Stock Market Wealth

Time To STRIKE: My GOLD Price Target!

Jul 22, 2018 | Stock Market Wealth

My physical gold strategy is extremely simple.

I take my monthly expenses, multiply them by 24 (which amounts to two years), and purchase physical precious metals. Personally, I divide it between 80% gold and 20% silver.

That’s it. I know that my family is sufficiently covered with two years of cash burn costs tucked away in five vaults, spread across three continents.

There are rare occasions, three in the past decade, where I added to these holdings.

The first time was in 2009, as I was building my post-recession portfolio. The second time was in 2015, as the FED raised rates for the first time in years. The third time is now.

Gold is oversold, while the Dollar is overbought.

Courtesy: U.S. Global Investors

Since my businesses are growing as well, my burn rate is also increasing, so it is an opportune time to recalculate my burn rate upwards and own more precious metals to hedge my elevated lifestyle.

This decision has nothing to do with the upside potential of the spot price or with the performance of the miners and everything to do with the fact that I don’t trust the markets right now.

As of this moment, the miners are cheaper than at any other time since I began investing, but it is not time to be aggressive yet.

Courtesy: U.S. Global Investors

I’m receiving emails daily, asking whether or not the commodities sector has bottomed, and the answer is NO.

In 2017, using the immense profits we made with cryptocurrencies, we were able to take a portion of the gains and roll it over into the mining sector, not going out of pocket at all, thus creating a zero cost-basis strategy for our positions, but we have not been rewarded for our contrarianism.

In other words, because of the ridiculously high gains that we booked in the crypto rally, we had a unique chance to reinvest some of these funds into very cheap mining shares, but they have not rallied. In fact, all we’ve done is to jump the gun,and we’re temporarily paying the price.

In 2018, though, we are not hedged.

That is to say that there is no raging bull market to “cushion” our patience with commodities stocks. So, every time that I consider placing an order, I’d be tapping into my own cash hoard, which isn’t something I’m willing to do at this point.

Put differently, it’s time to wait it out, and let the sector bottom out. I’ve been dollar-cost averaging for two years, feeling very comfortable holding key positions, which are in the red, since the companies I own are cashed-up, properly managed, and have valuable assets.

My next move will come when I see two conditions fulfilling:

  1. FAANG Stocks: unless a unique situation presents itself, I’m not adding to my commodities portfolio, until these stocks begin to sell-off.
  2. Interest Rates: When the markets become convinced that the FED isn’t about to reverse course, and will continue to raise interest rates, it will signal to the investor community that inflation is getting out of hand, and gold will, then and only then, explode higher.

Right now, I’m personally purchasing ounces of physical metals because I’ve committed to owning 24 months’ worth of living expenses in the form of precious metals, but I’m also fully positioned for a commodity stocks bull market, holding key positions with the best companies at very depressed valuations.

As we begin to experience an uptrend, be it a month, a quarter, or a year away, Wealth Research Group will publish our top contenders for the resource markets, but for now, wait for the prey; let the irrationality of markets work for you, not the other way around.

Best Regards,

Lior Gantz
President, WealthResearchGroup.com

Legal Notice: This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.

Please read our full disclaimer at WealthResearchGroup.com/disclaimer