Today, gold is in a full-fledged bull market.
The metal blew past $1,700 an ounce in April – a gain of 45% in a little more than 18 months.
I see no end in sight for these price gains. Bull markets end when there's no one left to buy. And as the coronavirus pandemic rages on, investors have several reasons to keep buying gold.
Importantly, the forces at work here are bigger than any individual crisis. They've influenced gold prices for hundreds of years.
So what's driving this gold bull market? Let's find out... And I'll show you a better way to profit than simply buying physical gold.
Gold price increases are typically due to three interconnected fears – collectively known as the "Fear Trade"...
- Fear of War
Whenever war breaks out, the loser's currency becomes worthless – German marks and Japanese yen at the end of World War II, for example. (Less recognized is that the winner's currency also suffers from the inflation brought on by the deficit spending required to fight the war).
- Fear of Recession
Economic recessions bring low interest rates. This means there's less competition from income-yielding assets that "barren" gold has to overcome for price gains.
- Fear of the Unknown
The value of fiat money – the printed paper that governments declare to be legal tender – is based on confidence in the issuing nation's economy. The unknowns can influence confidence. These can be internal unknowns: How much inflationary paper will be printed to fund the government? Or they can be external: How will the spread of coronavirus hurt a nation's economy?
Currently, war may not be an immediate concern... but Fear of Recession and Fear of the Unknown are driving gold higher.
The Federal Reserve has lowered interest rates to near zero. Investors looking for a safe haven don't have much reason to look any further than gold. Meanwhile, no one knows yet how severe or long-lasting the pandemic's economic damage will be.
And that means this gold bull market can last longer – and rise higher – than anyone expects.
But instead of simply buying bullion today, you can make far bigger profits by investing in high-quality gold stocks.
Gold stocks are tied to the price of gold... But they move more than the percentage change in the metal's price. That's because every $1 increase in gold's price boosts a company's profits equal to $1 times the annual ounces produced.
Gold bull markets can have even bigger impacts on a company's value because:
- They increase the value of reserve ounces still in the ground, which are often 10 times a company's annual production.
- Marginal ounces that were not cost-effective to produce at lower prices are now profitable to mine.
In my Gold Stock Analyst ("GSA") advisory, we take advantage of these trends. You can see how this worked out last year in our Top 10 portfolio, where we recommend the 10 best gold stocks for investors... Gold itself was up 19%. Meanwhile, the GSA Top 10 model portfolio was up 62.3%.
With fear running rampant in the markets today, the price of gold could ultimately soar to $3,000 per ounce or more. And the right gold stocks could outperform gold hugely in the months ahead.
That's why you need to seize this moment... and own the best gold stocks in the industry today.
Editor's note: From 2001 to 2019, John's GSA research service has produced audited gains of 923%. That's enough to turn every $25,000 into a quarter of a million dollars. Now, he believes we have a "perfect storm" for higher gold prices. And recently, he joined us for an online talk to explain why – and to share the best way to profit... Watch it right here.
"It has been used as a store of value and medium of exchange for thousands of years," Steve writes. This asset is one of the only forms of currency that no government can devalue... Get the full story here: The Biggest Worry for the World's Rich and Powerful.
"These days, people seem to be looking for fancy ways to profit during the current health crisis," Vic Lederman says. But in times of turmoil, it's usually best to keep it simple and look for assets that are bucking the trend. And these two sectors are clearly on a different path than normal stocks... Learn more here.
During a crisis, everything falls at first. And then one asset separates from the pack. That's exactly what's happening today in the gold market...
HAND SANITIZER AND BEER BOTH ENJOY HIGH DEMAND
Today, we're looking at a company that's adapting smoothly to today's coronavirus outbreak...
With much of the country shut down, many businesses have struggled to survive. Others sell products that are both desired and available no matter what's happening in the world, or have pivoted to meet shifting customer demand. Today's company is an example of both...
Boston Beer (SAM) is the $5 billion parent of Samuel Adams and Dogfish Head Craft Brewery. Liquor stores are still "essential businesses" even in states that have shut down, and folks stuck at home still want beer. Still, with restaurants and bars closed, SAM has made some changes... It's reprocessing unused Sam Adams into the gasoline additive ethanol, while its craft breweries now produce hand sanitizer.
SAM shares were in a multiyear uptrend before the COVID-19 outbreak, and they're back to new all-time highs... having more than tripled over the past three years. Alcohol is a consistent business. And Boston Beer's nimble adjustments have kept things moving even more smoothly...