Too late for gold?

I was 13 years old when India was in crisis. He had borrowed too much dollar money and was desperate to pay it back.

India urgently needed dollars. So the government came up with a plan to get it from people like my father who made money in petrodollars.

The Middle East was booming, and thousands of Indians had followed my father’s example and gotten jobs in Dubai and places like it. They were benefiting from the rapidly growing economy there.

Dubai’s currency is easily exchanged for dollars, and India was desperate to entice my father and others like him to lend those dollars to the government.

To do this, India offered my father a once-in-a-lifetime deal: Lend your dollars to India and get 18% annual interest tax-free for 30 years. To sweeten the deal, the government arranged for you to get your money back in dollars after a couple of years if you wanted, or keep earning 18% tax-free for 30 years.

Eighteen percent is a staggeringly high rate of return. You’d be lucky to get that from stocks or risky assets. It’s unthinkable to get that just by putting your money in a government-guaranteed bank account.

It was a once-in-a-lifetime opportunity to earn a risk-free return, similar to stocks.

And even though I was only 13 at the time, I learned something absolutely critical about investing from what my dad did when he got this offer…

My dad correctly guessed that even though India was in crisis, there was almost zero chance of getting ripped off by the government. In other words, this crisis was his opportunity.

My father gambled it all. He put every UAE dirham he had into this offer. It was a complete home run for him. And although my father died in 2000, my mother collected interest from this business until a few years ago.

And this is what I got from my father’s bet: when the odds are in your favor, you have to make the bet. You have to take the initiative and go for it.

The shining star of the market

Earlier this year, I told readers that gold mining companies were a scream buy. That’s because the stocks of these companies had just gone through an incredible six-month panic sell-off.

I showed that it really was a panic, because gold mining companies were MAKING money during this time. In other words, nothing was happening in the companies that caused this panic. It was pure excitement at work, fueled solely by irrational investor selling.

At these prices, it was not necessary for gold prices to rise to make money. All you need is for the sale to stop. And then the natural demand from smart money investors, who spot these panic situations to make big money quickly, would drive prices up. That is the scenario I set.

And that is exactly what has happened. Since that article, gold stocks are up 56% in just over four months, while the S&P 500 Index is up just 10% in the same time period.

The rally is not over

If you bought gold miners and have experienced these phenomenal gains… congratulations! Give yourself a pat on the back or maybe treat yourself. You have done well.

Now, if you bought and made money, I want you to know that I believe there is still more profit to come. That may sound crazy. However, I can tell you after 25 years of investing that when stocks make big moves like this, it’s a sign that more gains are on the way.

This is because behind these gains for gold mining companies is a huge demand from all types of investors who are just discovering the opportunity here. These shares are still held by Big Money, the same group that spent two years dumping them, causing their downfall.

Additionally, gold and silver prices are up 30% and 50% respectively so far in 2016. That means gold/silver mining companies will show increased sales and profit growth. in 2016 and 2017 due to the jump in gold and silver prices.

Finally, the fall in the shares of gold mining companies caused management to implement massive layoffs and cost cuts. These are still being put through today. As a result, profit margins are increasing. Even bigger gains are on the way…and big investors will want to get back in the game.

That is why I do not hesitate to say that it is not too late for those of you who have missed these first easy earnings to enter. Even though gold mining stocks are up more than 50% in four months, there is still plenty of gain to be had in this trade.

You can be sure that crooked market makers and shoddy hedge funds will manufacture volatility to get you to sell your gold mining stocks, so expect more volatility as this trade makes you rich.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *