GOLD: Pent-Up Energy RELEASED!
Time to say goodbye to Dollar-cost averaging, to hedging bets by shorting gold ETFs, to owning the Carbon-Free ETF, which is up 200% already, and to patiently sitting on positions for months, doubting whether or not the market is right and we’re wrong about gold stocks being cheap.
Howard Marks, the billionaire fund manager, who wrote the incredible book, “The Most Important Thing,” has plainly and distinctly laid out how bull markets end: “when all the buyers that were destined to get in are positioned, no one is left to bid up prices anymore. Then, sellers become the majority.”
In the gold equities market, this statement should be understood in complete reverse.
We’re at a point, when the sellers that are destined to exit their trades and hit their stop losses are giving up on their positions. No one is left to accept these stink bids, and from here on, new buyers will pay more if they want to own gold leveraged stocks.
I’m not just talking about gold, though. The entire commodities sector has been the biggest loser of QE monetization.
Silver has been a poor investment for years. Uranium has gone nowhere. Copper and zinc prices have gained, but the related stocks have only seen selling.
It’s been hard to remain hopeful and optimistic that market consensus will change for these ultra-risky resource plays, so we only kept 5%-7% of our net worth locked-up with them.
In the meantime, the big gains come from large positions, which matter most – the Wealth Stocks. These take up 60% of my portfolio, for example:
- Abbott Labs: This is the 1st company we ever profiled. It was trading at $37 per share, and it was a bargain. Today the price is $58, and the dividend yield has increased as well. I am holding right now. HERE’s the original analysis.
- W.W. Grainger: We covered this MRO leader at $173 per share, and it’s now trading at $279. That’s a 61% return, while the Dow Jones returned 12% during the same period. HERE’s the original analysis.
The P/E ratios of these great businesses are overpriced, though.
I will definitely keep holding them because I’m going to use them as leverage.
For the 1st time since 2010, I’m going to buy a gold stock on margin.
DO NOT implement this strategy yourself, unless you have the financial capabilities to handle big swings. For me, at this stage in my life, I’m after MASSIVE results, and I mean massive.
Like Buffett, who has explained to shareholders, myself included, why Berkshire only buys one major deal a year nowadays: “We’re too big to make small bets,” so do I feel that my next move has to be a game-changer.
On Sunday, I’ll explain which company, currently trading close to its all-time lows, will be the one I bet big on. Again, this is a disproportionate bet.
I’m laying it all on the line. In fact, my administrative assistant is preparing to overnight my written research to the offices of: John Paulson, David Einhorn, Bridgewater Associates (Ray Dalio), Sprott Asset Management (Rick Rule), DoubleLine Capital (Jeff Gundlach), Stanley Druckenmiller (Former partner to George Soros), Stephen Schwarzman (Blackstone), and The Tocqueville Fund.
On top of that, I just emailed the company’s founder the following:
“I have watched your company closely for years. The way that you were able to negotiate the purchase of cheap assets from the beginning sets you apart from many others. It will never be replicated by anyone else, especially with gold trading at $1,360 and with major-cap producers hunting for deals to replace their depleting mines.
I know you’re aware of the fact that literally all the best gold assets are held by strong hands today, so starting new companies is tricky.
Sir, we’re hitting peak gold in a number of months.
I plan to match the investment made by your largest individual investor. In 3 years, there’s no doubt in my mind that my principal will triple on the low end and put me in a league of my own if gold makes a significant move on a blue sky outcome.”
Jeff Gundlach has just gone on record that he sees gold making a $1,000 breakout.
If this occurs, the hedge funds, which are long gold, such as Dalio’s Bridgewater, will make a bloody fortune.
But, Dalio’s one disadvantage is that he can’t put his money into this company – it’s too small, which is why I estimate that an activist investor in a large-cap producer will push for a takeover at some point.
I’m putting all my chips in on this gold bet, disregarding all other gold companies, and buying it close to its all-time low.
This Sunday, I’ll show you why my near-term target is 343% higher than today’s price.