The Weekend Edition is pulled from the daily Stansberry Digest.
Our very own Dr. Steve Sjuggerud likes to tell this story...
Steve was speaking on stage at Gold Stock Analyst editor John Doody's annual invite-only gold-industry conference in Florida this year. He looked around the room and noticed something telling about the tops of the heads in the crowd before him...
Gray hair... White hair... No hair at all.
You always want to know your audience, right? But to Steve, what he saw on this day indicated something beyond the obvious demographics of the CEOs and other stakeholders in the industry he was talking to...
You could call it a kind of contrarian indicator. As Steve describes it...
I can't remember if I called it the hair-color indicator or amount-of-hair indicator. Most of the people in there – let's just say they weren't young.
And what that tells me is that there's still an extraordinary amount of upside.
Most investors today have never lived through a great gold bull market.
The last great gold bull market happened at the end of the 1970s, when the price of gold quadrupled in less than two years. And in that truth is an opportunity today – because few investors are aware of the potential for it to happen again.
Steve wrote about this golden opportunity in Tuesday's DailyWealth...
In brief, the economic conditions are ripe for a monster run higher in gold prices over the next few months and years.
The Federal Reserve and other central banks around the world have done their part already with endless money-printing. And they're not stopping anytime soon.
The Fed alone has pumped more than $3 trillion into the economy than was there just a few months ago. So to not consider the consequences would be a mistake...
Especially if you hear the big-picture story from guys like Steve, John, and John's business partner, Garrett Goggin, who joined Stansberry Research Publisher Brett Aitken for a special "Gold Rally Kickoff Call" on Monday.
During the videoconference, John detailed why he thinks gold prices can shoot to $3,000 per ounce – and maybe more – in the near future. He also explained how he has witnessed this crisis-response gold-boom cycle several times during his illustrious career.
The last of these cycles – after the 2008 financial crisis – actually helped John buy the waterfront home that he lives in now... a Ferrari that he drives... and the speedboat he takes out, too. (We urge you to check out the videoconference for free right here.)
John says he has made around $20 million in gold stocks alone...
That should be enough to get any investor's attention – even the mostly bald, but not-yet-gray-haired ones like me.
You see, it's easy to overlook gold, especially after 10-plus years of a bull market in stocks.
In a bull market, a lot of inexperienced investors can look really smart owning stocks...
Stocks across various sectors keep hitting new all-time highs all the time. The indexes keep heading higher and higher... It's literally the definition of a bull market.
But in a bear market and a recession, stocks aren't super-cool anymore...
(Unless you're excited, like we are as long-term investors, about buying high-quality businesses at cheap prices.)
In the intermediate term, if you're lucky, the major stock indexes churn along sideways until a recovery, when they begin to hit new highs again.
And on the worse end, there's compelling evidence for a Great Depression-like outcome over the next year.
Either way, it usually takes some time for the market's longer-term direction to play out...
If you're a believer in history repeating itself, at least somewhat, the average bear market since the Great Depression has lasted about 13 months. But they've varied in length from a few months in the 1960s and 1980s to nearly three years during the Great Depression.
Of course, we haven't seen this exact scenario before...
Talking about recessions now – which we're effectively in – the average peak of unemployment has been about 8%.
Today, roughly 20% of the U.S. population is unemployed. The only time the number has been higher was in 1933... during the Great Depression.
And now, we're seeing a cascade of "knock on" effects to the economy from the virus outbreak. New ones are still emerging...
You can pick an example depending on the day. But most recently, we're thinking of delayed mortgage payments from everyday Americans and an increasingly fragile meat-supply chain because of sick workers.
So, what do you do between now (the early days of this crisis) and then (whenever we see a bull market in U.S. stocks again)?
Well, gold is one of the few assets you want to make sure you own in a bear market or a recession...
While every time is "different," certain hallmarks of bear markets and recessions have consistently appeared in times like these.
One is how "safe haven" assets like gold – and things like government-backed high-quality bonds – have performed relative to stocks...
Five-year U.S. Treasury notes, for instance, have returned an average of about 11% in the last eight bear markets since 1948... compared with a 35% loss, on average, in the S&P 500 Index during the same time periods.
