Bad news for stocks has been good news for gold… This chart says the bottom is in for gold miners… The crowd is starting to pile in… In the mailbag: Is there nowhere to hide?…
As we’ve been telling you, October has been ugly for stock market investors.
Here’s how our Investment Director, Grant Wasylik, updated the team here at Legacy Research over the weekend…
Rough week for the markets. Here’s how the major U.S. stock market indexes fared…
The S&P 500, the Dow, and the tech-heavy Nasdaq dropped by about 4%. And the volatile Russell 2000 index of small-cap stocks dropped by about 5%.
It was brutal across the board. Only 32 stocks in the S&P 500 – or 6% – were up for the week.
But the bad news for stocks has been good news for the gold sector. Grant again…
Gold did its job. It rose by just over 1% last week as the rest of the market tumbled. And gold miners were up 6%. This flowed through to several Casey Research mining stocks.
Several of the gold miners E.B. Tucker and Dave Forest have in their model portfolios were up high double digits. The top performer was up nearly 20%.
It’s something master trader Jeff Clark has been tipping off his paid-up Delta Report subscribers about.
We know some folks think chart analysis is mumbo-jumbo. But Jeff’s track record speaks for itself. Since Jeff launched Delta Report in 2017, 80% of his trades have been winners… including over 78 double-digit gainers.
And he’s done it all through chart analysis… or what Wall Street types call “technical analysis.”
The chart that’s grabbing Jeff’s attention right now is of the VanEck Vectors Gold Miners ETF (GDX) going back to the start of the year.
GDX tracks 48 of the world’s largest gold mining stocks. This makes it a good proxy for the gold mining industry. Take a look…
GDX has formed what traders call an “inverse head-and-shoulders pattern.” It’s one of the chart formations Jeff uses to help him spot the bear market bottoms. As he explains it…
This pattern is used to predict a downtrend reversal. It starts when the price of an investment falls to form a trough [the first shoulder… or left “S” on the chart] and recovers. Then it falls again to form a lower trough [the head… or “H” on the chart]. Then it recovers to the previous high set after the first trough.
Finally, after the price falls again to form a third trough [the second shoulder… or the right “S” on the chart] – but not as low as the previous one – the pattern resolves in a breakout to the upside.
As you’ll see from the chart above, that’s almost exactly what’s happened with GDX. As Jeff told his readers, that means you should expect higher gold stock prices ahead.
Dave Forest is the guy Legacy Research cofounder Doug Casey handpicked to run our elite natural resource investing advisory, International Speculator.
Dave is a geologist with more than two decades of experience in the mining and gas-and-oil sectors. He’s also involved in raising funds for new mining enterprises. So he knows the industry inside out.
Over the last few months, I’ve been hearing more about gold financings quietly getting done – at a significant scale. One private firm I know just raised $8 million for a slate of gold projects in Africa. The assets are in the exploration stage, and the company isn’t trading yet.
That kind of enthusiasm among the industry’s inner circle – at a time when general sentiment is so low – is interesting. Public sentiment is horrible at a time when insider deals in the gold sector are running hot. And that’s extremely bullish.
Here’s what he told us after watching last week’s market action…
The interesting thing about last week’s action in publicly traded mining stocks is that a roughly 1% move higher in gold triggered such a strong rally for the gold miners. If you look at GDX, it shot up by more than 6%. And some individual gold miners went a lot higher than that.
As I’ve been saying, we’ve been seeing all this insider financing activity in the gold market. Now, the wider public is just looking for a reason to get excited about gold stocks. If a $20 or $30 move in the price of gold bullion can cause that kind of reaction, what do you think will happen when we see bullion up $50 or $100?
That’s when the lid is really going to come off.
If Jeff and Dave are right, now is a great time to be a gold buyer. We’ll be continuing our deep dive into gold later this week… with insight from Legacy Research cofounder Bill Bonner.
We’ll also be talking to another of our go-to gold experts, Strategic Investor editor E.B. Tucker, about the best ways to buy. Stay tuned…
200 countries and nowhere to hide? It looks like 1984 is going global as we speak. What do you expect from people who evolved from dirty, smelly primates?
– Ken V.
My personal choices from your responses are Ireland, Austria, and New Zealand. Very interesting article, thanks. 👍
– Marilyn K.
Meanwhile, an interesting suggestion from a fellow reader…
Religions are based on scripture, which is mostly poetry. So it only makes sense that religious conflict must be resolved through poetry, and not through politics, negotiation, or war. I propose that all religious conflicts be redefined poetically, so that they can be resolved without bloodshed, winners, or losers.
So let’s sharpen our words, not our swords; send missives, not missiles; and apply our minds to metaphor, simile, rhyme, meter, and prosody, but not pomposity, animosity, ferocity, atrocity, or monstrosity.
– Hugh M.
Are you buying gold or gold stocks? Let us know how it’s going at [email protected].
October 16, 2018
P.S. I (Chris) am flying out to Bermuda this evening ahead of the first annual Legacy Investment Summit. Teeka Tiwari is already there. So is Bill Bonner. The rest of the team – Doug Casey, Dave Forest, Jeff Clark, E.B. Tucker, Nick Giambruno, Marco Wutzer, Dan Denning, Jeff Brown, William Mikula, and Jason Bodner – will be joining us soon.
We’re going to be taking a deep dive into everything from the rise of the digital police state… to what’s next for gold… to the coming commodities boom… to the next leg-up for cryptos. If you’ve got a ticket, I look forward to seeing you at the welcome cocktail reception on the beach tomorrow. If you can’t make it, don’t worry…
We’re going to be livestreaming the whole thing… so you can catch all the ideas, insights, and recommendations from the comfort of your home. Find out how to get access here.