Gold “Mania” Ahead

Remember the Internet Bubble? Gold will hit "different this time" soon, too...

A LITTLE OVER 14 MONTHS AGO, the Financial Times published one of the most important articles nobody read, writes Brian Hunt in Steve Sjuggerud's Daily Wealth.

The article's headline was "Gold primed to become 'mania asset'..."

The gist of the article was something I've been telling people for a long time: Gold – more so than any asset right now – has the potential to experience a mania phase...one like we saw in internet stocks from 1997 through 2000.

A mania phase is a period in an asset's lifecycle marked by leaps of 10% or 20% in a month...100% or 300% in a year...and 500% or more over the course of several years. Get in early with a big position on a mania phase, and you'll make a fortune. Remember one Internet-mania darling, JDS Uniphase, climbed more than 30-fold in about two years...which would have turned a stake of $20,000 into $640,000.

As that little-read article mentioned, an asset must have one key ingredient to enter mania phase: It must have the "new era" factor...a set of conditions folks can point to and say:

"This time is different...The old, conventional methods of valuing assets are useless in this case."

Take internet stocks. In the late '90s, Wall Street analysts chucked classic valuation measures – like price-to-cash flow and price-to-book – out the window.

The internet was growing too fast for these old measures, they figured. Instead, they used crazy metrics like web traffic (and often pure fantasy) to justify valuations. Companies with little chance of turning a profit sported market caps of hundreds of millions of Dollars simply because they had good stories...and because that time was "different".

Now let's get to Gold. As we've noted many times in DailyWealth, you can make a good case that this time is different. Never before has the nation with the world's reserve paper currency – which is backed by nothing but faith in a bankrupt government – promised so much to so many people (Social Security, Obamacare, unlimited military commitment).

We're funding many of these promises with borrowed money...so crushing interest payments are on the way. The US government could pay as much as 20% of its tax revenue to service the national debt in just three years. Imagine working your tail off just to pay the interest on your credit cards.

For a picture of what could happen, consider that Europe – which in aggregate has made the same crazy promises...and is under a similar debt load – is watching its paper currency union experience a slow-motion train wreck. The chart below shows what gold's action looks like in the eyes of a European. It's looking a lot like a mania phase.

How high can gold go? I can't say. Nobody can.

Despite what many gurus will tell you, we simply cannot properly value gold. It's not a stock, so you can't say, "I'll pay 10 times cash flow for this." It's not a rental property, so you can't say, "I'll buy this for eight times annual rent." Gold's chief use isn't in the manufacturing process, like copper and iron ore.

Nope...gold is the odd man out in the asset family.

Gold represents real, intrinsic wealth. Greece can't debase it. The US government cannot debase it. There's no way to know what people will pay for gold in a big crisis. This is precisely the reason it is a candidate for mania phase. People can tell themselves, "This time is different. It's a new era of currency crisis, so gold can and should trade for $2,000...$3,000...or $6,000 an ounce."

I'm no "the world is going to hell in a handcart" guy. I simply look around for assets with extraordinary potential to rise. I'm indifferent to whether it's gold, stocks, homebuilders, uranium, or Malaysian palm oil.

I'm not saying a gold mania will happen next week...or even six months from now. I actually believe gold needs to pull back and "catch its breath." I am saying gold is an asset folks can justify paying any price for.

The same sort of analysts who claimed the Nasdaq would go to 50,000 are the same sort of analysts who will claim gold will go to $25,000 an ounce. The sober among us will be shouted down...because "this time is different."

This is the chief requirement of a mania. It is in place for Gold.

Buying Gold today? Make it secure, simple and cost-effective by using BullionVault...

Gold “Mania” Ahead

Remember the Internet Bubble? Gold will hit "different this time" soon, too...

A LITTLE OVER 14 MONTHS AGO, the Financial Times published one of the most important articles nobody read, writes Brian Hunt in Steve Sjuggerud's Daily Wealth.

