Why Gold is a Cinch to Move Higher
Gold has corrected nicely – down from $1,900 an ounce in mid-August to $1,633 an ounce as I write.
I say “nicely” because this correction is handing us a fantastic opportunity.
Gone from the gold market are all the short-term players, like cab drivers and bartenders.
They’ll soon be full of regret because the real gold mania hasn’t even begun yet.
When it starts, I’ll know…
How? Because gold stocks will finally be active participants in the rally.
Indeed, margins, profits and cash flow of gold companies are soaring, as they should be.
But despite the price of gold quadrupling, gold shares haven’t been even sniffed their early 2008 highs.
Such a reality can mean only one thing…
Investors still don’t believe that the price of gold is headed higher.
Only Upside From Here
Why am I so convinced that gold is about to rally again?
It’s simple, really – the world’s liquidity measures.
You see, the U.S. Federal Reserve has been running its printing press for months, with no end in sight.
More dollars will hit the financial system in the coming weeks via further Treasury market operations – i.e. quantitative easing, stimulus, rate maneuvers, tax policy… Call it whatever you like, it’s all just money printing in one form or another.
Last week, the United Kingdom added more liquidity to its economy – over $100 billion worth.
In the coming weeks, the eurozone will do the same, while also lowering interest rates.
The problem is, all this money is being created from nothing!
And it’s this continuous worldwide debasement of currencies that will create a base for gold prices for years to come.
Only this time, I suggest playing the forthcoming rally with mining shares, since they’re primed to rocket higher.
The Best Way to Play the Rally
Gold’s fundamentals are excellent, just from a monetary policy point of view.
Add in emerging market demand and a hedge against calamity, and you set the stage for a long and prosperous run.
Investors take notice…
Ignoring this opportunity is how you stay poor. If gold prices go lower, buy even more.
So without further ado…
#1. The Pure Play: Goldcorp (NYSE: GG) – If you want a pure, unadulterated play on gold prices, this is your best bet. It’s unhedged and a low-cost producer.
Both are early stage producer/explorers trading at less than $3 per share. They each benefit from finding new viable mines and selling them to the majors. Even more compelling, the junior miners are down more than 50%, making them quite attractive if you’re buying my gold thesis.
#3. The Ultimate Gold Play – In our just-released issue of The White Cap Report, I recommended a company on the verge of a MAJOR upside breakout.
It’s a mid-tier producer with incredibly strong growth prospects. It also just reported excellent numbers for the last quarter.
As my White Cap readers know, I’ve already played gold successfully twice. My initial target this go-round is for 100% gains.
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Ahead of the tape,