History’s Best Gold Stock Buying Opportunity

As predicted, knowing the Natural Laws of Economics” lower PM prices will only exacerbate this West-to-East flow [of gold] that has emerged. I therefore thought that the bullion banks and central banks would not have dared push that dynamics this far."For the last few weeks, I've been convinced that we're approaching history’s best gold buying opportunity... Why do I think that? Because a group of government supported gangsters, using every illegal trick under the sun, drove down the $ price of gold while the regulators, media and the government looked the other way. Nobody but nobody was looking after the interest of the people of the United States of America and by the way, the people of the world: If you are rich enough and well connected enough, the laws of the land no longer matter.

But until now, I've been waiting patiently for the right time to re-enter the market. As you all already know, I'm not into gold buying or trading for the short term. I'm investing based on where I expect gold prices to be over the next 3 to 5 years. And right now, almost every stock that I'm investigating is so undervalued that some are even trading at or below book value; even more undervalued than they were in 2008. Not having a Crystal Ball, I simply can't wait any longer. Start accumulating on weakness NOW!

That's why I'm issuing my first new buy recommendation in a long time. This bull market has gone on for a record 12 years (no other bull market that I know of has ever lasted 12 years).  You may recall that as far back as 2005, I first projected a target price for gold of $6,250 by 2017 - the only conclusion I can come up with is that there is at least another 4 years left for this GOLDEN BULL yet to run.

The recent pullback in gold bullion prices should be seen as a correction in an ongoing bull market. I see the pullback as a fantastic buying opportunity. The news headlines flash a bearish sentiment towards gold bullion prices, as all the “Johnny Come Lately” self-proclaimed gold experts that have recently turned bearish are now screaming about how much money has been lost due to the plunge in gold prices and the gold miners are facing government and environmental pressures as well. Also, the largest new gold and silver mine has had a major, structural cave-in and Barrick’s largest 18 million ounce mine in Peru has been forced to shut down for at least a few years due to legal problems with the government. And the list goes on as cash strapped Socialist governments around the world try to grab as much money as they can, with the foolish support of their people, which will only cause huge job losses and zero money going to their respective governments.

However, there is always a silver lining to every cloud and that is the gold supply will be reduced, putting further upward pressure on prices. Meanwhile, the usual biggest gold bullion consumer countries, like India and China, are experiencing record demand.

MORE AND MORE IT’S REMINDING ME OF LATE 1979/EARLY 1980

(Go to the archives and read my July 2005 article “21st Century Gold Rush”)

According to the All India Gems & Jewelry Trade Federation, India is experiencing its greatest demand this year as gold bullion prices have declined. (Source: Bloomberg, April 18, 2013.)

In China, customers are lining up to buy gold bullion. According to the Director of Sales and Operations at Chow Sang Sang Holdings International Limited, the number of gold bullion products sold in the Hong Kong and Macau area during the weekend of April 13th soared 150%.

Other countries in the global economy are witnessing increased demand for the metal as well. As talk of gold bullion entering a Bear Market continues, consumers from countries like Australia and Japan have ramped up their gold buying.  Gold bullion sales at the Perth Mint in Australia have soared. The Treasurer of the Perth Mint, Nigel Moffatt, commented on this situation by saying, “the volume of business that we’re putting through is way in excess of double what we did last week.”

In Japan, at Ginza Tanaka, a precious metals store in Tokyo, gold bullion buyers waited for three hours to buy the metal. (Source: Reuters, April 16, 2013)

In spite of all the drivel I hear from the gold bears, I am more bullish on gold than ever before. The reality is that central banks will continue to print paper money no matter what. They don’t have any other option (or so they think). But the more paper money they print, the greater the fall in the value of their currencies.  Do the bears NOT realize that central banks have moved away from being net sellers of gold and have become net buyers for quite a while now? And in 2012, central banks bought the most gold bullion in 48 years. It would not surprise me to find out that central banks have also been buying more gold bullion in 2013, just like consumers are doing right now; not only in India, China, Japan, and Australia but throughout the world, except of course the US, Canada and Britain, the prime price manipulators (whom I suspect have already gotten rid of all their gold).

Gold, silver and mining stocks stabilized Friday. Thus I re-established a new fresh re-labeling of the charts for silver and gold. I believe that these new annotations for the charts do a better job of explaining the waves since 1990 based upon proportionality of waves. It suggests the HUI is finishing an a-down, b-up, c-down correction of the rally from 2000 through 2011. This correction looks to be finishing wave c-down. If correct, the next rally leg will be a very powerful up wave, as it will be a wave 3-up of (3) up of III up. The Same thing for silver.

