Gone Since March… the Gold Bull Market Is Officially Back By Dr. Steve Sjuggerud Tuesday, September 11, 2012
The bull market in gold is 100% back. Wait, how do we know? What does a bull market in gold look like? And even better… how much money can we make? Let me answer those questions for you today… ----------Advertisement---------
--------------------------------From 2000 to 2011, gold was in an incredible bull market. But after rising for 11 straight years, gold peaked at around $1,800 an ounce in August 2011. It then fell to around $1,600. And for the last 11 months, gold has been downright boring, drifting around $1,600 an ounce. But that has changed… Two weeks ago, the Fed essentially told us that it's willing to print more money when needed. This causes the price of gold to rise… You see, when there are more dollars out there, and the same amount of gold, it takes more dollars to buy an ounce of gold. And gold is finally going up again! It's in an uptrend. The simplest, most common measure analysts use to gauge when an investment is in a new uptrend is the "200-day moving average." When a stock (or any other asset) is trading above its average price for the last 200 days, it's in an uptrend. For the first time since March, gold has risen above its 200-day moving average. So gold is now "officially" in an uptrend. It has been in an uptrend for a couple weeks now, and it appears solid.
Why is an uptrend so significant? Uptrends are where you make the big money… Since late 1971, gold has increased at a compound annual rate of 9% a year. But when gold is in an uptrend (when it's trading above the moving average), your wealth compounds at 18% a year. If you're interested in the actual numbers… we used month-end data instead of daily data to measure this uptrend. This significantly helps limit "false" signals. And we used 10-month moving average as opposed to a 200-day moving average (10 months have roughly 200 business days). Interestingly, there is nothing magical about the 200-day or 10-month period – the results were similar for eight-month, nine-month, and 11-month moving averages. Generally, your wealth compounds at about 18% a year (or more) when you own gold when it's above the moving average. That's incredible. The chart below shows what I mean…
You're "in" the trade when it's green and "out" when it's red. By using this system, you are a little late to get in and a little late to get out. And you'll get an occasional false signal. But generally, it's a pretty darn profitable – and simple – system. Today, gold is above its 200-day moving average for the first time since March. It has stayed above its moving average for weeks. In short, it appears the gold bull market is back… This is good news… Going back over 40 years, your wealth compounded at about 18% a year when gold was in a bull market.
If you've been looking for the right time to get back into gold – or add to your position – now is that time… Gold is in a bull market again. You want to own it now. Good investing, Steve Further Reading: In April, Brett Eversole told readers the spring downtrend in gold would reverse. "The fundamental picture for gold has not changed," he wrote. "And based on history, we can expect to see a new high in gold prices in 12 months or less." See what had him so sure – and why he's convinced gold will continue to soar – here. If you missed the initial gold breakout, don't worry… Resource expert Matt Badiali says you don't need to catch the start of a big bull market in gold to profit. You just need to look in the right place… Even if the gold rally falters, you can reap the rewards from one of Matt's favorite sectors. "And if the rally continues," he says, "the rewards will be that much bigger." Learn more here: The Secret to Making a Great Gold Investment Today.
The Secret to Making a Great Gold Investment Today By Matt Badiali, editor, S&A Resource Report Monday, September 10, 2012
You don't need to pinpoint the next great gold discovery to make a fortune in gold stocks... And you don't need to catch the start of a big bull market in gold... There's a way to profit that's safer than buying tiny explorers... And it can work even if gold doesn't move up by a dollar. Good miners are always exploring for and building the next mine. Think about it like LaGuardia Airport... There are some planes at the gate, some landing, and some still in the air. A good miner has producing mines... But it also has several in various stages of development. And as long as it's growing its production, shareholders can profit. A great example is Eldorado Gold (EGO), a global gold miner with mines primarily in Turkey and China. In 2005, Eldorado Gold sold just 66,804 ounces of gold. By 2011, it produced nearly 10 times as much...
Year
Ounces of Gold Production
2005
66,804
2006
135,653
2007
281,135
2008
308,802
2009
363,509
2010
632,539
2011
658,652
And as you can imagine, this was great for its shareholders. Shares of Eldorado Gold soared more than 400%. Many of you will correctly point out that during those seven years, the price of gold soared as well. But even if gold hadn't budged, Eldorado's revenues would have gone up nearly tenfold. You can see what a difference that kind of growth makes in the chart below. It shows Eldorado in black versus the big gold miners index (the HUI). And as you can see, Eldorado significantly outperformed the average big gold stock.
That several-hundred-percent difference is due to Eldorado's steady increase in production. You see, the gold miners in the HUI haven't been as diligent at increasing gold production... Eight companies make up 67% of the HUI today. Only four of them grew production from 2005 to 2011. That's a terrible record. In fact, the HUI's gold production from those eight companies grew just 11% over that period. That's why Eldorado's shares blew the HUI away.
And there are plenty of gold stocks poised to do the same today... Take $8.5-billion gold miner Agnico Eagle (AEM), for example. It produced 850,000 ounces of gold in 2011 and will produce 1.1 million ounces by 2014. If the price of gold remains flat over the next two years, we should still see Agnico Eagle's share price rise at least 30%, simply from the production growth. Another example is Yamana Gold (AUY). The company will grow its gold production 46% by 2014 from three new projects in Brazil. Its share price should move up as well. For those of you interested in picking through the gold miners today, look for those companies with a solid portfolio of new production coming soon. You'll be rewarded, even if the price of gold doesn't cooperate. And if it does... the rewards will be that much bigger. Good investing, Matt Badiali P.S. I've been telling my S&A Resource Report readers about another safe strategy for making big profits in the gold sector... owning royalty interests. This strategy is safer – and offers bigger potential returns – than buying most ordinary gold stocks. You can learn more about it here.