Gold belongs in every investor’s
portfolio. It is totally unique
among financial assets, a physical metal commanding timeless and universal
intrinsic value. It is a rock of
stability in a chaotic world, a stark contrast to the complex web of mere
promises to pay that is our modern faith-based financial system. Without gold, true diversification and
protection from systemic risk is impossible.
Gold’s fundamentals are dazzlingly
bullish. Like everything else on
the planet that is freely bought and sold, gold’s price today and in
the future is a direct function of its supply and demand. As long as its global demand exceeds
its global supply on balance, gold’s price will continue powering higher
in its secular bull. While it has
already come far from its humble beginnings in the $250s in April 2001, it
has a long way to run yet.
When I first started recommending physical gold
coins to our subscribers in May 2001 in the $260s, gold was widely derided as
an anachronistic relic. Not
surprisingly after nearly quadrupling
in the years since, it has earned vastly more respect today. Still, most mainstream investors have
yet to understand gold’s bullish fundamentals so unfortunately they are
missing out on the vast opportunities to come.
It is for these gold neophytes I am penning this
essay. I will explore
gold’s key fundamental drivers, both from the supply and demand
sides. After you digest this
high-level overview of gold’s fundamentals, you’ll have a much
better idea of whether you should add some gold to your own investment
portfolio. In order to streamline
the enormous body of research underlying this effort, I’ve divided this
essay into sections.
Supply - Mined Supply. Ultimately all gold is painstakingly
chiseled from the bowels of the earth.
But even with the best modern mining technology, this rare metal is
still exceedingly hard to produce.
Today’s gold miners face nearly insurmountable challenges on a myriad of fronts. It
is really a wonder that any gold is produced at all when you consider just
how difficult it is to bring new supplies to market.
First explorers have to find gold deposits.
This isn’t easy. Not
only is gold very scarce in the natural world, but prospectors have been
scouring the planet for millennia looking for it. Most of the low-hanging-fruit gold
deposits have probably already been found. It costs millions to explore, with
very high odds of failure. And if
a promising ore target is found, tens of millions more must be spent to drill
and sample it to determine if it is economically viable. This risky exploration and proofing
process takes years.
And once a deposit looks economically viable, the
real fun begins. Miners must
spend years more developing a mining plan and having it approved by various
government authorities. At any
stage in this long arduous journey, the government can torpedo the whole
project resulting in a total loss.
Unlike most businesses, mines cannot be moved when problems
arise. So gold miners are totally
at the mercy of corrupt bureaucrats.
Extortion is common and even outright nationalization is a very real
threat in many parts of the world.
Radical fringe environmentalists constantly try to derail mining
projects too.
After the government permits are obtained,
construction must begin. This
costs hundreds of millions, sometimes well over a billion, in today’s
environment. Since gold mining is
so risky the banks are often unwilling to loan money to miners, and if they
do they demand onerous terms. So
the companies have to issue shares in the equity markets to finance these
projects. While financing was
already difficult to obtain before the credit crisis and stock panic, many
miners today are finding it impossible to come by now. Without financing, mines cannot be
built.
Even if a miner somehow overcomes the long odds and
brings its mine into production, often a decade after the deposit was first
found, more challenges await.
Even with extensive drilling before mining, the geology of the ore can
vary dramatically from plan. This
results in lower production, higher costs, and lower profits. Since gold is often only found in
hostile climates today, bad weather can interfere with production in a
variety of ways. Friendly
governments can be usurped by unfriendly ones, raising the risks of crushing
taxes or even confiscation.
For these reasons and many more, global gold
production is actually falling
despite the relatively high gold prices.
Annual gold mined today, which is 70% of the world’s supply, is
running over 4% lower than when
this bull began in 2001! Global
reserves are also shrinking, despite vast sums being spent on
exploration. My business partner
Scott Wright recently wrote an excellent essay, with charts, on worldwide gold production and reserves if you want to dig deeper. Despite this powerful gold bull,
miners are falling farther behind.
