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On the Verge of a Gold Stock Explosion



-- Posted Thursday, 18 August 2011 | | Disqus

By Jeff Berwick, The Dollar Vigilante

It's probably the #1 question on gold stock investors' minds.  Are we on the verge of a repeat of the 2008 wipe-out.

Just by the very fact that we have had so many subscribers ask us this question, we can almost on this evidence alone say no.  Massive crashes never happen when everyone is looking for them and afraid of it.

However, there is much more evidence than this.

The most important is the money supply.  True Money Supply (TMS), the Austrian economics method for calculating the money supply, is in a much different position than it was in 2008 pre-crash.

In 2008 it had been close to 0% growth for two years.  Now?  In the last three years it has been between 8-18% annual growth and looks to be spiking higher again in recent months.

Fact: You don't have serious market crashes - not in nominal terms - when the money supply is increasing at a rapid rate.... like it is now.

For further evidence, let's take a look at the HUI Gold Bug Index (a basket of major gold stocks) versus the Dow Jones Industrial Average (INDU) in 2008 versus now.

Notice in 2008 how the gold stocks actually led the INDU to the downside, in a big way.

Now, let's look at this last year... which includes the most recent market correction.

Gold stocks have been outperforming the INDU throughout the year as well as into the last few weeks.  This is a very large difference from 2008.

If gold stocks were to start to plunge from here (20%+) then we'd have to re-assess.  But this is looking quite unlikely with the current market action.

In fact, Ed Bugos, TDV Senior Analyst, is expecting a VERY profitable fall and winter for gold stock investors based on all his indicators.

With gold nearing $2,000/oz, it is really only a matter of time.

Subscribe to TDV to see what Ed Bugos' top picks are for the coming gold stock explosion.  We will be expecting outsized performance in the gold stocks... to the tune of triple digit percent returns in the coming few years... and even four digit percent returns aren't out of the question.  If we are right it will be like buying internet stocks in 1998.  Hold on to your hats!


-- Posted Thursday, 18 August 2011 | Digg This Article | Source: GoldSeek.com

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