The article's headline was "Gold primed to become 'mania asset'..."

The gist of the article was something I've been telling people for a long time: Gold – more so than any asset right now – has the potential to experience a mania phase...one like we saw in internet stocks from 1997 through 2000.

A mania phase is a period in an asset's lifecycle marked by leaps of 10% or 20% in a month...100% or 300% in a year...and 500% or more over the course of several years. Get in early with a big position on a mania phase, and you'll make a fortune. Remember one Internet-mania darling, JDS Uniphase, climbed more than 30-fold in about two years...which would have turned a stake of $20,000 into $640,000.

As that little-read article mentioned, an asset must have one key ingredient to enter mania phase: It must have the "new era" factor...a set of conditions folks can point to and say:

"This time is different...The old, conventional methods of valuing assets are useless in this case."

Take internet stocks. In the late '90s, Wall Street analysts chucked classic valuation measures – like price-to-cash flow and price-to-book – out the window.

The internet was growing too fast for these old measures, they figured. Instead, they used crazy metrics like web traffic (and often pure fantasy) to justify valuations. Companies with little chance of turning a profit sported market caps of hundreds of millions of Dollars simply because they had good stories...and because that time was "different".

Now let's get to Gold. As we've noted many times in DailyWealth, you can make a good case that this time is different. Never before has the nation with the world's reserve paper currency – which is backed by nothing but faith in a bankrupt government – promised so much to so many people (Social Security, Obamacare, unlimited military commitment).

We're funding many of these promises with borrowed money...so crushing interest payments are on the way. The US government could pay as much as 20% of its tax revenue to service the national debt in just three years. Imagine working your tail off just to pay the interest on your credit cards.

For a picture of what could happen, consider that Europe – which in aggregate has made the same crazy promises...and is under a similar debt load – is watching its paper currency union experience a slow-motion train wreck. The chart below shows what gold's action looks like in the eyes of a European. It's looking a lot like a mania phase.

How high can gold go? I can't say. Nobody can.

Despite what many gurus will tell you, we simply cannot properly value gold. It's not a stock, so you can't say, "I'll pay 10 times cash flow for this." It's not a rental property, so you can't say, "I'll buy this for eight times annual rent." Gold's chief use isn't in the manufacturing process, like copper and iron ore.

Nope...gold is the odd man out in the asset family.

Gold represents real, intrinsic wealth. Greece can't debase it. The US government cannot debase it. There's no way to know what people will pay for gold in a big crisis. This is precisely the reason it is a candidate for mania phase. People can tell themselves, "This time is different. It's a new era of currency crisis, so gold can and should trade for $2,000...$3,000...or $6,000 an ounce."

I'm no "the world is going to hell in a handcart" guy. I simply look around for assets with extraordinary potential to rise. I'm indifferent to whether it's gold, stocks, homebuilders, uranium, or Malaysian palm oil.

I'm not saying a gold mania will happen next week...or even six months from now. I actually believe gold needs to pull back and "catch its breath." I am saying gold is an asset folks can justify paying any price for.

The same sort of analysts who claimed the Nasdaq would go to 50,000 are the same sort of analysts who will claim gold will go to $25,000 an ounce. The sober among us will be shouted down...because "this time is different."

This is the chief requirement of a mania. It is in place for Gold.

Buying Gold today? Make it secure, simple and cost-effective by using BullionVault...

Not Your Typical Gold Bug

Gold looks good right now, thanks to sub-zero real rates of interest...

"SO WHERE'S the big Gold bull market?" I asked John Doody over lunch yesterday, writes Steve Sjuggerud in his Daily Wealth email.

John writes the excellent Gold Stock Analyst newsletter, where he takes a deep look into gold and the major Gold Mining stocks every month. Before starting the newsletter in the early 1990s, John was an economics professor. This week, John and I are at a conference on Maryland's Eastern Shore.

"John, if Gold is so great now, then why hasn't it soared this year?" I asked him. "It's only up like 5% against the Dollar..."

"That's a good question," John replied. "In my opinion, the primary driver of the Gold Price is real interest rates that investors earn on their cash."

In short, if investors earn nothing on their cash, then gold goes up. If investors earn high rates of interest on their cash, then gold goes down. As the chart below shows, that's the only gold indicatory you need to know.



Importantly, we're talking about the "real" rate of interest – after inflation. John defines the real interest rate as the interest rate on risk-free 90-day Treasury bills MINUS the inflation rate.

That's a good estimate of your "real" return on cash. And as John explained, when the real interest rate is negative – when inflation is higher than risk-free interest – "cash loses purchasing power and buys fewer goods than it bought earlier in the year.

"When that happens, for protection, investors Buy Gold and drive its price higher."

Now, take another look at the chart. John explained:

"Today's gold bull market and 1970s gold bull market were eras of negative real interest rates. But importantly, for 2010 to date, the real interest rate has been barely negative, as shown by the chart's red-circled area."

With the real interest rate at about 0%, gold isn't moving anywhere. And John pointed out that the Fed rarely raises interest rates as elections approach. So interest rates should stay where they are.

But eventually, John says, "A pickup in the economy will be the key to higher inflation. With the US economy slowly on the mend, we could see inflation. Real interest rates would go negative and gold would rise."

One thing I like about John is, he's not the typical gold bug. He's not taking some moral stand against the government or digging a bunker full of freeze-dried food.

John simply looks at the facts. The facts say you need to own gold when the "real" interest rate is negative...almost regardless of the what's in the news.

His work shows that gold goes up when the bank's paying you nothing. That's where we are now...and that's what you need to know. John believes if the economy starts to recover before the election and inflation shows its head, the situation could get better from here for Gold.

In short, gold looks good now, with rates low and inflation likely to rise faster.

Ready to Buy Gold today...?

Silver Mining ETF

If you though Gold Mining stocks were high-risk, wait 'til you see silver's new ETF...

"SILVER is now more attractive than it has been in decades," my colleague Porter Stansberry wrote to his subscribers recently, says Steve Sjuggerud in his Daily Wealth email.

"Assuming gold hits my target of $2000 an ounce and assuming the Gold Price is 16 times the price of silver," Porter continued, "then silver should be worth about $125 by the time the bull market in silver reaches its peak.

"Buying today at around $17 [now $18] could earn you better than a 600% profit."

If Porter is even half right, then a just-launched silver investment could be the safest way to make over 1,000% in silver. You see, before this month, investors didn't have a simple way to buy a basket of silver mining companies. But now there is – the Global X Silver Miners Fund (SIL).

This exchange-traded fund owns a basket of the world's purest plays on silver mining – 25 stocks in all, with a fairly significant geographic diversification. (Silver companies from Canada and Mexico each make up a larger percentage of the fund than US silver companies.)

If you think Gold Mining companies are speculative – then you ain't seen nuthin'. Silver mining companies are extremely volatile. To see what I mean, take a look at the performance of the underlying index of the Global X Silver Miners Fund, versus the Silver Price.

In 2008, when the price of silver fell in half, shares of silver mining companies lost 80% of their value.

Since bottoming in 2008, silver mining companies are up four-fold, as you can see in the chart. Silver Prices barely doubled in that time.

So, shares of silver mining companies are significantly more volatile than the price of silver. If Porter is right about the price of silver rising 600%, then silver mining companies could easily soar over 1,000%.

Porter believes silver could go significantly higher because:

1. A major currency crisis will push people to put their savings into precious metals rather than dollars; and
2. Silver is extremely cheap relative to gold, based on history.

You already heard the case for our exploding government debts leading to a crisis. But you might not know the case for why silver is cheap relative to gold. I'll let Porter tell it:

"During periods of monetary crisis, demand for silver as money pushes the gold-to-silver ratio heavily in silver's favor. For example, the ratio returned to its historic range (16 times) during World War I. It happened again in the early 1970s, when Nixon abandoned the Gold Standard. It also happened most famously in 1979-1980, when it seemed as if America was really entering a serious money crisis.