With mined gold supply heavily constrained despite
the best efforts of the world’s elite miners and the strong gold-price
incentives to produce, any demand
growth cannot be satiated with mined gold. And even if gold mining somehow
becomes easier (geopolitics are less hostile, for example), it will still
take the better part of a decade
before new supplies can be brought online. This is incredibly bullish for gold!
Supply - Central Bank Sales. Over centuries, central
banks have accumulated vast hoards of gold bullion. Some of this was purchased
righteously, but much was obtained via plunder and confiscation.
Central banks as a group are the largest participants in the gold
market. Thus they have become
something of a bogeyman in the gold world. Many investors live in constant fear
of future central-bank gold sales.
Seven years ago when gold was under $300 central
banks made me anxious too. But
they don’t any longer. Despite
the mystical aura of dread surrounding them, they are merely gold investors
like me. While their collective
scale is very large, these behemoths are run by mere mortals who cannot see
the future either. Whether buying
or selling gold, central banks operate within the same market constraints as
the rest of us.
In the entire history of the world, analysts
estimate that about 162,500 metric tons of gold have been mined. Incidentally gold is so dense that a
metric ton of it will fit in a solid cube less than 15 inches square. Thus all the gold ever mined anywhere
would fit in a cube less than 67 feet per side! Of this global above-ground gold
supply, as of Q3 2008 the world’s central banks held 29,784t. Thus the CBs control just 18% of the
world’s total above-ground gold.
Investors control a far-greater 82%.
Since this gold bull began in 2001, mined production
has averaged about 2,500t per year.
So if the world’s central banks decided to sell all their gold
today, it would be like 12 years of production hitting the markets all at
once. The gold price would
utterly crash in such a scenario, it would be apocalyptic. Thankfully it will never happen for a
wide array of reasons. First, 107
sovereign countries own this gold and they are never all going to agree on
anything, let alone a coordinated gold dump.
Of this 29,784t of official gold holdings, 8,134t
(27%) belongs to the United States.
Many gold conspiracy theorists believe a big fraction of this gold has
already been stealthily sold into the
marketplace. This is very bullish
if true since it reduces the threat of future sales. Even if the US still holds this gold
though, the US dollar would probably collapse if an announcement was made
that the US was dumping its gold reserves. It is extremely unlikely. 10,911t (37%) of this CB gold is held
in the Eurozone, and this gold is a very high percentage of these
countries’ total foreign-exchange reserves (58% in aggregate).
So European CBs have
been selling gold aggressively to diversify since at least 1999. That year they met and formed what was
later called the Central Bank Gold Agreement. They agreed to limit their collective
gold sales to 400t annually over 5 years. In March 2004 in CBGA 2, this
agreement was extended and expanded to a 500t-per-year maximum for another 5
years. While these targets
haven’t always been hit in a given CBGA year (ending September), they
are a good proxy for European CB sales as a whole.
Since 2000, European CBs alone have sold between
400t to 500t of gold annually.
These are indeed big numbers, adding 16% to 20% to the global mined
supply. Without these sales,
gold’s price would have gone much higher. But even with them, gold has still nearly quadrupled since
early 2001! This means even heavy
sustained CB selling is not big enough to offset the growing investment
demand for gold. So far in this
secular gold bull, despite the CBs’ giant selling campaigns, gold has
still powered higher.
Central banks are not an apocalyptic threat for
gold. Every year European CBs
sell gold, which makes their “market share” of total above-ground
gold dwindle. And every year more
gold is mined, farther reducing CBs’ relative footprint in the gold
world. Thus with each passing
year, with every tonne of CB gold sold, central-bank impact and relevance in
the gold market gradually fades.
They are nowhere near as big of threat today as they were in 2001 and
with each passing year their positions continue to weaken.
And not all central banks are sellers. 10,739t (36%) of CB gold is held
outside of the US and Europe.