But aren't interest rates near rock-bottom today? And isn't that concerning for Treasurys?
Sure is. The broader point, though, is that these traditional safe assets increase the risk elsewhere in a portfolio.
Along those lines, the case for owning gold has possibly never been better...
As Garrett reminded us in a private e-mail earlier this week, we saw eras of low interest rates and prolonged negative "real rates" (accounting for inflation) from 1974 to 1980 and after the 2008 financial crisis. Gold shot to new all-time highs both times.
Today, the Fed is making gold cool again...
Interest rates are at 0%, which feels almost like an afterthought at this point while new stimulus packages are still being drawn up.
And as unprecedented trillions of "fake money" floods the economy in the form of central bank-printed dollars, yen, and euros, it takes more money to buy the same amount of assets like gold and silver.
This is a big part of the reason why many of our editors have long considered gold a "chaos hedge."
As Steve explained in a March DailyWealth essay, in times of crisis and afterward, gold prices soar over the long term after a brief "confusion period." We recently saw that period happen in March... Gold dropped along with the broader market to a low of $1,500 per ounce.
The spot price of gold is back to around $1,700 per ounce. And John firmly believes it will reach new highs at or above $3,000 in the near future.
Of course, the stocks of gold companies that are well-positioned in the precious metals industry benefit, too. Even more, these companies – if you know which ones are good, like John and Garrett do – will pay dividends.
So, if you want to preserve and grow your wealth in a prolonged bear market, allocate a fraction of your portfolio to gold today...
Some of our editors, like Ben Morris and Drew McConnell, suggest putting as much as 30% of your portfolio in precious metals today, along with a healthy allocation to cash. Others may say less. You must make decisions based on your own situation, time horizon, and risk appetite.
But the bottom line is... owning at least some gold or precious metals is something we can say should be a part of a well-allocated bear-market investment strategy.
And you're not going to find better guides and experts to explain the trends in precious metals to you – and recommend which gold stocks to own – than John and Garrett.
John and Garrett have fine-tuned a gold-stock portfolio system over the years that has generated incredible results...
Their model portfolio returned a cumulative 923% from 2001 to 2019, beating the major gold exchange-traded funds ("ETFs"), surpassing the average gold stock by nearly three times, and nearly doubling the return of the S&P 500.
They did it by fully vetting and researching only the best stocks in the gold universe, comparing them to each other with a standard set of metrics, and then compiling a short list of stocks that often outperform even big rallies in the price of gold itself.
From 2008 to 2011, for example, the price of gold jumped 163%. But industry leaders like Seabridge (SA) went up 225%. That's great... if you knew about Seabridge in advance.
John and Garrett's work is read by more than 40 of the top professional money managers at the world's largest hedge funds, as well as a host of other industry leaders. Our Steve Sjuggerud is one of their followers. And as he says...
I don't have to put my name and reputation behind anybody. But John and Garrett are the real deal. These are the guys that you want to listen to if you want to make money in gold and gold stocks.
After listening to John explain his system in our free videoconference, you'll actually have the information to do the work yourself... if you're retired and that was ALL you did with your time.
But we suspect many of our readers either don't have that kind of time or would rather be doing something other than researching stocks that John and Garrett could tell you about much quicker.
If that's you, the best thing you can do right now is to let them put their decades of experience to work... and benefit by signing up for their research.
If you're interested in hearing John and Garrett detail their latest thoughts on the gold sector today, we encourage you to watch the replay of their discussion.
Gold has never been cooler. And they explain how you can make big returns in this overlooked part of the market, which is critical while building a recession-proof bear-market portfolio.
As we said earlier, John and Garrett's video is absolutely free to watch. Click here to catch the replay.
All the best,
Corey McLaughlin
Editor's note: During his recent Gold Rally Kickoff Call, legendary gold investor John Doody shared his thoughts on the unfolding gold bull market. He explained what's going on with precious metals prices... explained their recent price volatility... and most important, told viewers about the right way to invest in gold today. You can't afford to miss out on potential triple-digit gains over the next few years. Click here to listen to John's message.
