The TRUTH Behind Gold's Recent Sell-Off Greg Canavan Editor Sound Money. Sound Investments
An April note from QB Asset Management contained the following...
'The crowd is ignoring the obvious and will miss great opportunity, in our view. Today's negative real interest rates amid one of the most inflationary global monetary regimes on record presents a rare chance to capture significant Alpha if/when the monetary system resets again (which we argue it must).'
'Alpha' is the return you get over and above that of the 'market'.
I firmly believe that Alpha is what you'll get — in spades — if you hold an overweight position in gold as the world transitions to a new monetary system.
By 'a new monetary system' I mean a system of international finance to replace the current US dollar-centric one. I know that's a big claim, and I don't think a new system is imminent.
But the current system, where the US dollar acts as the world's reserve currency, is no longer functioning properly. It's reached the end of its life cycle.
This is why you're seeing rampant money printing around the world — just to maintain marginal rates of economic growth. The system is broken.
We recently had a once in 33-year fall that saw gold down by 14% in two days. Many commentators now say 'gold is in the bear market'. Gold stocks have fallen off a cliff this year.
Do you know what I'm doing in response to that?
I'm buying more gold.
Gold has become a contrarian investment again. And that makes me very happy indeed. Because, as I'll show you, I believe gold could rise 700% from today's price.
As I'll show in a second, gold in April 2013 mirrored gold in August 1976...when a massive 50% correction in gold was followed by a massive bullion rebound and new record highs.
I think that's what you're going to see in late 2013 and through 2014.
That puts gold stocks at probably the cheapest and most oversold levels they have ever been. Look, if you've owned gold stocks over the past year you're licking your wounds.
But the survival circle is about surviving what's to come, and throughout history gold has been the financial weapon of choice when it comes to survival.
The current sell-off in gold and gold stocks is not the end of the 12-year gold bull.
It's the best opportunity to BUY INTO precious metals in at least five years.
But again, the 'reality control' machine is going to try very hard to convince you this is not the case.
Goldman Sachs just lowered its gold price projections. Credit Suisse and UBS are bearish. Citigroup says the gold bull market is over. You'll see way more of this in the months ahead. In fact you'll even see renowned gold bulls declare that we've seen the top of this cycle.
Don't buy into this. As I show in 'The Definition of Sound Money', before you can capture that Gold Alpha, the 'market' will do just about anything and everything to make you believe it isn't possible.
This is what happened in the last gold bull market in the 1970s. Gold fell 50%, from a peak of US$198 in late 1974 to just above US$105.50 in August 1976.
I didn't experience the 1970s gold market. But I reckon it would have been just as gut-wrenching as this gold bull is.
Of course, hindsight tells us that the nearly 12% plunge in August 1976 marked the final capitulation before gold went on to increase more than 700% in just under four years.
But those selling into the decline thinking the bull market was over had no idea what was coming. That'll happen now, too, for the rest of the year. You'll be taken to the edge...and perhaps pushed over.
It feels like many gold equity investors were pushed over the edge in April 2013.
And that, reader, has created an epic profit opportunity for you...
We're again in a period of monetary turmoil. Australia's dollar, as I've shown, is about to fall very hard. Global central bankers try to reflate their economies following the 2008 bust. And gold is again selling off.
As I show here, that's not rational.
In fact, you are being gifted with a buying opportunity.
Gold is going higher. But gold producers and explorers...yes, the same ones that have had 20%-30% scythed off their values in recent months...are going to go higher still.
Here's what I told the Australian Financial Review back in 2011...
'Greg Canavan, editor of Sound Money, Sound Investments says in the next few years $US5000 is "entirely reasonable" because "gold is the only unencumbered asset in the financial system. It's the only asset on central bank books that isn't someone else's liability."'
That holds as true now as it did the day I first bought bullion.
If the recent sell-off has spooked you, you're not alone. But that's how great long term buying opportunities emerge...when everyone is spooked and no one feels confident to buy.