These Asian central banks will probably increasingly buy physical gold bullion. While western CBs’ gold holdings
generally represent 50% to 75% of each country’s total forex reserves,
in Asia gold is just a few percent.
Japan’s 765t of gold are just 2.1% of its forex reserves. China’s 600t are merely
0.9%. Russia’s 473t are
only 2.1%. And India’s 358t
account for a paltry 3.1%. These
growing Asian giants need to diversify
into gold, not out of it like the Western CBs. They will add to overall global investment demand.
The International Monetary Fund holds 3,217t (11% of
official gold). Potential IMF
gold sales are a perennial threat trotted out every few years to scare gold
investors. Even back in 2001 IMF
sales were discussed often, yet big IMF selling has still not come to pass in
the 7 years since. Even if the
IMF can get permission from its 185 member countries to sell gold, which is
very unlikely for political reasons, the IMF gold cannot stop this secular
gold bull. Bring it on, the Asian
CBs would love to own the IMF gold.
At any rate, the key thing to remember about
central-bank gold sales is they have been large and constant since gold was
in the $250s. Yet even with this
supply headwind, gold still nearly quadrupled to just over $1000 by early
2008! Even the worst that central
banks could throw at gold wasn’t enough to seriously retard its secular
bull. And with each tonne they
sell, their relative share of above-ground gold (along with their relevance)
dwindles. CB gold is finite. It is central banks that are the
anachronism, not gold.
Demand - Investment Demand. With mined supply
shrinking and central bank hoards dwindling, gold supplies are very
constrained. And no matter how high
the gold price goes, mining is not going to get much easier and in fact will
probably continue to get more difficult.
And central banks are not going to be able to conjure up more gold out
of thin air like they do with their fiat paper currencies. With flat-to-shrinking supplies,
demand is the wildcard that will drive gold prices in the coming decade.
Unlike all other commodities which are primarily
used for industrial purposes, almost all gold demand is
investment-driven. Gold’s
intrinsic value has persisted for millennia, outliving every government,
currency, and nation the world has ever seen. Gold is not a faith-based promise to
pay like every other financial asset.
Its innate value makes it easily negotiable, for anything anywhere, no
matter what happens. Physical
gold bullion should be the foundation of every
investor’s portfolio.
All the demand categories below are subcategories of
investment demand. For a broad
array of reasons today, all kinds of investors all over the world are increasingly
interested in gold investing. And
in the financial world, the higher the price of anything goes the more people
become interested in it.
Performance and returns attract in capital, which creates a virtuous
circle driving even higher prices.
So a secular gold bull gradually becomes a self-fulfilling prophecy
until supply once again eclipses demand.
Demand - Monetary Inflation. Inflation is always and
exclusively purely monetary in nature.
When central banks create fiat money out of thin air, it eventually
filters into the real economy to compete for finite goods and services. Relatively more money bidding on
relatively less goods and services means higher general prices. Inflation is devastating for
investors, an immoral stealth tax levied by corrupt governments. Gold is the only financial asset that
thrives in inflationary times.
And boy are we seeing inflation today! The socialistic financial-market
bailouts, which now exceed $8 trillion
in the US alone according to Bloomberg, are the biggest single inflationary
event the world has ever witnessed.
During the Great Stock Panic of 2008, within a matter of months Washington and the Fed
inflated, spent, or guaranteed the equivalent of 55% of the entire GDP (all
goods and services produced annually) in the whole United States of America!
This near-hyper inflation alone is exceedingly
bullish for gold. But
unfortunately central banks relentlessly inflating their money supplies is
not an isolated event reserved for crises. They are always doing it!
Since January 1980, the US Federal Reserve has grown MZM money by an
astounding 10.4x! There are an order of magnitude more dollars floating
around the world today than 3 decades ago. This equates to an 8.7% compound
annual growth rate over 28 years.
