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And today it’s happening again! Back then, it was the gold fever of 1897, sparked by stories of riches — tales beyond the dreams of avarice — that poured out of Canada’s Klondike. Little creeks with names like Bonanza and Eldorado more than lived up to their names, as prospectors pulled fistfuls of nuggets from the icy waters and muddy banks. In the blink of an eye, entire towns were emptied as their residents picked up and set off for the gold fields.
The mayor of Portland … a former state governor … and a brigadier general (who also had the most lucrative law practice in the state of Washington) … were just three of the many who kissed their wives goodbye and hightailed it for the North Country, vowing to return as multi-millionaires. Some did get rich; plenty more ended up broke. But the one thing the Klondike gold rush shows us is that when the world catches gold fever, it’s like a force of nature. That’s the uncanny power of the yellow metal — prized since the beginning of civilization. Well, hang on to your hats. On Friday, the February gold futures contract closed at $557 per ounce — the highest level since 1981. This has set off a chain reaction of technical “buy” signals that are lining up to drive an ounce of gold to $600, $640 … and beyond. My view:
We May Be on the Cusp of a Gold Rush This time, there isn’t a new discovery of gold to spark gold fever. Quite the opposite — new discoveries of gold are getting fewer and further between, even as demand swells and swells. In fact, it is the scarcity of the metal that’s driving the gold rush. And this time, the riches won’t be limited to the far-flung gold fields. Average investors can participate right along with “the big boys.” Already, powerful forces are lining up that could trigger parabolic moves in select gold stocks in the next 12 to 18 months. And these forces won’t just affect the yellow metal. They will also impact your stock portfolio, even your lifestyle:
Force #1 Global spending for the exploration of nonferrous metals (mostly gold and silver) fell sharply to $1.9 billion in 2002 from $5.2 billion in 1997. Now, it’s back to an estimated $5.2 billion this year. But the dearth of spending for so many years has opened a large gap in exploration and development. Reason: It can take seven to ten years to bring a new mine on line. This gap is your window of opportunity — to buy the best mining stocks with the biggest piles of gold to feed the world’s nearly insatiable hunger for the yellow metal.
Force #2 I take no joy in saying this — I have greenbacks in my wallet, too — but the U.S. dollar is probably going to take it on the chin in 2006. Standing ready to push the dollar over the edge: China. China’s trade surplus is yawning to Grand-Canyon-sized proportions. And China’s currency, the yuan, still pegged to the U.S. dollar, continues to make its manufactured goods dirt-cheap in U.S. markets. But now, the U.S. and other leading Western nations are putting pressure on China to decouple its currency from the greenback. Well, Washington better be careful about what it wishes for! After all, China buys U.S. Treasuries by the bucket load to keep its currency pegged — in fact, U.S. dollar assets account for over three-quarters of Beijing’s $819 billion in foreign reserves. If China revalues its currency, all its Treasuries will fall in value. This, in turn, could prompt China to buy more things with rising value … like gold. Look. The U.S. needs to attract over $2 billion per day in foreign funds to keep the value of the dollar stable. All China has to do is buy FEWER U.S. Treasuries and it will start pushing the dollar down that slippery slope. Since gold is priced in dollars, as the greenback falls, that should send gold even higher. We saw both gold and the dollar rally in 2005 — a rare event caused by the Fed’s repeated rate hikes. Now, foreign countries are about to raise their rates, pulling money away from the dollar. That alone could send gold catapulting higher.
Force #3 Gold demand in the Middle East rose 11% in the third quarter of 2005. The biggest gain was in the United Arab Emirates, which saw gold demand rise by 13%. Now, the U.S. Energy Department forecasts that the oil revenues of OPEC, which controls 40% of the world’s oil supplies, will hit a record $522 billion this year.
Adding more heat to the fire is the escalating crisis with Iran and their nuclear sabre-rattling in the heart of the oil-rich Middle East. This could send Persian Gulf princes rushing into the Dubai gold market to buy more gold, an ideal haven in times of trouble. It’s all coming together to create … The Great Gold Rush of 2006 The new gold rush isn’t taking place in a vacuum. It’s happening in the context of massive shifts in the global economy, spiraling energy costs, dwindling resources, and the declining value of the money in your wallet. Just one of these forces would be enough to keep gold high and move it higher. Together, they’re working together like booster rockets all firing at once. That’s why the sky’s the limit on gold. And that’s also why I’ve just written a special report, “The Great Gold Rush of 2006,” naming the best and most powerful vehicles you can use to play the gold move to the hilt — right now:
Vehicle #1 Many people don’t know about this vehicle. And that’s a shame, because it’s the gold you can fold. The full name is the Perth Mint Certificate Program (PMCP). Michael Checkan and Glen Kirsch helped create this program for the Perth Mint ten years ago. There are four reasons PMCP is so popular, and they’re spelled out in their motto: “SAFE,” which stands for “Secure, Affordable, Flexible and Exclusive.” It’s … ”Secure” because it’s the world’s only government-guaranteed program. Of course, no one guarantees the value of gold, which can also go down. But the security from theft and other mishaps is so secure, the PMCP is permitted in self-directed individual retirement accounts (IRAs). ”Affordable” due to the low minimum purchase requirements and fees. There are no storage fees for unallocated (unsegregated) gold. ”Flexible” because there’s no pre-determined transaction size, other than the minimum purchase requirement ($10,000). ”Exclusive” in light of the relationship with the Perth Mint, not a foreign bank, and this is an institution that has provided safe storage for gold since 1899, almost dating back to the Klondike gold rush I told you about at the outset. For the details, visit www.PerthMint.com.au.
