The past couple of weeks, we’ve seen some of the worst sentiment for gold going back decades in some cases.
For one glaring example, we currently are seeing open interest on the futures markets lower than at any point going back 17 years:
I recently talked about how the Gold Miners Bullish Percent index hit ZERO.
American gold ETFs have seen their largest outflows ever:
But in China and India, the story is different. They’re playing a different game. Asian gold ETFs are still showing inflows.
In India, gold buying by private citizens was getting so crazy that in May, Prime Minister Modi asked his people to stop buying gold for at least a year.
Here in the west, we’ve seen price weakness after a historic run-up earlier this year. For long-term gold investors this correction is a welcome reprieve. It’s hard to buy bargains when the price of gold is making new all-time highs, every week. And the name of the game in resource investing is: you must buy when everyone else is heading for the exits.
A combination of the Iranian war, a potential rate hike and a slightly stronger dollar has chipped 20% off the price of gold since January.
But the fundamental story for gold is no different than it was in January. Massive unfunded debts. A de-dollarization trend ongoing globally. Not a whisker of monetary/fiscal stewardship in any branch of government.
That means we have an opportunity to arbitrage the future value of gold and gold stocks.
The value proposition has scarcely been better for gold stock investors.
There’s a monumental mismatch between price action and what we know is coming for the future of the dollar and other major currencies.
If you missed out on the big gains from the past 18 months, many of the best gold stocks are back at square one – except the price of gold is well above where it was 18 months ago. So, you can buy the same stock at a much better valuation.
For one example, I just sent an update to my readers this morning about a gold miner that owns one of the best mines in Central America. It will soon be producing 1 million ounces of gold per year. That makes it a tier-1 gold operator.
This company sells for 50% less than what it traded for in March of this year. It sold for the same price in 2021… when gold was $1,800/oz.
At $4k gold, this company should be worth close to 3X what it trades for today.
The market is leaving these companies for dead. For value-oriented investors, it doesn’t get any better.
I know you may be reluctant to step into this gold market. And I get it. That’s why I created a special project oriented for people who don’t want to spend a bundle on my research. I’ve put a selection of some of my favorite gold stocks in different stages of production, maturity and safety into a small portfolio.
You can check out exactly how this smaller portfolio works here.
Have a great weekend.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