"As the Dollar loses its standing as the world's reserve currency, I expect the silver ratio to decline substantially and the price of silver to increase relative to gold...Buying Silveringis the best hedge against a money crisis. In short, there is very little demand for silver as a commodity, compared to the demand for silver when it is used as money."

You could buy bags of silver coins from a dealer...but to build a serious position, you'd end up with a garage full of silver.

You could buy shares of the iShares Silver Trust (SLV), which tracks the price of silver. Or for leverage to the Silver Price, you could buy double-long and double-short silver funds from ProShares to double your risk. You could buy shares of a handful of silver mining companies – with the volatility and company-risk that entails. Or now, with more diversification than owning just a couple silver stocks, you have another option: The Global X Silver Miners Fund, which holds shares of 25 silver companies.

It's a volatile basket. But if Silver rises like Porter thinks, I believe you could make 1,000% here.

As Porter told his readers, "However you decide to own it, make sure you Buy Silvernow."

Want to Buy Silverwithout increasing your risk anymore than you need to? Want price exposure alone...without adding equity or management risk, complex derivative leverage or counterparty-default risk? Get the safest silver at the lowest costs by using Silver.BullionVault...

Buying Gold Overseas

The case for holding a chunk of your wealth outside the US, in the form of Gold Bullion...

OUR MAJOR FOCUS here at DailyWealth is on helping you grow your wealth as quickly and safely as possible, writes Steve Sjuggerud in his free daily email.

But for ideas on how to protect your wealth once you have it, I don't know anyone better than asset-protection attorney Joel Nagel.
 
I've known Joel for a long time. He's one of the nicest guys in the business... and he's spent over a decade helping some of the world's richest people protect their wealth from disasters.

We're in a crazy situation right now in America. Instead of making the future brighter for our children, the government is making things worse.
 
That's why my publisher, Stansberry Research, recently held a private conference call with Joel...and he shared some great ideas. Given the problems I've written about recently, I wanted to share some of them with you today.
 
Stansberry Research: Joel, could you give us an overview of what you recommend folks do to protect themselves from the things we see happening in the next few years – whether they have $5 million in the bank or $50,000?

Joel Nagel: It really does come down to the level of financial wherewithal a person has and what they're trying to protect. The strategies are very different for somebody who has, say, $50,000 that they want to protect as opposed to somebody who has millions of Dollars.

We advise our clients to consider opening up a foreign bank account based outside the United States. This will give you the ability to open cash deposits in foreign currencies. It'll provide you with insurance should something happen to the Dollar or the US banking system. And as you mentioned, in the event of future currency controls, you'll already have a nest egg outside the United States from which to operate.

Secondly, along the same lines, foreign currencies – most of our clients look to have some portion of their net worth held outside the US Dollar. And again, you don't have to be a millionaire to hold an account with some Swiss Francs, New Zealand Dollars, Canadian Dollars, Australian Dollars...

There are plenty of currencies that aren't based on the huge debt model the US Dollar has taken on, and therefore aren't as susceptible to the kinds of crashes the US Dollar is going to face.

Stansberry Research: How about Gold Bullion and other precious metals?

Joel Nagel: You don't have to be that wealthy to consider owning precious metals either. We recommend clients hold at least 10% of their net worth in gold, Silver, platinum, palladium. And the precious metals should be located outside the United States.

Along with metals, physical metals, you have metal certificates, often referred to as "foldable gold" that you can quickly and easily move from one location to another and redeem either for physical metal or for cash later.

Stansberry Research: How about another idea?

Joel Nagel: Foreign real estate rounds out the bottom category – again, having not only foreign real estate as an investment, but also as a physical safe haven where you can go not only for vacation, retirement, or any other reason that you wish to leave the United States.

