The gold bull market is really back, at least when it comes to newsletter promotions. Probably the quickest off the starting line was Porter Stansberry with his “Metropolitan Club” plan and introduction of the Stansberry Gold Investor service in late March that drove a lot of investor attention to the gold mining sector (not many publishers, if any, can access larger mailing lists than Stansberry)… but many of the major publishers have gotten on board and are pushing gold ideas these days.
The general sentiment for gold, which in shorthand is that negative interest rates and global unease will send gold prices rocketing substantially higher over the next year or so, is clearly being reflected in the mining stocks. Gold itself has risen this year (up 20% YTD), but gold miners have been off to the races (big miners, on average, are up 80%) — and though that’s a recurring pattern we’ve seen for years, where gold miners are leveraged plays on gold, it’s been much more dramatic in the last six months than we’ve seen in quite a long time.
I’ve got some more blatheration for you about the general performance of gold stocks and the connection to gold prices and other “safe” investments, but I’ll save that for the end… for now, let’s just see what another newsletter guy is getting excited about in the gold market…
This time it’s Sean Brodrick, who has been around newsletterdom for many years with a couple different publishers — he’s trying to sell subscriptions to Oxford Resource Explorer ($79), which hasn’t used gold in its promotions for a while that I’ve noticed (recent pitches for that letter have focused on LNG and on Sasol’s GTL “gasoline without oil” plans).
And, as is pretty typical with pitches about natural resources companies, he teases gold miners as a way to buy gold cheap — in this case, “How to “Buy Gold” at $165 an Ounce” … which sounds, especially to folks who are new to resource investing, like a no-brainer. The intro letter from Andrew Snyder that links us to Sean’s ad says:
“So how do you play this situation? Sure, you could buy gold…
“But our own Oxford Club gold expert, Sean Brodrick, has uncovered a backdoor way to play it.
“Sean’s just off the plane from visiting two miners in Mexico…
“And he’s found a way to “buy gold” right now at $165 an ounce.
“That’s a 91% discount to gold’s current price… and a 98% discount to $9,053-per-ounce gold.”
Golly, a 98% discount! Who wouldn’t want that? The ad itself then gets more specific, this is how Sean Brodrick gets our attention at the very top:
“Resource Expert Sean Brodrick Predicts Gold to Soar 47% by Year’s End…
“His Odd Recommendation Today: ‘Don’t Buy Gold!’
“Rather, he’s just uncovered a ‘sister’ play with potential 800% gains on its $2 shares over time…
“But you must get in NOW.”
He says that the opportunity to “grab 800% gains” is on the table now, and he thinks the gains will come within 24 months, but that “on September 20 the opportunity will be gone.”
That’s the date of the September meeting of the Federal Reserve Open Market Committee, which meets about every six weeks to make decisions about the Fed Funds Rate (among other things). Everyone in the market freaks out about Fed meetings, as they’re doing today (I’m typing this in the morning, we’re expecting Janet Yellen’s press conference at 2pm as she reports on the Fed meeting held yesterday and today), and there is constant speculation about when or how the Fed might raise rates.
Before a weak report or two and the fear over the “Brexit” vote, the assumption was that they would raise rates several times this year, including in June, but sentiment shifts quickly and expectations are now low for interest rate hikes… but yes, the next two meetings are on July 26-27 and September 20-21, and Yellen’s press conferences are only scheduled for every other meeting, so the next “big” meeting is September 20.
The big catalyst for higher gold prices that Brodrick cites is the same one everyone else is also citing: Negative interest rates. Governments charging you to lend money to them is an abomination in the eyes of pretty much any logical capitalist, and any move to a negative interest rate policy in the US as an attempt to further stimulate the economy would put even more pressure on retirees and the pension funds and insurance companies on whom those retirees depend, and probably continue to crush banks, who would really like to see some gradual rate increases. But it would probably be good for gold. Money has to sit somewhere when it’s not being actively used or “risked”, and if the “safe” investments like Euro, Yen or US$ sovereign bonds have negative returns and banks don’t pay any interest, gold looks better and better as an alternative.
Some folks go further and talk about negative interest rates causing a rea