Barrick Gold, and Newmont Mining. They have market capitalizations around $14.8b, $12.7b, and $9.5b today. It takes a lot of investor buying to push larger stocks higher. But the best of the smaller gold miners and explorers have market caps ranging from $0.1b to $2.5b, far smaller than the majors. So it will take far lower capital inflows to blast them higher.

A carefully-handpicked portfolio of the best of the smaller gold miners and explorers will trounce the coming gains in GDX and the HUI. The sheer profits leverage to gold many of these smaller miners have is breathtaking. And if they’ve survived this terrible and fearsome winnowing of the past couple years, they have cut costs to the bone. So their profits are going to explode higher as the gold price inevitably normalizes.

The only hard part is picking the best, the fundamental elite, of the smaller gold miners and explorers. And that’s an area we’ve long specialized in at Zeal. We’ve been deeply researching gold and silver stocks for well over a decade, and our knowledge in this area is unparalleled. Every few months, we dig deep into a precious-metals-stock sub-sector and whittle that universe down to our dozen fundamental favorites.

They are profiled in depth in fascinating fundamental reports. We just published our latest this week, which researched junior gold stocks. These dozen elite explorers all have amazing projects that both investors and larger gold miners are going to scramble to buy as gold recovers in 2015. So now is the time to buy them cheap before everyone else rushes in later. Buy your report today, position to multiply your wealth!

We also publish acclaimed weekly and monthly newsletters for contrarian speculators and investors. In them I draw on our decades of hard-won experience, knowledge, wisdom, and ongoing research to explain what’s going on in the markets, why, and how to trade them with specific stocks. With the new year looking to see massive changes, subscribe today and prepare for the dangers and opportunities ahead!

The bottom line is gold stocks are set to shine again in 2015. They’ve fallen relative to gold for far too long, driven by the impact of the Fed’s brazen stock-market manipulations on gold. But with QE3 done and any QE4 now politically impossible, the stock markets’ implied backstop has vanished. Without the Fed’s support, the next major selloff is going to be far larger. That will start bringing investors back to gold.

As gold rebounds and normalizes in this post-QE3 era, the wildly-undervalued gold stocks are going to just soar. Despite gold being way up near $1150 at the recent gold-stock lows, this sector was merely trading as if it was $350! This insane fundamentally-absurd disconnect can’t last for long, as all stocks are ultimately bid to levels reflecting their underlying earnings. So gold stocks are heading far higher soon.

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 

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Put Precious Metal Mining Stocks In Your X-Mas Stocking

 
Put Precious Metal Mining Stocks In Your X-Mas Stocking
Bolivia land of Slver promises
with David Smith

Listen Now

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 

Join The Morgan Report Free for 30 Days *
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The coming Financial Collapse of 2015

 
The coming Financial Collapse of 2015
by Steve Quayle and David Morgan

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 

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New Signs Gold and Silver Are Returning as Monetary Assets

 
New Signs Gold and Silver Are Returning as Monetary Assets
by Stefan Gleason

Much to the chagrin of the financial elite, gold and silver are reentering the American consciousness and starting to shake the wing nutty image of their recent past. But it’s taken a global financial crisis to get the public’s attention – one that could wipe out our nation at almost any moment.

The U.S. government’s role in the economy is on a seemingly interminable upward trajectory. The government’s official debt balance that just crossed the $18 trillion mark (with additional unfunded liabilities estimated at more than $100 trillion). Half the population now lives in households that receive government payments.

Even as private sector jobs disappear and workforce participation rates languish near generational lows, the corporate sector is seemingly thriving. Corporate profits as a percentage of the economy are at record highs. Fortune 500 corporations are using cash hoards and cheap financing – not so much to invest in capital assets or business expansion, but to buy back their own shares and send their stock prices higher.

All these dangerous excesses and distortions are made possible by our
free-wheeling fiat monetary system.

What’s occurring now – endless proliferations of paper flowing into the Treasury and banking sector from the central bank – is precisely the sort of thing our Founding Fathers sought to prevent.