There are several easy steps you can take to safeguard your wealth. It doesn't take millions in the bank to make it worthwhile. So even though you might not have considered these before, you ought to now.

Buy Gold in Zurich, Switzerland at $3 spreads with 0.12% per year storage fees, only by using BullionVault...

Gold: “The New Greatest Trade Ever”

Buying Gold looks the only hope for surviving the currency collapse ahead, says one analyst...

LAST WEEKEND, my friend Porter Stansberry gave one of the most powerful speeches of his career, writes Steve Sjuggerud in his Daily Wealth email.

We've been working together for about 14 years, so I've seen a lot of them. At the open-air Blue Iguana restaurant on Ambergris Caye in Belize, however, Porter told the small crowd the story of the NEW Greatest Trade Ever...

After that speech, the attendees who weren't compelled to act on his idea are either incredibly foolish ("That's too crazy") or incredibly lazy ("Ah, we've got time before all that comes to pass...").

You might know the story of the old "Greatest Trade Ever". In short, in 2007, hedge-fund manager John Paulson made $15 BILLION for investors in his fund by betting against the housing market. (If you don't know the story, pick up the book The Greatest Trade Ever by Gregory Zuckerman.)

Betting against housing seems obvious in hindsight...But when Paulson put the trade on, he was essentially alone – everyone thought the government would somehow manage to keep the charade going.

Porter's speech in Belize was as compelling as Paulson's ideas were two years ago. Like Paulson's, Porter's trade is obvious, but everyone expects the government will smooth it over. Like Paulson's, Porter's trade may reach a point where the government simply can't fix it – and get there sooner than anyone expects.

Porter's idea is really big. He believes the entire paper money system is about to fail – very soon.

"If aliens landed tomorrow, they wouldn't understand our money system at all," he explained. "The aliens would ask, 'People really save these pieces of paper backed by nothing, issued without restraint, by a government that certainly can't pay its debts? That makes no sense!'"

As Porter sees it:

"The United States is the only government in the world that can actually afford to underwrite the world's banking system. That's not because we have any real savings, it's only because we control the world's reserve currency. It's a paper standard, which means we can always print more of it."

Of course, that has been the case for years now. It's worked in the past. But Porter laid out the coming collapse of that system...and what's bringing it to a head right now:

"The annual funding costs of our national debt are now approaching $4 trillion per year between deficits and rolling over short-term debts. There is no entity large enough... not even China... that can come close to lending us the $4 trillion we need in the next 12 months. Add every possible source up, and you're still short by $2 trillion."

It was a dire speech. The most compelling part was the obvious inevitability of it all. The only question is the timing – when does the US Dollar house of cards fall?

Betting on the collapse of the paper money system will be the Greatest Trade Ever... some day. Porter predicts it will be way sooner than anyone thinks.

What does Porter recommend to play the new Greatest Trade Ever? One thing: Gold.

No point getting craftier than that. Governments can print money, but they can't print gold. Porter prefers to own it... Have it in your possession, not in a paper form in an account somewhere.

While the "end of paper money" is an outlandish prediction, Porter has a history of "outlandish" predictions that have come true...

Several years ago, he predicted the end of General Motors. Many readers got angry and thought it was impossible. GM was an American icon. But Porter got it right, and GM shareholders were wiped out.

In November 2007, his single best idea at our annual investor conference was the demise of Fannie Mae and Freddie Mac. Back then, they were two of the largest companies in America. It was a shocking prediction. Within a year, they were bust.

Today, Porter's big prediction is his most outlandish ever. We're not talking about iconic American companies. We're talking the end of the world money system. But Porter's track record is excellent. And the outcome is inevitable, as he showed.

Porter is buying gold. And so is the guy who made the Greatest Trade Ever, John Paulson. Paulson recently took a multi-BILLION Dollar position in gold and launched a gold fund.

In 2007, Paulson saw an inevitable crash in housing and made the Greatest Trade Ever.

In 2010, Paulson and Stansberry are betting against the Dollar – they're Buying Gold.

