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Europe is having a “Holy Cow!” moment right now. That’s the kind of moment when the basic assumptions that form the “solid” cornerstones of your life suddenly crumble like soft clay.
Europe’s assumption: That the euro would last forever. WRONG! Many people wonder if the euro will exist in a few years. Heck, the euro as we know it might not last past next month!
And that’s just one of five forces that are poised to send gold hurtling higher … to $1,350 … $1,450, $2,300 and beyond. And this could happen a lot faster than most people can believe possible.
I’ll tell you more about those five forces. Importantly, if you think Europe’s problems will stay on the other side of the Atlantic, think again. There is a tsunami of trouble headed America’s way. And if you aren’t already holding as much gold and silver as you need to ride out a financial crisis, you better start thinking of what you’re going to buy — in hard metal and select mining stocks and funds.
I can help you with what to buy, too. First, let’s talk about those five forces.
Force #1 — Britain Tells Greece: “Abandon the Euro”
Greece is the epicenter of the financial earthquake that is shaking the euro zone to its foundations. The Greeks simply borrowed way too much for too long and now they can’t afford to pay it back — despite a $143-billion bailout package from the euro zone and International Monetary Fund.
Now, British economists have advised the Greek government to leave the euro and default on their sovereign debt to save the Greek economy.
The London-based Centre for Economics and Business Research warned Greek ministers they will be unable to escape their debt trap without devaluing their own currency to boost exports. There’s only one way this can happen — if Greece returns to its own currency.
If Greece exits the euro, two other financially strapped European countries, Spain and Portugal, would probably follow suit. These three ailing euro-zone countries have issued public and private debt worth $2.6 TRILLION, according to economists at The Royal Bank of Scotland. That’s equal to a whopping 22% of the region’s gross domestic product. There’s no way in heck those countries can pay that back.
Exiting the euro is fast becoming the only real option.
Now, consider that in Greece, vendors are selling gold coins on the steps of the Athens Stock Exchange, as frantic citizens cash in their paper assets and convert them to gold. Also consider that Germans, terrified of the kind of currency crisis they went through in the 1930s, are even now rushing to buy gold coins. Consider what will happen if this same scenario starts playing out in Portugal, Spain — heck, maybe across Europe! That could send gold prices CATAPULTING higher.
Force #2 — Central Bank Buying Is Poised to Start in Earnest
Central Banks used to be net sellers of gold. That all changed in 2009 due to a couple of factors.
First, central banks in Russia, China, India and other emerging countries needed to balance out their vast U.S. dollar reserves, and the easiest way to do that was to buy gold.
Second, as the financial crisis reared its ugly head last year, central bankers that used to be sellers — many of them across Europe — stopped selling because they needed hard assets in case of a run on the bank.
Now, central banks are net buyers — to the tune of about 425 metric tonnes last year. The reason is simple: If their fiat (paper) currencies are sliding lower, the easiest way to prop them up is with gold.
This year, who knows? But I’m betting they’re going to buy a LOT more!
In fact, the IMF sold 15.1 metric tonnes of gold in April, according to Bloomberg News. With gold trading at about $1,200 an ounce, that’s roughly $600 million dollars in gold. And ALL of it was snapped up by Central Banks.
And it’s not just central banks. In just the euro zone alone, banks face up to 195 billion euros in a “second wave” of loan losses. These banks are facing a crisis of confidence. There’s one quick way to set those fears to rest — to let the public know you have a lot of gold in the vault!
Force #3 — Smart Money Is Loading Up on Gold with Both Hands
Assets in the popular SPDR Gold Shares ETF (GLD) hit a record $48.8 billion last week, according to State Street. And it’s only one of many gold ETFs in the world — all of which are adding gold at a furious pace.
All together, the physical gold ETFs in the world now hold more than 78 million troy ounces. That’s 2,426 metric tonnes — or more than all the gold produced by mines last year.
The growth in demand for gold from exchange-traded funds is enormous and accelerating. Mine supply can’t keep up.
And that brings me to force #4 …
Force #4 — Supply Is Stretched to the Breaking Point
Supply from mines peaked in 2001 and have fallen in five of the last eight years. Miners in places like South Africa are now digging as far as 2½ miles below the surface of the Earth to get gold.
While it is true that gold production rose from 2260 in 2008 to 2350 metric tonnes in 2009 according to estimates by the USGS, that does not reverse the trend of declining gold production in the world. Falling production in places like South Africa will soon make the trend negative again.
Estimates put the world’s existing stock of processed gold at 160,000 metric tonnes, with about 2,400 tonnes being added each year. That amounts to a growth rate of just 1.75%, well below the worldwide increase in demand. There is scrap gold sold on the market, and there is more of it as prices go higher. But even scrap has its limits, when central banks, exchange-traded funds and smart investors are buying every ounce of gold they can find and sitting on it.