Clearly a few large holders of gold are participating with the central banks and their whores in a major dump, in an effort to support international Central Bank policy of massive hype- printing of fiat currencies. Once exhausted though, gold should resume its long term rising trend. The decline, trying to look like a crash at this point, but this has produced a selling exhaustion, as all the stops have been run which then usually sets the stage for a substantial rally.

I realize that you may be skeptical since the S&P has been on a tear while gold has stalled for the last 18 months or so.

But when you compare the S&P and gold over the last decade ...

The S&P is up 40% ... as compared to gold which is up 440% ...

That's a more than a 10-to-1 return just for buying and holding the yellow metal rather than sitting in the markets.   While quite a few might think that the biggest gains in gold have seen their heyday, I think that it is just about that time to REACCELERATE.

FUNDAMENTAL REASONS FOR GOLDS RISE

Over the last 2 or 3 months or is it really 12 years (go to the archives at Gold-Eagle.com) I have already outlined, in great detail, my reasons for being super bullish on gold and silver, but I am still a one man show and I am extra tired in trying to uncover something that I may have missed. But I said it before and I will say it again: “GOLD and SILVER Companies have never in HISTORY been as much undervalued in relation to the price of their underlying metals as they are today”. So the best buy today is to buy Mining Stocks rather than Gold Bullion. If I am right, “you will make 10+ times more money on stock than by buying Bullion”.

UNFORTUNATELY I am to damn old to get out into the field and do primary research like I did back in the 1970’s and early 198O’s. But back then there were no such thing as ETF’S like GDX or GDXJ, which you can buy today But there are a few quality research letters that do excellent work on individual stocks that you can subscribe to. If you do not know who they are, email me and I will be happy to send some selections out to you.

IN SUMMATION

My long term projections for the Precious Metals are still intact ($6,350 by 2017); But you may be able to make as much as 10 times more if you choose the right stocks.

WARNING: DANGER: More and more of some of the most promising new and old mines have been shut down, especially in South Africa as well as my most promising silver mine (MAG SILVER) in what was thought to be friendly Mexico (still might come back),  Barrick’s 18 million oz gold mine in Peru and others in Eastern Europe and Northern Eastern  Asia. There is also one of our long term holdings, Gabriel Resources, that has just won a few legal battles and received a favorable political vote and permits. (I have been holding this one for almost 20 years.)  Even if it pays off, I am not so sure it was all that good an investment considering the time held. But it is supposed to have 25+ million ounces.  There is of course MAG SILVER which I still own. They just won a few favorable votes, but as you know they are up against the environmentalists, so that even in mining friendly Mexico these green whackos never seem to give up. So far, all work is still on hold. So although our last foray into ETF’S has not been all that successful I am, for the time being, sticking to GDX and/or GDXJ.

INSTEAD OF BUYING GDX and GDXJ OUTRIGHT, you can SELL  out of the money 6 month Calls while Selling out of the money 6 month Puts. The worst that can happen to you is that you end up buying 20% below today’s market OR you get called away making a measly 40%

OIL

Oil, on the other hand, should also rise sharply, with an upside target of at least $150, probably hitting $170  as both gold and oil react to serious political problems with Iran and other war-like trouble spots.  The chart pattern for oil looks to be completing a textbook Rising Bearish Wedge, a pattern having five waves of three sub-waves each.

How can oil rise so sharply? Possibly in response to a war in the Middle-East or massive monetary inflation or both. Since I cracked my CRYSTAL BALL, the future must remain a bit cloudy, so all I can provide is my best guess.

 

GOOD LUCK AND GOD BLESS

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UNCOMMON COMMON SENSE                                       May 5, 2013

Aubie Baltin CFA, CTA, CFP, PhD.

2078 Bonisle Circle

Palm Beach Gardens, FL  33418

[email protected]

561-840-9767

 

Please Note: This article is for education purposes only and is designed to help you make up your own mind, not for me to make it up for you. Only you know your own personal circumstances so only you can decide the best places to invest your money and the degree of risk that you are prepared to take. The Information and data included here has been gleaned from sources deemed to be reliable, but is not guaranteed by me. Nothing stated in here should be taken as a recommendation for you to buy or sell securities.