And you...?

“Historic” in a Bad Way

The new US healthcare bill made history for US Treasury debt...

IT SHOULD have gone down as a historic moment, writes Steve Sjuggerud in his Daily Wealth email.

But hardly anyone noticed.
 
The same day the health care bill passed, US government debt lost its "risk-free" status.
 
That day, for the first time in over a generation, the US government was a worse credit risk than a US company.
 
Specifically, investors were willing to accept a lower interest rate to lend money to billionaire Warren Buffett's company, Berkshire Hathaway, for two years than to lend to the US Treasury for the same period of time.
 
It shouldn't be possible...after all, the government prints the money... how can it be less likely to pay off its debts? But it makes sense on the other side, too. You can easily see how billionaire Buffett's company is less of an actual credit risk than our government, which is on the hook for tens of trillions of Dollars of promises.
 
It's not even just the world's richest man who's grabbing lower interest rates than Uncle Sam...Heck, even home-improvement store Lowe's can borrow money at a cheaper rate than the US government.
 
The Obama administration believes the health care bill is "historic". Obama meant historic in a good way. The bond market recognizes it's historic in a bad way.
 
The passing of the legislation marked the first day in decades the bond market thought highly rated corporate bonds are a safer bet than the people who print the money.
 
The market decided a bet on bonds from our government is no longer risk free. It was a historic day.
 
The way to play it is simple – and you've heard it before...but it's right – is sell government bonds and Buy Gold, the currency that can't be printed.

The World’s No.1 Interest Rate

Ten-year US Treasury bond yields are one of the most important numbers in the world...

WANT THE BIG picture? Let's check in with one of the most important numbers in the world, says Brian Hunt in Steve Sjuggerud's Daily Wealth – the yield on the US 10-year Treasury bond.

The "10-year" is the most widely followed gauge of how much interest Uncle Sam must pay to borrow money. Many analysts, like our colleague Porter Stansberry, expect this rate to head higher.

The higher interest rate argument says the US government is racking up huge debts right now...and just as a bank would demand higher rates to loan money to the town drunk versus the town preacher, Uncle Sam's creditors will eventually demand higher rates as well.

Below is the past two years of the 10-year yield. In the last nine months, the 10-year yield has fluctuated between a high of 3.94% and a low of 3.17%. But in a series of "higher highs and higher lows," this number has crept back up to the 3.6%-3.8% area.

Keep an eye on this number. If it pops above its 2009 high and reaches 4%, it's a sign the "higher interest rate" crowd is right... and Uncle Sam is going to have some ugly interest payments ahead.

Want to buy and own physical Gold Bullion, safe and sound in secure, specialist vaults in Zurich, Switzerland? Go to BullionVault now...

China’s Gold Investment

How can China build its gold reserves if it doesn't Buy Gold...?

"A FEW FACTORS limit our ability to increase [our] Gold Investment," said China's chief foreign exchange manager, Yi Gang, in a speech this week, notes Steve Sjuggerud in his Daily Wealth email.

Western investors have long speculated China will start Buying Gold and selling its hoard of US Dollars at some point. (China's hoard could be literally trillions of US Dollars.) It would be the first step in a "Doomsday" scenario for the greenback.

Just imagine – China trades in its Dollar reserves for Gold Bullion. The value of the Dollar crashes...and US interest rates soar, as China is no longer willing to buy US government Treasury bonds.

Some investors have said China has a perfect way to do it, available right now. The International Monetary Fund (the IMF) has a near-200-tonne hoard of gold that it wants to unload.

But if China actually used all its Dollar reserves to Buy Physical Gold, it would completely overwhelm the market. It would end up trying to buy about a third of all the gold ever mined in the history of the world. There's no way it could get all that gold without sending the price to outrageous levels.

It seems Mr. Yi recognizes that. He essentially said gold is too volatile, the historic returns aren't that great, and any gold buying by China would "certainly" increase Gold Prices.