This wouldn’t be a big deal if the underlying
economy grew by 8.7% a year as well.
If the pool of goods and services on which to spend money grows as
fast as the money supply, there is no inflation. But obviously this is not the
case. Since January 1980 US
nominal GDP has only grown by 5.3x, only about half as much as the money supply. And the Fed is not alone here, all
over the world broad money supplies in first-world nations generally average
growth rates of around 7% annually.
At 7% annual growth rates globally, there is 6.6x
more paper money in circulation today than there was in early 1980 at the top
of the last secular gold bull.
Yet over centuries, new mining has only added 1% to 2% to the
aboveground gold supply annually.
At 1.5% gold growth through mining each year, today’s gold supply
is only 1.5x as big as 3 decades ago compared to 6.6x for money. Divide this out and there are 4.4x as
many fiat-currency units (dollars, euros, everything) potentially chasing
each ounce of gold today than at the end of the last gold bull!
If you multiply the famous $850 nominal high of
January 1980 by this 4.4x outpacing of gold growth by monetary inflation, it
yields a conservative end-of-bull target approaching $4000 per ounce. If you adjust by the lowballed
Consumer Price Index instead, the real gold high in January 1980 in today’s dollars ran up
around $2400. Either way,
today’s gold bull has a long way to run before it reflects today’s inflation, let alone
future inflation. Central
banks’ only real ability is to inflate, inflate, inflate into infinity.
So monetary inflation is not going away. If anything it will only
accelerate. In a fragile
debt-based highly-leveraged global financial system, inflate or die is a
literal truth. If central banks
don’t keep inflating at ever-expanding rates, the whole worldwide
system will implode. This
perpetual accelerating fiat-paper inflation is unbelievably bullish for
gold. As investors worldwide
become more aware of the incredible monetary inflation around them, their
appetite for gold investment will only grow.
Demand - Negative Real Interest Rates. When central banks are
running their printing presses overtime and inflating like mad, nominal
interest rates (yields on bonds) can slide below the rate of inflation. When this happens real
inflation-adjusted interest rates go negative. In other words, merely by owning the
best elite bonds like US Treasuries bond investors actually lose real purchasing power year after
year! Naturally bond investors
aren’t in the game to lose money, so negative real rates infuriate them.
Unfortunately just like the old Soviet Politburo,
today’s central banks actively manipulate short-term interest
rates. As we’ve seen in
recent months, central banks can drive nominal interest rates down to zero if
they desire. This abominable
power is unbelievably destructive to free markets. It destroys the necessary natural
balance between savers (investors) and debtors. And when capital transactions are no
longer mutually beneficial to both parties, investors gradually start to walk
away.
Thus negative real rates slowly strangle the life
out of the bond markets. Bond
investors, tired of being punished by the central banks for their act of
saving and forced to subsidize debtors, gradually withdraw their capital. It is foolish to invest in a realm
where you are guaranteed to lose real purchasing power for investing your
scarce capital. Some fraction of
this bond flight capital seeks refuge in gold. While gold doesn’t pay a yield,
over millennia it has never failed to at very least keep pace with monetary
inflation and preserve purchasing power.
And in today’s crazy environment of near-zero
nominal yields on even US Treasury debt, mainstream bond investors’
traditional argument against gold is rendered moot. In normal times of positive real
rates, the way the markets would always work without central-bank
interference, bond investors object to gold because it pays no yield. Well, today bonds pay virtually no
nominal yields either! And after
inflation their real yields are terribly negative. This makes gold very attractive to
mainstream debt investors.
Thus negative real rates, inflation exceeding
nominal bond yields, is the most bullish possible monetary environment for
gold. A couple weeks ago I wrote
an essay on real rates and gold that includes long-term charts if you want to dig
deeper into this crucial truth.
Until the goofy Fed raises interest rates radically, say to 6%+, real
rates will remain too low or negative and very bullish for gold. And as you know, there isn’t a
snowball’s chance in hell that the cowardly Fed will push rates to 6%+
for many years to come, if ever.