Why? I’ll tell you why …
Force #5 — The U.S. Financial Crisis Is Just Starting
Europe has its debt problems, but they pale in comparison to the enormous debts looming over America.
Gross U.S. debt is approaching a level equivalent to 90 percent of the country’s gross domestic product, Carmen Reinhart, a University of Maryland economist, recently told a bipartisan fiscal commission making recommendations to the White House and Congress. When gross debt hits 90% of GDP, Reinhart told the commission, growth “deteriorates markedly.” Median growth rates fall by 1%, and average growth rates fall “considerably more,” she said.
It gets worse! The IMF has said that the gross public debt of the U.S. will reach 97% of GDP next year and 110% by 2015. There’s a word for that kind of debt: Unsustainable! The danger is that if debt slows growth enough, the country is never able to grow its way out of debt.
So now the White House and Congress are dancing on a knife’s edge, trying to balance an urgent need for stimulus spending to goose the economy while wary of the danger of adding more debt which would kill economic growth.
Larry Summers, President Barack Obama’s top economic adviser, has asked Congress to “grit its teeth” and approve a fresh fiscal boost of $200 billion to keep growth on track. “We are nearly 8 million jobs short of normal employment. For millions of Americans the economic emergency grinds on,” he said.
Whether through Congressional action or Presidential order, we will probably see the Treasury printing presses kick into high gear. And this will likely add to monetary instability. I expect the same choice will be made in Europe, despite the European Central Bank’s anti-inflation mandate. If the ECB won’t inflate its way out of trouble, individual countries will dump the euro and do it themselves.
I’ve told you about bullish forces driving gold in previous issues. And the long-term trend in gold is higher for many reasons that I’m not going to list here. But each of these five forces that I’ve told you about today has the potential to send gold to $1,450 or higher on its own — this year! Together, they form a nearly unstoppable force. You can either ride this wave or get steamrollered by it.
In troubled times, gold is the ultimate safe haven, the place to park at least some of your assets when the manure hits the fan. Indeed, we’re in the kind of times where gold will hold its value better than any other asset class.
And I believe gold will more than hold its value — the right bets in gold can offer you extraordinary returns!
Sure, there’s the risk you can lose money, as there is with any investment. But as the great George Bernard Shaw once said: “You have to choose between trusting the natural stability of gold or the natural stability and intelligence of members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.”
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| Yours truly exploring a mine first-hand. |
The Next Step — For Select, Elite Investors
There are other ways to invest in gold and silver, of course. One very good way is with select miners that are poised to rocket higher when precious metals rally. I travel to a lot of miners, and I see the good and the bad. And now I’m putting 10 of my favorites together in a special report.
I’m talking about stocks like …
- Company #1. A miner that is growing its gold production, has cash costs, is an earnings powerhouse, has large reserves AND a strong balance sheet — and it has one of the most respected management teams in the industry.
- Company #2. A miner operating in China, developing low-cost deposits with world-class potential. This one is off Wall Street’s radar, but is poised to be a real high-flyer!
- Company #3: A miner with global reach and a fat pipeline of new projects that will come online over the next few years, sending the stock of the world-class gold producer soaring.
- Company #4. An explorer that has fast-tracked one of the biggest undeveloped gold projects in the world. It should deliver a project assessment in 2011, and if that turns out as positive as I think it will, this baby could be snapped up by one of the majors very quickly.
- Company #5. A miner going after the same gold went into the tombs of the pharaohs of Egypt — and finding a king’s ransom in treasure. It is ramping up production and is a major takeover target!
Plus, if you think gold is in for a big move, just wait till you see what’s going to happen to silver. And I’m also giving you my three top picks in silver …
- Company #6. A company that has multiple revenue streams in silver. It keeps adding to its reserve base, and has very low costs — which makes it especially well leveraged as the price of silver takes off.
- Company #7. This miner has three producing silver mines in Mexico. They have a big pipeline of new projects to keep them busy and light a fire under the share price. Earnings per share should nearly double next year.
- Company #8. A silver miner working in one of the highest-grade silver districts in the world. It has a big-name partner, a fast-track to production, and should be in production by the end of this year.
- PLUS — my 2 top picks for the best funds to ride the precious metals boom. These are good holds for the long haul, and you can just ride these funds as it makes the most of the coming gold supply/demand squeeze.
That’s 10 picks in all — 10 high-powered precious metal superstars for 2010.
These picks are in my hot new report, The New Gold Rush — to $2,000 and Beyond.
In this report, I’ll also tell you …
- The best ways to buy gold and silver bullion. Plus, where you can buy gold and silver bullion online, and how much shipping will cost you.
- 8 Forces lining up to drive gold prices through the roof
- The outlook for silver — why it should outperform gold
- PLUS, as a special bonus, I’ll tell you how you can buy a precious metal most people are ignoring — one with the potential for triple-digit percentage gains!
