Emma’s Note: Emma Walsh here, managing editor at the Diary.
Longtime readers know Bill is a committed goldbug. The yellow metal plays a pivotal role in his personal portfolio.
But since its high at the end of May, the gold price has dropped about 8%… so this might be an opportune moment to add some gold or gold mining stocks to your medium- to long-term portfolio…
Casey Research editor, Kris Sayce, outlines a simple, one-click way to do just that…
How are you feeling?
Or, to be more precise… How is your portfolio feeling?
After all, it’s September. Historically, this is the worst month of the year for stocks.
And so far, it’s going true to form. Stocks are down. Investors are on edge.
So… how to play it?
We’ll show you by sharing one of our top ideas on the best place to invest during the market’s worst-performing month…
Why You Should Look Past the Warning Signs
Month-to-date, the S&P 500 is down 1.11%.
The Nasdaq is down 0.83%.
The Dow Jones Industrial Average is down 1.59%.
You can see this laid out on the chart below:
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When taken in the context of the long term, those numbers don’t really seem like much. Nothing to worry about at all.
But still, a few down days and some worrying headlines are all it takes to scare investors out of the market.
But rather than scaring you, we’d like to think our role is to help you spot opportunities. That’s really the basis of everything Casey Research has done for many years.
That’s not to say that we cheer the market on regardless – like the chumps in the mainstream. Or that we ignore the dangerous warning signs when they appear. And boy, there are plenty of dangerous warning signs.
But rather than focusing all our attention on those warning signs, we make you aware of them… and then show you how to profit from them or despite them.
We’ll show you one example of that today…
A Beaten-Down Sector Ready to Rebound
One of our favorite investing ideas has taken a beating for most of the past year – gold stocks.
Specifically, junior gold stocks. Check out the chart below:
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Since this time last year, the VanEck Vectors Junior Gold Miners ETF (GDXJ) is down 33%.
Over the same timeframe, the S&P 500 is up 33%.
Now, there are arguably a whole bunch of reasons for that. The gold price has eased back from the highs it hit earlier this year.
You could also argue that while there are risks in the market, most investors don’t consider gold and gold stocks as a hedge against those risks.
In fact, you could argue that for many, gold and gold stocks are an ancient investment idea. Who wants gold when you can trade cryptos and so-called “meme stocks”?
Whether those arguments are fair or not… and whether those attitudes play out in the short term or not… is something we’ll only know in the months ahead.
But as long-term investors and speculators… and as investors and speculators who look for beaten-down opportunities when no one else cares about them… there’s a lot to like about buying junior gold stocks right now – despite what most investors think about them.
“It’s the Perfect Time to Buy on the Cheap”
As Dave Forest wrote in a recent issue of his premium service, International Speculator (paid-up subscribers can catch up here):
Today, the S&P/TSX Composite Index of gold stocks is at the same level as it was in February 2020. Back then, gold was just above $1,600 per ounce. Today, it’s significantly higher – around $1,800.
More importantly, gold miners have had a full year of high gold prices. They’ve built up big cash reserves.
That’s making gold companies very attractive investments right now. Newmont is paying a 3.7% dividend yield. That’s nearly triple the current S&P 500 dividend yield, which stands at just 1.3%.
Gold miners’ big war chests also set us up for a trickle-down boom. Gold companies will likely spend some of their record earnings to acquire new mines and development projects.
That’s especially true now, when prices for most gold stocks are down. If you’re a gold major looking to make acquisitions, it’s the perfect time to buy on the cheap.
That makes junior gold miners especially appealing for speculators. And with gold stocks down 24% in the past four months, that makes it the perfect time to buy.
So if you don’t already have junior gold miners as part of your Casey “10 x 10” Approach to investing, we would suggest adding a carefully chosen selection of stocks now.
[The Casey “10 x 10” Approach involves splitting your capital into 10 lots. And then looking for 10 separate investment ideas to fill each of those lots.]
One option is to buy the GDXJ. It contains 96 junior gold miners: 65% of them are Canada-listed, 15% are Australia-listed, and 5.6% are U.S.-listed.
But our preference is to buy individual stocks. So rather than buying GDXJ outright, you can use it as a place to start your research.
Of course, we can’t guarantee that gold stocks will go straight up from here. This is the stock market, after all… and we’re in September, historically the worst month for stocks.
But based on Dave’s research, and based on the valuations of gold stocks today, we believe now represents a great time to buy… with great potential for big gold stock gains over the medium to long term.
Cheers,
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Kris Sayce
Editor, Casey Daily Dispatch
P.S. As we mentioned, the VanEck Vectors Junior Gold Miners ETF (GDXJ) is a good way to get exposure to gold miners. But a much better option is to buy only the best companies. That way, rather than getting “just” the index average, you can outperform it to make even better returns.
This is something Dave Forest strives for in his International Speculator service. At writing, some of his gold stock recommendations are up 80%, 170%, 192%. And Dave believes they still have room to run. To get Dave’s expert gold research, learn more about an International Speculator subscription right here.
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