Demand - Secular Dollar Bear. The central banks’
artificially-low interest-rate policies to subsidize debtors and punish
savers wreak terrible collateral damage on currencies. The global currency markets are often
driven by yield. If one
first-world country’s bonds are yielding 2% while another’s are
yielding 4%, currency investors and speculators will naturally gravitate to
the higher yields. So
today’s ludicrously-low US interest rates are ravaging the already-weak
US dollar.
Once the world’s reserve currency, the mighty
US dollar has been in a secular bear since mid-2001. As measured by the flagship US Dollar
Index (a basket of major currencies), the dollar carved a series of new all-time lows in spring 2008. The long-term dollar charts show just how weak this currency has been, down
41.0% at worst in its secular bear to date. And this was all well before Ben
Bernanke panicked and forced US interest rates to all-time lows near zero!
Today’s deeply negative real-rate environment
will only strengthen and prolong the secular dollar bear. As the long-term USDX charts clearly reveal, the US dollar is always weak in a
secular sense when real rates are too low or negative. A weaker dollar drives all kinds of
investment interest in gold, from two major constituencies. Since gold is ultimately another
currency, the only hard one on the planet, futures traders buy gold
aggressively when the dollar sells off.
A continuing dollar bear will drive major futures buying in gold.
Even more importantly, large foreign investors
including central banks have far-too-much dollar exposure relative to their
overall portfolios. This great
overallocation was fine when the US dollar was in a secular bull in the
1990s. But these investors have
already lost a fortune in the 2000s dollar bear and they will lose a lot more
if this bear continues and they don’t diversify out of their overweight
dollar holdings. While they will
buy a lot of euros with their dollar sales, some major fraction will flow
into gold.
The biggest buyers of gold to protect themselves
from the ongoing dollar bear will be the Asian central banks. As mentioned above, they now have
trivial fractions of their total forex reserves deployed in gold. Yet they have trillions of dollars
worth of exposure in US dollars and US Treasuries, from 50% to 80% of their
total reserves in falling US dollars!
Asian CB diversification out of dollars into gold is mind-blowingly
bullish for this metal.
At $800 per ounce, the 2500t of new gold mined each
year is only worth $64b. If Asian
central banks gradually move $1t (not even half of their US dollar reserves
today) into gold in the coming decade, it would represent buying equivalent
to almost 16 years of total world
gold production! So the secular
dollar bear, exacerbated by the Fed’s asinine 1970s-style
negative-real-rate policy, is highly likely to spawn big CB gold buying out
of Asia for diversification reasons.
The ongoing dollar bear is very bullish for gold investment demand
growth.
Demand - Secular Stock Bear. Bond investors, futures
traders, and Asian central banks are not the only giant pools of capital that
have huge incentives to invest heavily in gold today. So do stock investors. As I started warning about back in 2001, after the giant secular bull that peaked in early
2000 the US stock markets were due for a 17-year secular bear. This means 17 years of grinding
sideways on balance, never heading too far above the 2000 highs over this
entire multi-decade span.
These secular bears that occur after secular bulls
are part of a great valuation-driven cycle in the stock markets that I call
the Long Valuation Waves. The
LVWs are the single most important force for long-term stock investors to
understand, so please read my essay on them if you are not familiar. Since 2001 this analysis has proved
dead right, even though most investors and analysts scoffed at it. I even used LVWs to warn about the
S&P 500 getting cut in half back in January 2008 well before the recent stock panic.
Because we are indisputably in the secular-bear
stage of our current LVW, the stock markets are likely to grind sideways for
another 8 years or so. The last
time a 17-year secular-bear hit the US stock markets, between 1966 and 1982,
stock investors were flat on paper but they absorbed tremendous real losses after inflation.