This report comes out on June 11 — one week from today! And if any of these picks move out of my “buy” range, don’t worry — I have a whole bushel of other great picks, just waiting for me to pull the trigger.
When the Big Money Catches Gold Fever,
There’s No Telling How High It Can Go!
Millions of investors, burned by market volatility, are not paying attention to gold right now. They have no idea of the enormous profit potential. They are going to miss the boat entirely. But not you, provided you get my new gold report, The New Gold Rush — to $2,000 and Beyond.
In it, I’m going to go into detail on the forces I see driving gold and silver — and I’m going to offer my best picks to get the most out of gold’s coming surge.
This is a tricky market — you can’t just buy anything because not everything is going to go up. So you really need to see this report. I’m not saying that gold investments are a sure bet. Nothing is, and losses are always possible.
On the other hand, a big payoff is also possible. Heck, subscribers to my last two gold reports should have been able to bag total gains of around $3,800 on one report and $6,792 on the other in gains before commissions. And subscribers to my Agriculture Report should have been able to bank around $9,499 before commissions in three rounds.
Sure, past gains are no indication of future performance. And results may have varied depending on the price and commissions paid. But here’s the best part: My new report will sell for a cover price of $195 — but I’m going to offer my special gold report to YOU for a limited time at a special price of $149 — a HUGE discount!
This report would be cheap at triple the price. Don’t miss out on this opportunity. Call 800-291-8545 to order your copy of The New Gold Rush — to $2,000 and Beyond today. Or you can order it online just by clicking this link.
Yours for trading profits,
Sean
P.S. The time to sit on the sidelines is over. The time to act is now! These 10 red-hot precious metal picks for 2010 are poised to rally hard, and they could go ballistic if any of the five forces I mentioned comes sooner than people are expecting. As in any gold rush, the people who move early tend to get the biggest gains. Get on board this profit train now, before it leaves the station — or you’ll wish you had.
About Uncommon Wisdom
For more information and archived issues, visit http://www.uncommonwisdomdaily.com
Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in UWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Roberto McGrath, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Marty Sleva, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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{ 10 comments… read them below or add one }
Wow, all that just to scare us into buying your expert newsletter for recommendations. Why don’t you just say buy a gold ETF instead of all those stocks especially if you say future results are not guaranteed?
You didn’t even mention the potential buying power of hundreds of millions of Chinese.They don’t have a honest currency like the U.S. had a hundred years ago,when it was the world’s growth engine.Inflation is higher in China than the U.S. and if it’s citizens start moving towards gold that would definitely send gold higher.
do you think rising interest rates will affect the upward price of gold?
You talk about the price of gold rising, and recommend miners…but who knows how these companies are run, the reserves of their mines, political risks, strike risks, dishonesty as many of these mines are in unholy countries. You are convinced the price of gold will rise,but fail to mention anything about inflation. The two should go hand in hand. Commodities in general are falling; and deflation is a real possibility, due to the end of goverment stimulus and no more bail outs. Cuts in the public sector will multiply this effect. All this, and the price of gold is rising? Get real!!!
Sean,
“The New Gold Rush — to $2,000 and Beyond” report
I am an Australian investor who believes there is ample opportunity without going outside the Australian market.
Do any of your recommendations refer to companies listed on our ASX Exchange?
Also, are there comparable ETF’s,simialr to you rsuggested buys, listed on the ASX?
I enjoy your articles especially the logic you apply.
Regards
Keith
I think the report is worth the money asked x10… if you are not an expert in mining shares. The above comment about buying ETF’s instead of solid mining shares is foolish IMHO. The ETF GLD and the ETF SLV are selling derivative paper bullion as much as 100:1 vs. physical PM’s in the vaults. Furthermore, class action law suits are going to be announced out of New York soon (2 weeks) against JP Morgan and HSBC for manipulation through naked shorts on the COMEX and LBMA. The Justice Dept is investigating them too! People are calling in for delivery RIGHT NOW at an exponential rate. Can you say
Short-squeeze! Average mining shares out performed physical bullion 40:1 1979-1980. Sean….you are A-OK in my book and deserve the lousy report fee. I know I sound like a ringer…but I am not. Sean is telling the unmitigated TRUTH. This is a once in a lifetime opportunity.
Dear Mr. Weiss,
You guys are simply amazing.
Thank You and the TROOP.
That’s a great point he didn’t mention how the Chinese people are now allowed to buy gold and are taking advantage of it which is going to drive gold prices even higher. I am interested in investing in gold but don’t know who to purchase from. I have done some research and found Regal Assets is a good company. Can anyone give me some help? Thanks
How about Kitco pool accounts for buying and storing precious metals?
Should tha dow and US bonds drop dramatically,what reaction should we expect in the markets of countries rich in natural resources like Canada,Brazil, Mexico,Australia.How do you expect their currencies to react???