|Home||About Us||Resources||Archive||Free Reports||Market Window|
Monday, November 7, 2011
"We believe gold will continue to rise... We expect gold stocks to do even better."
That was famed hedge-fund manager David Einhorn on a conference call last week. Einhorn isn't a lifelong gold bug... But he likes gold now. And lately, he's been switching out of the metal itself and into gold mining stocks...
Einhorn believes a "substantial disconnect has developed between the price of gold and the mining companies."
A month ago in my True Wealth Systems letter, I wrote the same thing... "Gold stocks are 19% undervalued," I said. "Whenever gold stocks have gotten this cheap by this measure, triple-digit returns have followed soon after."
It's happened three times in the last eight years. The longest it took to double your money was 13 months.
I reiterated buying shares of GDX (NYSE: GDX) – the gold stocks fund – in last month's True Wealth Systems letter. Shares of GDX are up 16% since I wrote that. So we're buying GDX... and David Einhorn is, too.
I had a new recommendation in last month's True Wealth Systems as well... buying shares of junior gold mining companies (through GDXJ – the junior miners fund).
Here's what I wrote:
Since I wrote that, junior gold mining stocks have soared... But the dramatic discount is still there. Take a look...
We have three possible outcomes:
I believe choice No. 1 is what will happen. But even if gold does nothing or falls, we could still do just fine... Einhorn explained why this week:
Gold stocks are cheap. Historically, they've brought home triple-digit returns within 13 months when they've been this cheap. Our systems say buy them. And one of the best hedge-fund managers is buying them, as well.
Consider buying shares of GDX or the junior miners with GDXJ today.
"If gold continues to rise," Steve says, "this investment could deliver huge gains. It's happened in all previous gold bull markets." See what he's talking about – and how to get in on what Steve calls "the best deal in most of our lifetimes" – here.
NEW HIGHS OF NOTE LAST WEEK
Starbucks (SBUX)... Big Coffee
MasterCard (MA)... credit cards
Cabot Oil & Gas (COG)... oil & gas
American Tower (AMT)... cell towers
Kanas City Southern (KSU)... railroads
NEW LOWS OF NOTE LAST WEEK
Sony (SNE)... giant Japanese electronics maker
Toyota (TM)... giant Japanese auto maker
Mizuho Financial (MFG)... giant Japanese bank
Rosetta Stone (RST)... language courses
Texas Industries (TXI)... construction materials
St. Joe (JOE)... land developer
National Bank of Greece (NBG)... Greek crisis
Cablevision Systems (CVC)... cable television
In The Daily Crux