I’ve been warning you about a major shift that’s happening in the global markets. Years of easy returns in the Dow, S&P, and NASDAQ are coming to an end and will be replaced by a market environment marked by slow growth and meager returns for traditional investments.
Given the recent shifts in central-bank monetary policy, we now need to change the outlook for the next decade (and probably longer than that) from slow-growth to no-growth. The global economy is about to contract and central banks around the world will cut interest rates and increase the money supply. We will soon have to face the reality that future real returns will be meager at best, and nonexistent or even negative-yielding at worst, unless we park our funds elsewhere.
Let’s face the facts: the combination of stock buybacks, mergers and acquisitions, private equity and venture capital investing, cheap money, and multiple rounds of quantitative easing have fueled the current economic expansion cycle – now the longest one on record. But this has only served to widen the wealth gap, since it’s chiefly the wealthy who have participated in the equities bull market.
Courtesy: Macrobond and Nordea
The end result of this grand experiment in artificial stimulus is that 13 trillion dollars’ worth of investors’ money, worldwide, will be held either in ZERO or NEGATIVE-yielding debt. Even in the United States, where bonds yield better than they do in most countries nowadays, real (post-inflation) rates are near zero and with rate cuts on the way, it’s only going to get worse.
It’s easy to think that governments can continue easing in perpetuity, but in a weak global economy, central banks will soon run out of stimulant to boost the markets. Fully aware of this, these same central banks have been quietly loading up on physical gold in anticipation of debts coming due and major market indexes providing scant returns with no safety net.
And so, the smart money is allocated in gold while hapless retail investors, retirees, and savers are hoping and praying that the stock market gravy train can stay on the tracks for another year or two. For you and your family’s sake, I sincerely hope that you’re prepared for the no-growth decade – a dark time when gold will shine.
In mid-June, while everyone was focusing on the Federal Reserve’s next move, I sent out alerts on several underappreciated precious metals companies: two in the royalty, one in the silver streaming sub-sector, and a final one that truly captures the full range of metals, miners, and resource financing.
You’ve already seen double-digit gains within just a few weeks. One of our easiest moneymakers has been Franco-Nevada Corporation (FNV), a gold-focused royalty and streaming company that operates across multiple continents. I gave the signal on this one when the shares were trading at $78 on June 14th, and FNV is already up a solid 15% since that alert.
Because they’re a royalty and streaming company, Franco-Nevada isn’t exposed to the risks associated with operating mines, developing projects, or conducting exploration. Instead, they get to participate in the revenues of gold-asset operations without being directly impacted by cost inflation – a smart business model that allows Franco-Nevada’s margins to fully benefit from rising gold prices.
Courtesy: Franco-Nevada Corporation Investor Presentation
The company has handily outperformed both gold and goldminer ETF’s for years, and they’ve been generous to shareholders with 11 consecutive years of dividend increases. Personally, I’ve bought each and every dip on FNV and my latest gains are part of a long-term plan to continue capitalizing on this company’s consistent growth.
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Another highly profitable alert is Royal Gold, Inc. (RGLD), which has a business model similar to Franco-Nevada. With 41 producing properties, 15 development-stage projects, and 130 evaluation and exploration-stage properties around the world yielding consistent streams of income, Royal Gold provides diversification comparable to an ETF but with superior performance.
Royal Gold’s producing and development assets are operated by over 50 different companies, including some of the largest and most experienced in the industry: Barrick, Goldcorp, Newmont, and Yamana are just a few examples. And, similar to Franco-Nevada, Royal Gold is chiefly gold-focused and offers broad geographic diversification:
Courtesy: Royal Gold, Inc. Investor Presentation
Shares were just $95 per share on June 14th when I alerted you to RGLD stock; it’s currently up 24% since I gave the buy signal. Again, my objective is to outperform the gold and mining indices, and I’m picking and choosing among the best companies for market-beating performance.
I’m also extremely pleased with the Sprott Inc. call from mid-June, which has gone absolutely ballistic, having returned 24% after a steady climb from the $2.33 buy price. Sprott is a cost-effective gold play with a focus on physical bullion trusts, resource financing, and active strategies in the natural resources space.
Sprott has a major asset in the form of resource industry living legend Rick Rule, President and CEO of Sprott U.S. Holdings, Inc. They also have 200,000 global clients and more than CAD$10.6 billion in assets, making Sprott an obvious choice for powerful participation in the commodities bull market of 2019. Rick Rule is to the resource sector what Warren Buffett is to the traditional investing scene.
My next alert is going to be the MOST IMPORTANT in this newsletter’s history.
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