Gold is currently up over $100 to $1,350, smashing through key resistance. Silver is up over $1, also breaking through resistance at $18. This is happening despite a sharply higher USD. This spike in precious metals and the dollar is being driven by the “Leave” vote taking an unexpected lead in the UK referendum. With only 63 of 382 local authorities still left to be counted, the “Leave” vote is winning 52% to 48%.
If the leave vote it confirmed, it will be a big blow to globalists that are hell bent on centralizing political power. To get a better idea of the implications of this vote, check out this article: This was the day the British people defied their jailers.
Despite the huge move this year, gold stocks remain very undervalued. The following charts from Palisade Research help to illustrate this point.
The first chart shows the Bloomberg Commodity Index relative to the S&P 500. The wider the gap, the more undervalued commodities are relative to stocks. There will eventually be a reversion driven by a drop in equity prices, rise in commodity prices or most likely a combination of both.
Comparing the current bull market run in the TSX Venture exchange to past bull market runs, we can see that the current bull has plenty of room to run. The last two bull markets lasted 1,142 days and 573 days, respectively, and yielded returns of 266% and 222%. The current bull market has lasted less than 200 days old and could advance another 5X to match prior bull market returns.
The ratio between the Gold BUGS Index and the price of gold bottomed in late 2015 and has spiked higher this year. While gold stocks have been performing very well, the HUI still has plenty of catching up to do. It needs to kick into overdrive to reach a historical median. I expect a continuation of the strong leverage that mining stocks have been offering as of late.
No matter what happens with the UK referendum tonight, I expect much higher gold and silver prices by year end. This bull market is just getting started. While gold and gold mining stocks have done very well this year, the greatest returns have come from junior silver miners. If silver returns toward the previous highs near $50 per ounce, silver mining stocks are going to go ballistic.
There are a handful of these silver mining stocks that we either hold in the GSB portfolio or have on our target list. To view the GSB portfolio in real time, get the top-rated monthly newsletter and our weekly trade alerts, click here now.
