Well, yesterday’s look at Steve Sjuggerud’s favorite gold stock brought a bunch of questions out of the woodwork about a different Stansberry gold teaser… we don’t often like to “pick on” the same publisher two days in a row, but we do aim to please — so that’s our topic for today.
The ad is for subscriptions to something called Commodity Supercycles, which looks like it’s a new “hard assets” investment letter (it’s being sold at $49/year, hadn’t heard of it before today).
It’s signed by editor Bill Shaw, who also edits Stansberry Gold & Silver Investor, which is a much pricier precious metals advisory ($2,500 up front, plus $49/month) — the only pitch of his we’ve looked at before was when he teased First Mining Finance (FF.TO, FFMGF) about two years ago. That’s worth noting mostly because it should remind us to treat marketing language with great skepticism — he talked that up as being maybe “the most lucrative speculation in our firm’s 19-year history” and predicted a huge year for gold in 2017, and we can now look back and say “not so fast” to both those predictions, which should help us be rational when looking at today’s prediction.
Because marketing language is so powerful, and I’m inclined to like the kinds of stocks teased here, I’ll start you off with a visual reminder of that fallibility… this is what First Mining and gold have done since that ad in August of 2017 (orange is First Mining, blue is the gold ETF GLD, with the gold mining ETF GDX (red) and the S&P 500 (green) for comparison):
But what everyone’s looking for, of course, is another wild bull market in gold — like we saw in the first half of 2016, and before that in 2010-2011. And we’ve at least gotten the start of another bullish run for gold this year thanks to falling interest rates and growing global uncertainty, with gold up by 15% or so since January and the big gold miners (GDX) providing the typical 2X return on that (up 34%). So we’re primed to hope for more… and, perhaps, tempted to flee into gold as global politics stacks new bricks on the “wall of worry.”
So with that backdrop, what is Bill Shaw teasing? It starts out by sounding quite familiar, at least to anyone who has seen the many mining teasers that have been thrown at us over the past 15 years…
“Running in a small-town Nevada newspaper, a local business owner needed to raise cash to pay off an outstanding loan.
“NOBODY could have predicted what happened next.
“Put simply, the man who stumbled upon this ad discovered a secret my colleague Dr. Steve Sjuggerud has called:
‘The best business model I’ve ever seen.'”
Oh, great, so we’re going to see another pitch for royalties, aren’t we? More from the intro email:
“Porter Stansberry has said: ‘[This business model] will do well no matter what happens to the stock market.'”
And here’s some of the promo language:
“Today, we are at the beginning of a brand-new bull market – and I strongly believe we’re about to see spectacular gains.
“If you want to capture the biggest gains, you absolutely must get into this brand-new bull market as early as possible…..
“I’m going to show you exactly what to buy today – it’s by far the #1 way to get rich in gold today, and you can get started for less than $10…..
“It’s not a Mining Stock, ETF, or Bullion – but this virtually unknown $7 investment could hand you a small fortune as gold soars higher.”
OK, yep, that’s pointing us right at royalty stocks — which are always teased as “unknown” and “secret” and “best business model ever” and, technically, are not really “mining stocks” so yes, most folks who are not active investors probably haven’t heard of them.
So we probably already know the stock, right? There are not that many royalty stocks.
But we don’t want to spoil the surprise yet…. Let’s have a brief interlude to get Shaw’s pitch about gold in general…
“… maybe you remember when billionaire and legendary investor Stanley Druckenmiller made headlines claiming he SOLD all his gold after President Trump was elected…Are you getting our free Daily Update
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“Well, just recently, he changed his tune, piling back into gold in 2019. In just the last few months, Druckenmiller bought more than four million shares of gold mining giants Barrick Gold and Agnico Mining…..
“Not only do I expect gold to hit $2,000 by the end of 2019…
“But I think it’ll keep going, soaring far beyond $3,000… possibly reaching $5,000 or higher in this new bull market….
“Most people don’t know this, but so far this year, gold has outperformed every major investment class…
“It’s returned more than oil, bonds – even stocks in the past year…
“And as this rally gains steam, most folks will run out and buy bullion or mining stocks.
“But I have an unfortunate truth to tell you…
“When it comes to investing in gold, most folks (I’d guess 99% or more of the investing public AND the wealthy investors I just told you about) will miss out on the biggest gains.”
So there’s our “FOMO” (fear of missing out) alert… did that cause your credit card hand to twitch?
And then he gets into the kind of investment he’s teasing, which we’re already pretty sure will rhyme with “shmoyalties”…
“As I’ll show you, if you follow this simple approach, which has nothing to do with bullion, ETFs, or mining stocks, the gains can be absolutely incredible.
“During one period, for example, this virtually unknown gold strategy returned 38% per year!
“And not just for a year or two…
“This incredible investment returned an average of 38% per year – for 18 straight years….
“Even during the great recession, when the stock market lost 37% in 2008, this approach preserved investors’ wealth – and even gained more than 50% – despite the fact that gold bullion barely moved.”
Then, finally, to the actual investment being teased…
“… it’s as simple as buying a stock in your ordinary brokerage account….
“Today, you can get into this gold strategy for just $7.
“That gives you the chance to capture amazing gains – with the potential to turn every $1,000 invested into a small fortune over the next few months – as gold explodes higher and higher.”
But wait, first let’s lay on one more layer of FOMO for you…
“And even students of history – investors who know the safe-haven power of gold – might be tempted to rush into investments like the iShares gold ETF, or gold coins and bullion.
“Many more will simply buy risky, hit-or-miss mining stocks.
“And here’s the thing: If you rush out and buy the same investments everyone else is buying, you might do OK.
“But if you want a low-risk way to potentially turn every $100 invested into $32,947, you’re going to have to turn away from the herd and take a stake in a different kind of gold investment.”
OK… now into the details, as we shovel some actual clues into the Thinkolator…
“Don’t Buy Gold, Bullion, or Mining Stocks… Do THIS Instead
“The virtually unknown gold investment I want to tell you about was pioneered by a Canadian named Pierre Lassonde….
“If you invested $100 in Lassonde’s company when it first went public, you could have made more than $32,000…
“And if you had invested $5,000, it could’ve turned into a windfall worth $1.6 million.
“In short, the secret Lassonde discovered was ‘Mining Royalties’ – that is, simply a right to receive a percentage of production from a lucrative gold mine.”
So that surprise is out of the bag… yes, we’re talking royalties again. Which is lovely, I’m a big fan of royalty stocks, but it probably also means we’re looking at a stock we’ve heard of before.
Pierre Lassonde, if you’re unaware, was the founder of Franco-Nevada (FNV), which was a mostly failed mining explorer