In a recent Wealth Watch article, I explained why the pause in the red-hot precious metals rally is a tailor-made buying opportunity for astute investors.
Gold mining stocks are the stars of this rally so far, and in my view they’re just getting warmed up for much bigger gains to come — meaning now’s the perfect time to place your bets!
Follow the Money to Grab the Biggest Profits
Retail gold investors have recently taken some profits off the table. I’ve noticed ETFs tracking the physical price of gold — which is up almost 15% from last year’s low — are seeing an uptick in fund outflows over the past few weeks.
But it’s a different story for ETFs that track gold and silver mining stocks.
One of the most popular ETFs indexed to precious metal mining shares, the VanEck Gold Miners ETF (GDX), had near-record inflows of $407.8 million over the past six months.
That ranks GDX No. 2 for positive money flows out of 30 hard asset ETFs!
It’s easy to see why smart-money investors are flocking into gold and silver mining shares. There are plenty of catalysts ready to fuel a run-up in these stocks.
Perhaps No. 1 among them is the sad state of the global monetary system today.
Money Talks, but It Ain’t Saying a Word Right Now
Last week, Bloomberg reported the amount of negative-yielding debt worldwide just hit $9.32 trillion — that’s a few trillion dollars shy of an all-time record high.
Most of these toxic bonds belong to Europe and Japan, which are zombie economies!
When yields on government bonds go subzero, it tells me loud and clear that there’s a crisis of confidence in the global financial system.
It’s also a clear signal to buy gold! Gold historically surges higher when there’s a lack of confidence in paper money.
And gold mining shares offer you an even better proposition: a leveraged bet on the upside to gold and silver prices!
When gold and silver prices surge higher, gold-in-the-ground value (represented by mining stocks) soars higher at an even faster clip. It’s a proven fact time in and time out.
Many financial experts recommend a 10% or so allocation to gold as the ultimate store of value in an uncertain world.
But I’ll do you one better…
Split the difference. Keep 5% in gold bullion or coins but allocate another 5% to top-rated gold mining stocks.
Doing this offers you the added potential of beating gold prices by a factor of 10-to-1 or even 20-to-1 on the upside.
You’ll be glad you did.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch