Gold Has Bottomed, The Next Price Target is $2,400
Gold has just completed a 2-year correction and 1-year consolidation that has carved out a technical bottoming process. Gold is currently very oversold and resting at support near the all-in cost of production. Our analysis suggests that the next wave higher will push the gold price to a minimum of $2,400 and maximum of $3,600 by the end of 2016. The $2,400 price target is the inflation-adjusted all-time high for gold and would match the previous advance. The $3,600 price target would be consistent with the prior pattern of advanced, whereby each upleg doubles the magnitude of the previous upleg.
If you think our price targets are bullish, consider that John Williams of Shadowstats.com forecasts that gold needs to climb to nearly $9,000 and silver to over $500 per ounce to match the inflation-adjusted highs attained during 1980. All of the fundamental conditions that generated gold’s 1980 high are much more severe today.
Bearish sentiment is currently dominating investor psyche and most people cannot imagine a push to $2,400 or higher. Yet, there is historic precedence for such a move and both the fundamental and technicals support such a power advance.
The U.S. dollar and other fiat currencies are rapidly declining in value as the Federal Reserve, ECB and Western governments are printing and borrowing with reckless abandon. This race to debase is creating ripe conditions for inflation and the potential for hyper-inflation in the coming years. Adding fuel to the fire, Russia, China and countries around the world are starting to bypass the dollar in international trade. Indeed, it appears the days of the dollar as world reserve currency are numbered!
Profit from Leverage in Undervalued Mining Stocks…
While gold and silver will be excellent investments and we advocate holding some physical in your possession, the biggest opportunity for gains is with mining stocks. The best in breed companies are now more undervalued than at any point since the start of the bull market or depths of the financial crisis. Sentiment has been extremely bearish, which is precisely when large upside moves historically tend to occur. The following chart shows the gold stocks index (HUI) vs gold, depicting just how undervalued mining stocks have become. Mining stocks are now more undervalued than at any point since the inception of the gold bull market back in 2001!
Meet the Editor, Jason Hamlin…
My name is Jason Hamlin I spent nearly a decade in analytics for the world’s largest research firm. I quit the corporate world shortly after the bull market in precious metals got underway and was successful as a private investor and helping family members turn around their portfolios. I decided to turn my focus from helping fortune 500 companies to helping everyday investors that were struggling to achieve strong gains in the stock market. It was the best decision that I have ever made and I have never looked back.
My investment philosophy that takes into account political, historical and socio-economic factors to determine macroeconomic trends and isolate the sectors that stand to gain the most. I then apply fundamental and technical analysis, as well as proprietary models, to find the companies within these sectors that will outperform their peers.
Core Investment Principles
At present, the following beliefs are at the center of our investment philosophy and drive our investment strategy:
1) High inflation and devaluation of the U.S. dollar are inevitable.
2) Political instability and growing distrust of fiat currency will favor gold.
3) The stock market rally is artificially-induced and is therefore unsustainable.
4) Gold and silver are real money and will return to having a larger role in global finance.
5) Precious metals are significantly undervalued and the gold bull market is far from over.
6) It is wise to hold a portion of your wealth in physical bullion within your possession.
7) Mining stocks are oversold, undervalued vs. the metals and will offer leveraged gains.
Lastly, I believe in the companies that I write about and never accept payment to pump a particular stock, eliminating any conflict of interest.
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Jason Hamlin is the founder of Gold Stock Bull and publishes a highly-rated investment newsletter focused on strategies for profiting in the bull markets in gold, silver, energy and agriculture. Mr. Hamlin has a background analyzing charts and trends for the world’s largest market research company, is versed in fundamental and technical analysis and has consulted to Fortune 500 companies around the globe. Jason is a cycles investor, student of Austrian economics and speaks regularly at investment conferences throughout North America. The Gold Stock Bull newsletter is focused on finding junior mining companies that are undervalued relative to their peers.
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