|The point is this: when gold is ready to rise, it takes off.
Every single one of the years in the date ranges above saw an increase of more than 20%. What some investors might see as slipping backwards may just be the cycle getting ready for its next natural advance.
- So if you’re a subscriber to my Boom-Bust-Echo theory, then you know the gold rally has barely just begun.
The biggest profits still lie ahead of us.
Savvy investors will patiently hold, before finally selling near the peak of the boom.
For example, many major gold producers right now, such as Kinross, Gold Fields, Alamos, and Eldorado are trading around $5-6.
(Gold Fields is up nearly 190% from its lows 14 months ago – and that’s a $5 billion company!)
These stocks could easily be sitting at doubles a year or two from now. And the juniors’ percentage returns will likely be an order of magnitude greater.
It might be hard to believe that gold stocks could see gains of 500% or more in the next couple years. It was equally hard to believe in 1933, 1972, 1978, and 2007… but it happened every time.
Why Gold Is a Bad Investment When “This” Happens
During a gold rally, you might be tempted to invest directly in gold bullion.
There are many reasons why that’s not the best way to invest, including the persistent strength of the U.S. dollar. Have some bullion exposure.
But another really big reason is the potential for extreme leverage with gold stocks.
Look at what happened to gold in the ‘70s…
It took off early, cooled off a bit in the mid-‘70s, then hit the afterburners headed into the latter part of the decade.
On December 31, 1978, gold was at $226 an ounce.
On January 21, 1980, it maxed out at $850 an ounce.
That would be like gold going to $5,641 by the time the next U.S. President is inaugurated. If it happened forty years ago, it can happen again.
Now, digging up information on tiny gold producers from the early ‘80s is no easy task. Most of the information was not digitized then.
But here’s data we put together below on a few producers that the Katusa Research team found, along with the percentage returns at their peak:
Table 1. Gold Producer Returns, 1979-1980