Gold is Very Undervalued, The Next Price Target is $2,400
Gold is completing a 4-year correction and consolidation that has brought the price down to the cost of production. There is strong technical support around $1,000. Our analysis suggests that the next wave higher will push the gold price to a minimum of $2,400 and maximum of $3,400 by 2018. The $2,400 price target is the inflation-adjusted all-time high for gold and would match the previous advance. The $3,400 price target would be consistent with the prior pattern of advances, whereby each upleg doubles the magnitude of the previous upleg.
If you think our price targets are bullish, consider that John Williams of Shadowstats.com forecasts that gold needs to climb to nearly $9,000 and silver to over $500 per ounce to match the inflation-adjusted highs attained during 1980. All of the fundamental conditions that generated gold’s 1980 high are much more severe today.
Bearish sentiment is currently dominating investor psyche and most people cannot imagine a push to $2,400 or higher. Yet, there is historic precedence for such a move and both the fundamentals and technicals support such a powerful advance.
Fiat currencies are rapidly declining in value versus real assets, as the Federal Reserve, ECB and Western governments are printing and borrowing with reckless abandon. This race to debase is creating ripe conditions for inflation and the potential for hyper-inflation in the coming years. Adding fuel to the fire, Russia, China and other BRICS countries around the world are starting to bypass the dollar in international trade. Indeed, it appears the days of the dollar as world reserve currency are numbered!
Profit from Leverage in Undervalued Mining Stocks…
While gold and silver will be excellent investments and we advocate holding some physical metals in your possession, the biggest profit opportunity is with mining stocks. The best-in-breed companies are now more undervalued than at any point since the start of the bull market! Sentiment has been extremely bearish, which is precisely when large upside moves historically tend to occur. The following chart shows the gold stocks index (HUI) vs gold, which shows how mini stocks are now at the most extreme oversold and undervalued levels ever!
Meet the Editor, Jason Hamlin…
My name is Jason Hamlin and I spent nearly a decade in analytics for the world’s largest research firm. I quit the corporate world shortly after the bull market in precious metals got underway and was successful as a private investor and helping family members turn around their portfolios. I decided to turn my focus from helping fortune 500 companies to helping everyday investors on Main Street struggling to achieve strong gains in the stock market.
My investment philosophy takes into account political, historical and socio-economic factors to determine macroeconomic trends and isolate the sectors that stand to gain the most. I then apply fundamental and technical analysis, as well as proprietary models, to find the companies within these sectors that will outperform their peers.
Core Investment Principles
At present, the following beliefs are at the center of my investment philosophy and drive my investment strategy:
1) High inflation and devaluation of the U.S. dollar are inevitable.
2) Political instability and growing distrust of fiat currency will favor gold.
3) The stock market rally is artificially-induced and is therefore unsustainable.
4) Gold and silver are real money and will return to having a greater role in global finance.
5) Precious metals are significantly undervalued and the gold bull market is far from over.
6) It is wise to hold a portion of your wealth in physical bullion within your possession.
7) Mining stocks are oversold, undervalued vs. the metals and will offer leveraged gains.
Lastly, I believe in the companies that I write about and never accept payment to pump a particular stock, eliminating any conflict of interest.
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Jason Hamlin is the founder of Gold Stock Bull and publishes a highly-rated investment newsletter focused on strategies for profiting in the bull markets in gold, silver, energy and agriculture. Mr. Hamlin has a background analyzing charts and trends for the world’s largest market research company, is versed in fundamental and technical analysis and has consulted to Fortune 500 companies around the globe. Jason is a cycles investor, student of Austrian economics and speaks regularly at investment conferences throughout North America. The Gold Stock Bull newsletter is focused on finding junior mining companies that are undervalued relative to their peers.
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