Realize that big 100% cyclical stock bulls are still possible and probable within these
secular bears, but when all is said and done stocks will have merely ground
sideways for nearly two decades.
As stock investors come to grip with this ugly
reality, they will get more and more discouraged about general stocks. Kind of like negative real
rates’ impact on bond-investor psychology, stock investors are going to
increasingly realize how silly it is to stay heavily deployed in
flat-trending stocks and suffer heavy real losses. Some fraction of these beleaguered
stock investors will turn to gold for deliverance.
Between March 2000 and November 2008, the flagship
S&P 500 US stock index lost a sickening 50.7%. Yet over this same span to the very
day, gold soared 161.0% higher!
Wouldn’t you have much rather been in gold since then, like we
contrarians have? And if you
instead optimize this span for the secular gold bull rather than the secular
stock bear, it looks even better.
From April 2001 to March 2008, gold soared 291.7% higher. Over this identical 7-year span the SPX
was merely up 11.4%.
As mainstream stock investors start to better
understand gold’s fundamentals, more and more of their massive pool of
capital is going to flood into gold.
Indeed this is already happening through the new gold ETFs. These exchange-traded funds act as a
conduit between stock-market capital and the physical gold market. In fact, the GLD gold ETF in the US (the world’s largest by far) has
grown its holdings from nothing to 775t held in trust on behalf of US stock
investors in just 4 years! This single ETF now holds more gold
than all but 6 of the world’s biggest central banks!
Demand - Secular Commodities Bull. During the secular stock
bull from 1982 to 2000, capital was increasingly seduced into the stock
markets to chase the phenomenal returns.
This led other sectors to be starved for investment, particularly
commodities. Thus global commodities-producing
infrastructure was largely left rusting for the better part of two decades
even while worldwide economic activity ramped up dramatically. This chronic underinvestment in supply
and delivery infrastructure led to this decade’s great commodities bull.
Despite the brutally fast and large correction in
commodities since July that was greatly exacerbated by the stock panic, these
secular commodities bulls aren’t over. They tend to run 17 years on balance
in history, with inverse phases to the stock LVWs. When stock markets are in secular
bulls, commodities are in secular bears.
And when stocks are in secular bears like today, commodities are in
secular bulls.
Secular bull markets can’t end until global
supply growth exceeds global demand growth. This has yet to happen in nearly all
major commodities. No matter how
high prices go, as gold mined production illustrates, commodities producers
just can’t adjust fast enough to meet demand trends. It takes years to over a decade to
find new supplies of raw materials and bring them to market. This inherent inelasticity of
commodities supplies is what makes commodities bull markets so exciting and
exceedingly profitable.
On top of today’s demand, half the world
(primarily Asia and Africa) is now industrializing. Billions of people are working
incredibly hard to increase the standards of living for their families. And as standards of living rise,
absolute commodities consumption will skyrocket. Sure, the average Chinese or Indian is
never likely to consume as much per-capita as we Americans are blessed to do
today. But since they are
starting from such low levels, and since there are billions of Asians, even
if they ultimately get to 1/5th the per-capita levels of US consumption of
major commodities then aggregate global demand will explode.
As this commodities bull powers higher worldwide,
gold will get increasing attention from investors. While gold is not the king of
commodities like oil, gold is the easiest and most logical way to invest in
commodities. It is easily bought
and sold, extremely valuable for its volume and weight, completely portable,
and very easy to store. So as the
global commodities bull reemerges from this severe correction and powers higher, untold hundreds of millions of
investors worldwide will start adding gold to their portfolios.
Demand - Rise of the Asian Consumer. We’ve already
discussed Asian central banks needing to diversify their dollar-dominated
forex reserves into gold. But
another huge source of future investment demand is going to be from average
Asian consumers. Unlike Americans
and increasingly Europeans, Asians have a deep cultural affinity for gold. They have always respected it and want
to own it even when it is not performing well. They understand from painful
historical experience how physical gold protects them from corrupt
governments, paper currencies, and unforeseen financial disruptions.
