On The Verge of a Gold Stock Explosion

By: Jeff Berwick | Thu, Aug 18, 2011
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It's probably the #1 question on gold stock investors' minds. Are we on the verge of a repeat of the 2008 wipe-out.

Just by the very fact that we have had so many subscribers ask us this question, we can almost on this evidence alone say no. Massive crashes never happen when everyone is looking for them and afraid of it.

However, there is much more evidence than this.

The most important is the money supply. True Money Supply (TMS), the Austrian economics method for calculating the money supply, is in a much different position than it was in 2008 pre-crash.

True Money Supply

In 2008 it had been close to 0% growth for two years. Now? In the last three years it has been between 8-18% annual growth and looks to be spiking higher again in recent months.

Fact: You don't have serious market crashes - not in nominal terms - when the money supply is increasing at a rapid rate.... like it is now.

For further evidence, let's take a look at the HUI Gold Bug Index (a basket of major gold stocks) versus the Dow Jones Industrial Average (INDU) in 2008 versus now.

Notice in 2008 how the gold stocks actually led the INDU to the downside, in a big way.

Dow versus Gold Bugs Index

Now, let's look at this last year... which includes the most recent market correction.

Dow versus Gold Bugs Index

Gold stocks have been outperforming the INDU throughout the year as well as into the last few weeks. This is a very large difference from 2008.

If gold stocks were to start to plunge from here (20%+) then we'd have to re-assess. But this is looking quite unlikely with the current market action.

In fact, Ed Bugos, TDV Senior Analyst, is expecting a VERY profitable fall and winter for gold stock investors based on all his indicators.

With gold nearing $2,000/oz, it is really only a matter of time.

 


Subscribe to TDV to see what Ed Bugos' top picks are for the coming gold stock explosion. We will be expecting outsized performance in the gold stocks... to the tune of triple digit percent returns in the coming few years... and even four digit percent returns aren't out of the question. If we are right it will be like buying internet stocks in 1998. Hold on to your hats!

 


 

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, Stockhouse.com, 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 Stockhouse.com 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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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/