If Mr. Yi is to be taken at his word, in short, China doesn't have plans to Buy Gold in the open market. And Mr. Yi's comments are in line with recent comments from the China Gold Association, who told the China Daily newspaper that it is "not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility."

So how would China acquire gold if it doesn't buy it? This is where it gets interesting...

An official from the China Gold Association told the China Daily that rather than acquiring Gold from the IMF, China would Buy Gold directly by buying gold mines "abroad". Rather than buying physical gold in the open market (where China would be the 800-pound gorilla in the room), China plans to buy future production instead.

If that's true (and there is some sense to it), then how should you play it? Dennis Gartman reported on this yesterday, in his Gartman Letter:

Perhaps we are to begin owning gold mines rather than Gold Futures or Gold ETFs. We have avoided owning mines for years, preferring the "purer" play of owning gold rather than the mines, for we fear being exposed to poor mine management, or accidents in a mine that might do damage to the equity while gold itself moves higher. But if the Chinese authorities want to own mines, perhaps we have to consider doing so also...

I've done more than consider buying Gold Mining companies. In the latest issue of True Wealth, my subscription newsletter, I recommended Buying Gold mines as the best way to have exposure to gold right now.

The reason is simple. This chart sums it up...



Gold is up 70% since the summer of 2006. Meanwhile, gold stocks (as measured by the Gold BUGS Index) have done nothing.

Usually, a 10% move in gold would mean a 20% move in gold stocks. But this relationship broke down in the financial crisis. Now, either the price of gold needs to crash... or the price of gold stocks needs to soar to correct this anomaly.

The timing might be just right. Gold mining stocks are down, and it's just coming to light that the Chinese authorities could prefer acquiring gold mines – which give the country a permanent supply – over Buying Gold in the open market.

Building your personal gold reserves today? Make it cheap, safe and simple by using BullionVault...

Gold Bull Market is Back!

Investor sentiment has switched, putting the Gold bull market "firmly back on track"...

BACK in December, I got spooked about gold, writes Steve Sjuggerud in his Daily Wealth.

In fact, I told my subscribers to sell their gold. We sold a position we'd bought back in 2003, when gold was incredibly unpopular.

What tipped me over the edge...? The morning that issue of my newsletter, True Wealth, was going to print, I'd already seen ads for gold on TV. I'd already heard ads for gold on the radio on my drive to the office.

And it was only 5:30am.

The financial data at the time backed up my anecdotal evidence. Investors were loading up on gold. And if you know me at all, you know that – as with any other asset – I want to Buy Gold when nobody is paying attention, and I want to sell when everybody is interested.

In December, everybody was interested. So in December, we sold our gold. The timing was excellent. The price of gold peaked for US investors in early December. And so did the price of Gold Coins. They have fallen maybe 20% since then, as have the precious-metals Gold Mining stocks we sold.

However, my opinion of gold has changed 180 degrees since December. It's because investor opinion about gold has switched, from remarkably bullish to pretty darn bearish, pretty quickly. Let me show you what I mean.

Back in December, the "sentiment surveys" showed investors were at highs for the year. Now that has changed. Two weeks ago, public opinion hit its lowest level since last April (when gold was at its lows for 2009, below $900. Now THAT was a time to buy). That's what we want to see.

Investors have also fled Gold Mining stocks since December, too. For example, the Rydex Precious Metals Fund saw its assets fall by more than half from December to today (from over $350 million to $177 million now). Traders like to use Rydex funds to chase trends. They were bullish on gold stocks in December. Now they've given up on gold stocks. That's what we want to see.

Meanwhile, gold's "price action" is just great right now. The Dollar has soared in recent weeks, but gold is soaring more. Also, investors who didn't want Dollars now don't want Euros either. They don't want paper currencies at all. They're Buying Gold.

New highs are part of bull markets, and gold is now hitting all-time highs in terms of Euros. That's what we want to see. Because the bull market in gold is back!

Ready to Buy Gold...?

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