As the industrialization of Asia (and Africa) makes
consumers more affluent, they will demand much more gold investment. Asians tend to be big savers
(investors) even in lean times, and as their incomes grow they will have
larger surpluses available to invest after living expenses. There is no doubt a big fraction of these
surpluses will buy gold. While
each Asian won’t be able to afford much by Western investors’
standards, with billions of them the aggregate increase in gold demand will
still be stunning.
And Asian stock markets weren’t immune to the
recent stock panic. In fact, they
fell more violently than the US markets in many cases. Gold denominated in other currencies
did far better in the global stock panic than it did denominated in US
dollars, approaching all-time highs in some cases. So the new Asian investing class,
terribly shaken by the stock-market carnage, is now more likely than ever to
diversify some of its capital into gold.
Over the coming decade, the rise of the Asian
consumer/investor could be more bullish for gold investment demand than all
the other demand factors combined. Asian investment demand barely existed
during the 1970s gold bull, yet that bull was still huge. Imagine how big today’s will
ultimately prove with Asia finally on board.
Suppy and Demand - Technical Proof. There are many other
secondary factors likely to increase global gold investment demand. The Information Age is an
example. During the 1970s gold
bull, Wall Street hated gold just like it does today. So back then many investors
couldn’t learn about gold because the mainstream media monopolized
information flow. Lack of
widely-available good analysis on gold retarded that famous gold bull, which
was still very large (+2,332%!).
But thanks to the Internet, the mainstream
media’s stranglehold on information has been shattered. Today anyone anywhere can easily learn
about gold fundamentals. This is
very bullish for gold. Thanks to
the Internet, today any investor can order physical gold coins in a matter of
minutes that will be delivered to his doorstep a few days later. Thanks to computers, today stock
investors who wouldn’t bother with gold coins in a million years can
buy a gold ETF in seconds to add gold exposure to their portfolios. We live in a wondrous era!
Ultimately though, the proof of this gold bull is in
its secular chart. The path gold
has carved here is the aggregate result of every ounce of gold bought or sold
on this planet since 2001. Every
central bank sale is reflected here.
Every gold investment made by individuals and institutions is
reflected here. Every sale of
gold, whether to fund a kid’s college education, buy a house, or
whatever, is reflected here. This
chart is the distillation of all
global supply and demand for gold.
And its message is crystal clear.
ince early 2001, gold has nearly quadrupled at
best. It has relentlessly carved
higher highs and higher lows on a secular basis. Its dollar price has increased every single
year (the green numbers on the bottom show the amounts). The only way such results are possible
is if global demand growth has indeed exceeded supply growth since 2001. I challenge you to find another
investment that can even approach such performance in the incredibly chaotic
markets we’ve witnessed over the last 7 years. Gold is already in an elite class of
its own.
At Zeal we’ve been long physical gold since it
traded in the $260s in May 2001. Our
subscribers have already made fortunes in the 7 years since heeding our
analysis and recommendations. So
we are certainly not new to this gold party, we were buying gold and gold
stocks back in the early 2000s when it was considered lunacy to do so. We are true contrarians who have been
battle-tested, and prevailed, in this challenging financial decade.
We are going to work hard to continue excelling in
the next decade, capitalizing on the ongoing gold and general-commodities
secular bulls. We publish
acclaimed weekly and monthly newsletters that detail our market analysis on an ongoing basis
and the real-world trades we are making based on it. Subscribe today!
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The bottom line is gold’s fundamentals are
more bullish today than ever.
Despite relatively high prices, mined supply is shrinking. Central banks’ relative power in
this market is waning dramatically.
And thanks to both natural market forces and artificial manipulation
contrivances, global investment demand for gold is likely to grow
tremendously from today’s levels.
This
secular gold bull is far from over friends!
Adam Hamilton, CPA
Zealllc.com
November 21, 2008
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