The Coinage Act of 1792 authorized the minting of the nation’s money. It defined a “dollar” in terms of a specific quantity of grains of silver (equivalent to about three-fourths of an ounce). Few people today even realize that the dollar bills in their pocket were originally intended to be silver.

The de-monetization of silver was effectively complete in 1965, when the U.S. Mint ceased producing dollars, half dollars, quarters, and dimes containing 90% silver (from 1965 to 1970, half dollars still contained 40% silver).

Of course, you can still buy U.S. 90% silver coins minted in 1964 and earlier. They are priced based on the current value of their silver content, plus a small premium. You can even use them as money in legal barter transactions.

The last real link the U.S. still had to sound, Constitutional money was finally broken in 1971, when President Richard Nixon suspended gold convertibility. Henceforth, no foreign government could redeem their dollar reserves for gold.

After the dollar became a purely fiat currency 43 years ago, it began a course of massive depreciation. Since 1971, gold prices have moved from $41 per ounce to as high as $1,900. Silver went from $1.40 an ounce to $49.50 at its peak in 1980 – a high mark hit again in 2011. Gold and silver prices have pulled back from their 2011 highs, but are likely to rise higher still.

Meanwhile, government debt and profligacy have reached epic proportions. In 1971, the national debt stood at $398 billion, 34% of GDP. Today’s $18 trillion debt load represents 99% of GDP.

Total credit market debt comes in at an astonishing 330% of GDP – and that’s off from its peak in late 2008. Since the 2008 financial crisis, the Federal Reserve has been waging a battle against credit market deflation, which is the market’s way of unwinding a credit market bubble. The Fed has bought more than $4.3 trillion worth of bonds and tried to reignite a financial bubble in the stock market by holding rates at ultra-low levels.

Ironically, the promulgators of this financial madness will often try to portray advocates of hard money as loony! Yet under a gold standard, we had stable price levels, a more restrained government, and less severe booms and busts in financial markets.

The movement to return fiat currencies to sound money has gained momentum in recent years. On November 30th, Swiss voters went to the polls to decide on a referendum to force Switzerland’s central bank to dramatically boost its gold reserves. (The Swiss franc had been the last remaining major country to operate on gold standard until 1999, when the franc went fiat.)

The “Save Our Swiss Gold” referendum failed. Even so, other countries in Europe are eyeing gold as a monetary asset.

The Dutch central bank in November moved a fifth of its 612.5 metric tons in gold reserves from the Federal Reserve Bank of New York back home to Amsterdam. “The Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country,” the central bank said in a statement.

France may soon make a similar move to repatriate its gold reserves. The leader of France’s largest opposition party, the National Front, called on the French central bank to take full possession of its gold held abroad and called for an independent audit of the country’s gold reserves.

A member of the European Central Bank Executive Board, Yves Mersch, recently gave a speech discussing the potential benefits of the ECB buying real assets, including gold.

Russia this year became the world’s largest regular buyer of gold. In October, the Russian Central Bank bought nearly 20 tons of gold, or around 8% of total world monthly gold mining production.

Sound money efforts are spreading in the U.S. at the state level. Earlier this year, Oklahoma joined Utah, Texas, and Louisiana in passing a legal tender law that removes state taxes on transactions made with gold and silver coins. These states have asserted their power under Article I, Section 10 of the Constitution to recognize gold and silver as legitimate currency alongside the dollar. Similar legislation is now under consideration in several other states.

Granted, it seems unlikely that the U.S. or any major country will return their currency to a classical gold standard anytime soon. But signs abound that precious metals are re-entering the public consciousness – and will be playing a more prominent role in monetary systems as geopolitical tensions rise, debt levels become more unmanageable, and public confidence in political institutions wanes.

Stefan Gleason is President of Money Metals Exchange, a national precious metals dealer with over 35,000 customers. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

 

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

 

Join The Morgan Report Free for 30 Days *
* 30 Day Trial applies to new user sign ups only!
Offer does not apply to Premium Memberships.
  

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