Gold just vaulted to $1,454 an ounce, up more than $180 since May to its highest level in more than six years, writes Mike Larson.
Gold stocks are soaring, outperforming all the major averages on both a short- and long-term basis. And now, silver is quickly playing catch-up. The iShares Silver Trust (SLV) has surged 7% in the last month, more than triple the 2.2% rise in the SPDR Gold Shares (GLD).
Does this mean it's too late to get on board with precious metals investments? No. Short-term corrections and pullbacks can happen at any time, and they should be bought because this looks like just the start of a multi-year bull market.
I’ve shared some of the fundamental reasons why I’m getting behind precious metals over the last several months. And if you followed those recommendations, you’ve already done quite well for yourself. But today, I want to look at this a little differently.
I’ll start with Bank of America Merrill Lynch’s latest fund manager survey for July. The firm polls investment managers who collectively oversee almost $600 billion in assets each month to determine, among other things, what the “most crowded” trades on Wall Street are.
The most popular play? For a second month in a row, it was being long on U.S. government bonds. Being long on technology stocks and investment-grade corporate bonds were in the second and third spots, respectively.
But what trades were nowhere to be found? Being long gold, silver or precious metals miners (see chart below).
Nasdaq.com recently posted a list Initial Public Offerings (IPOs) that priced in June and July.
What kinds of companies do you see coming public?
- Chinese plays like Douyu International Holdings (DOYU).
- Biotech firms like Fulcrum Therapeutics (FULC).
- Cloud/Software-as-a-Service (SAAS) names like Medallia (MDLA).
- And so-called “blank check” buyout/takeover vehicles technically known as Special Purpose Acquisition Companies (SPACs), including Tuscan Holdings Corp. II (THCAU) and Oaktree Acquisition Corp. (OAC.U).
The same old stuff Wall Street has been churning out for more than a year now.
What you won’t find is a bunch of offerings from precious metals miners — because they aren’t flooding the market with shares. And they aren’t getting the same kind of hype and breathless financial media coverage as money-losing tech turkeys.
Of course, we are starting to see money flow into the sector. The amount of gold held by gold-backed ETFs globally jumped from 127 tons to 2,548 tons in June. That increase is equivalent to around $5.5 billion, and the largest rise in assets under management (AUM) for any month since 2012, according to the World Gold Council (see chart).
But that’s peanuts in the grand scheme of things. My expectation is that those flows into bullion investments will keep rising throughout the rest of 2019 and beyond. That, in turn, will attract more money into precious metals stocks, ETFs, and mutual funds.
Eventually we’ll see the kinds of classic warning signs you see at the top of bull markets in any asset class. But my research suggests that’s a long way away. So, what can you do to get your share of the potential profits?
Well, gold and gold mining ETFs are always one option. But if you’d prefer specific stock ideas, or actionable “Buy” and “Sell” recommendations, consider my Safe Money Report.
And that’s why I’m pleased to announce that I’ve added an extra gold-focused presentation to my list of events at the MoneyShow San Francisco. The conference runs from August 15 through August 17 at the Hilton San Francisco Union Square.
I hope to see you there. I’m confident that together, we can identify some compelling profit opportunities in this underappreciated sector. Safe Money subscribers of Weissratings.com.
