Will Gold Go Higher?

“We have an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act BIG.” (emphasis mine)

That’s what Treasury nominee Janet Yellen said in response to a question posed regarding the country’s debt and its sustainability. She followed that comment by saying that climate change poses an existential threat that requires investment in clean technology, renewable energy, and electric vehicles.

That echoes views shared by outgoing president Donald Trump and incoming president Joe Biden.

This isn't isn’t a political site. But in order to maximize profits it’s critical to be aware of the cycle we’re in and it’s important to get ahead of policy changes here in the U.S. and abroad.

It’s not a coincidence that companies like Lithium Americas (NYSE: LAC) have surged from a 52-week low of US$1.92 on March 18, 2020 to a 52-week high of US$28.75 today.

Lithium was bottoming two quarters ago, it was clear that whoever won the presidency would be in favor of clean technology and it was clear that companies with U.S. exposure and quality assets would catch a significant bid from institutions as they rushed in to gain exposure to a clear trend.

Can Lithium Americas go higher? Sure, but the time to buy it was when it was a boring stock that had yet to be recognized by the market.

There’s a similar scenario playing out in the gold space right now.

Veteran traders and ardent goldbugs can’t believe gold hasn’t broken out to new real all-time highs.

The traditional view that with inflation — which is here — predictable monetary and fiscal policy would send gold higher has been wrong for the past several months. So much so that gold is now being called boring and dead money. The juniors are avoided and most tips I receive for trades nowadays are in the crypto and cannabis sectors.

Sound familiar?

There’s a mountain of negative yielding debt. We have an administration, Treasury nominee and Fed that are all aligned in their views. Dovish views that will err on the side of spending until they can spend no more.

Spending that’s not sustainable and spending that will make you wish you had added aggressively during this latest consolidation in the gold space and the related juniors, which is the market where I make my living.

Five years from now you likely won’t remember this consolidation unless you don’t use it to your advantage.

Like when my friend, colleague and business partner Nick Hodge called a bottom on Bitcoin when it was struggling to hold the 5k level. Cryptos got boring, they were dead money, Bitcoin holders felt like bagholders. Then what happened?

In the words of Ms. Yellen, think big and position accordingly.

Or don't. Because I’ll need buyers to sell my stock to at higher prices a few years down the road.

More people are buying Lithium Americas (NYSE: LAC) at US$29.00 than there were at US$1.92.

Gold is going higher.

It may take another month or two as it fights off rising real rates. The juniors are being given away right now.

That won’t last and I think I’ve found the next 10-bagger in the royalty space.

I’m excited to share that with you soon.

Let's get it!

Gerardo Del Real
Editor, Daily Profit Cycle

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For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Daily Profit Cycle, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.

*Follow Gerardo on Twitter.

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