Vehicle #2 This is a unique CD offered by Everbank, a U.S.-based bank specialized in CDs that are pegged to things like foreign currencies and gold. Much like any U.S. bank CD, it’s insured by the FDIC. And like any CD, you earn interest on your money. The difference is that the yield you earn is pegged to the average 5-year price performance of the spot price of gold bullion, using 10 semiannual pricing dates. For more info, go to www.Everbank.com.
Vehicle #3 There are two gold exchange-traded funds — funds whose value is pegged to the price of gold bullion, minus nominal fees and expenses. These are not shares of stock, but they trade like stocks, with all the advantages of being able to buy or sell in liquid markets at almost any time. The two gold ETFs are the StreetTRACKS Gold Shares (GLD) and the iShares COMEX Gold Trust (IAU). They trade at roughly 1/10th the price of gold, minus a small amount to account for fees. So if gold is trading at $500 an ounce, you can buy the GLD or the IAU for about $50. In fact, you could say that a gold ETF is one of the easiest ways to buy gold. Because it’s so easy, Gold ETFs can see enormous flow of investor funds as gold fever heats up. So they’re bound to be the most liquid vehicle in the marketplace, good both for a long-term buy-and-hold strategy … and for trading strategies. You can download a prospectus for GLD from the Web or contact your broker for more info. And for ETF trading instructions, see my special report, The Great Gold Rush of 2006.
Vehicle #4 I like two in particular. One fund is the outstanding leader of the pack, loaded with industry heavyweights, and geared toward a buy-and-hold investor. It carries a four-star rating from Morningstar. The other specializes in stocks that are trading at a discount to the industry. That tells me this fund could outperform going forward. Click here to get more details.
Vehicle #5 The first is a gold miner with the smartest management in the business. Its output is growing by double digits and its earnings are growing by triple digits! It doesn’t hedge by selling in the futures markets. So it’s getting the full benefit of the gold price boom. Plus, it’s been busy buying up resource-rich competitors to position it for the coming gold rush. And yet I feel this stock is still a dirt-cheap bargain by many measures. I expect it to rise at least 33% in the near future, probably more with some time. The second senior mining company I’m hot to trot with also has triple-digit earnings growth … plus … a slew of new mines coming into production. It’s recently made a very smart merger that secures gold reserves for many years to come. And yes, it’s a bargain. I figure it could easily rise 57% from current levels — even more when the gold rush fever heats up. My report names the companies and gives you trading instructions on each.
Vehicle #6 I have four for you on my radar screen right now:
Are profits guaranteed? Of course not. Small-cap stocks are risky by nature and sometimes hard to buy or sell. And as with any investment, you CAN lose money. But, I’m convinced each of these is loaded with value and on the verge of blast-off. If you want to download my report, you can do so immediately. I think that will give you a head start on all the Johnny-Come-Latelies who will wake up and smell the coffee only AFTER gold makes its big move. Gold had a great 2005. But that pales in comparison to what we could see in the great gold rush of 2006. That’s why throughout 2006, I’ll send buyers of my special report at least four follow-ups. I don’t want you to jump into these investments now … and then have to sit around guessing about what to do next. When I think the time is right, I’ll update you on your positions, give you my latest signals, and help keep you on course. I’ll tell you when to take profits, when to buy more and, in the unlikely event I’m wrong about some of them, how to cut any losses.
The Early Bird When the wild reports of gold first came out of the Klondike, many hardened prospectors scoffed and turned their backs. But some moved fast, and they were the ones who reaped the biggest rewards. The gold rush went on for years and made a lot of people rich, but those quickest at the draw snatched the easy money — fistfuls of nuggets from the icy-cold waters. If you want to protect yourself from the global economic earthquake bearing down on us, and if you want to potentially maximize your profits in gold, don’t wait around. A gold rush like this one only comes along once in a generation, perhaps once in a century. My exclusive special report, plus the minimum of four follow-ups over the course of the year, is normally priced at $495. Order now, and it’s yours for only $295. If you’re interested, call 1-800-400-6916. Good luck and Happy Trading! Sean Brodrick About MONEY AND MARKETS MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM 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 inasmuch as we do not track the actual prices investors pay or receive. Contributors include Marie Albin, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.
© 2006 by Weiss Research, Inc. All rights reserved. |
Ten decades and nine years ago, the world burned with gold fever.
From San Francisco to Boston, people left comfortable lives and thriving businesses to walk, ride, sail and even balloon their way to the land of opportunity.
That’s an increase of 10%, a new record. Even adjusted for inflation, it’s the highest level in 25 years! Just a small fraction of those funds rushing into gold markets should be rocket fuel for gold prices.
