Crisis Investing

Issue 8 / September 2024

Dear Reader,

This month, we're doing a gold-focused issue.

We’re convinced that the gold market offers some of the best opportunities for success right now, with the risk/reward balance heavily tipped in our favor. That’s why we’ve also got a new gold pick for you today—one that Doug himself owns.

I'm really excited about this opportunity, and the write-up is a bit of a long read, so I'll keep this intro brief. But I do want to highlight a few key points that underscore why we’re so bullish on gold right now.

As you probably know, the gold space has been buzzing with excitement lately. It's been in the spotlight throughout September, and for good reason - we finally saw the yellow metal break its all-time high.

But trust me, this golden run looks far from over...

For one, we have the Fed falling back on their old playbook: easy money.

Not only did they deliver a hefty 0.5% rate cut - a clear sign that all is not well in our economy - but they've hinted at another 0.5% cut in their last two meetings of the year (November and December), with more cuts expected in 2025 and 2026.

Of course, anyone with half a brain knew the Fed would cut rates this year. It's an election year, and whether it's Biden or Harris, the Democrats need all the help they can get.

Remember, the Fed's just a marionette for the elite, and it has been tinkering with rates in almost every election year since 1972.

That doesn't mean it wasn't a huge mistake this time around, though.

A little historical context might help to see why. Let’s take a quick stroll down memory lane to 1976, another election year.

The Fed delivered a hefty rate cut, after a series of aggressive hikes to fight rising inflation, to support Gerald Ford's presidency as he ran against Jimmy Carter.

But this backfired terribly. It led to a resurgence in inflation, which eventually reached double digits in the following years, and ended up plunging the nation into stagflation - that toxic mix of high inflation and low economic growth.

I can't say for certain, but the parallels are clear, and it seems we're walking down the same road. It honestly makes zero sense for the Fed to cut rates so aggressively if everything is as great as Fed Chair Powell would have us believe.

But what performed exceptionally well back in the 1970s? You guessed it—gold. It skyrocketed from about US$100 to US$850 (roughly US$2,670 in today's dollars). That's a gain of about 8.5 times.

Either way, stagflation or not, you can bet that inflation will soon be rearing its ugly head again. And that will inevitably continue to push gold prices up.

That's to say nothing of the massive government debt, out-of-control interest expenses and deficits, global de-dollarization, and central banks buying up gold precisely because of all those reasons.

Now, I don't know if gold will hit US$3,000 per ounce or US$5,000, but it's definitely headed much higher next year and beyond.

When I think about all this, it’s mind-boggling that gold stocks are still so unbelievably cheap (and the one we’re recommending below today is a perfect example).