Market Collapse, Gold and Gold Stocks

By: Jeff Berwick | Thu, Aug 11, 2011
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What a few weeks it has been.

Numerous times, before the end of QE2 (on June 30), we were questioned at conferences or in interviews about what would happen after QE2 ends. Here is a direct quote from the May issue of TDV when speaking about what will happen when QE2 ends:

"The only other way (other than going into QE3) that Treasury demand can be increased dramatically is through another financial crisis.

It has come to that. The only way to even come close to financing the debt of the US Government is to send world markets into freefall, prompting people to panic and, perhaps, run yet again into Treasuries as a "safe haven".

But every day that gold rises and the US dollar falls is an indication that the US dollar and US Government debt are not being seen as "safe havens" anymore. The world is slowly realizing it is quite the opposite."

We stated numerous times that it would be no more than 1-2 months after the end of QE2 that we would see QE3 launched OR a major financial crisis.

One month and a few days later and welcome to the crisis.

It's pretty hard not to say we told you so. We said, and continue to say, that there is no way out of this other than US Government collapse/default or hyperinflation. We've said to hide out in gold. Gold hit $1,800 today.

$GOLD Chart

In the July 3rd Interim Update to subscribers, TDV Senior Analyst, Ed Bugos, called for gold to hit $2,000 by year end. At the time, gold had been doing nothing for a 3 month period and with the traditionally slow summer period for gold about to get underway, Ed heard more than a few chortles of disbelief.

Now, just a little over a month later and $2,000 is just a stone's throw away.

But, all of this is the past. I want to talk about the present and the future.

Ed stated often over the last few months to keep a generous cash position in case gold stocks get taken down by an overall market panic/crash. And, gold stocks have definitely taken a hit.

However, Wednesday's action said a lot about what might be coming for gold stocks - which have lagged behind bullion by a wide margin.

$HUI Chart

With the overall stock market in the midst of a massive plunge (Dow down 520 points), the HUI rocketed higher, up 17.25 (3.14%), for the second straight day.

Perhaps gold stocks are finally going to play catch-up with the metal.

$HUI:$GOLD Chart

The last time gold stocks traded at this low of a valuation compared to gold was during the 2008 crisis. This time around the money supply is much more inflationary than in 2008, interest rates have been promised to be at a savings-killing 0% for another few years and gold stock valuations are much lower than in 2008.

That means that they could be nearing take-off. Even just returning to its ratio versus gold bullion from 2004-2008 would entail a 100% rise from here. And that was when gold traded for between $400-$800. Now, at $1,800, these stocks have multiple triple digit potential.

This weekend, Senior Analyst Ed Bugos will be reviewing some of our favorite gold stocks to begin getting positioned in our Interim Update.


Sign up to receive The Dollar Vigilante today to have Ed Bugos, one of the top gold stock analysts in the world, working directly for you. He updates our portfolio every weekend and features a new stock on average every month.



Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website,, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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