When Will Gold Stocks Surge?

Jerome has spoken. What did we learn? 

Inflation is rampant. The same inflation that didn’t exist just a bit ago according to Team Transitory, which included Jerome himself.

We learned we should expect a couple more rate hikes of 50 to 75 basis points each before the market forces the Fed to find magical data that says inflation is cooling and we can go back to the regularly scheduled program of printing money until the whole mad experiment implodes on itself.

We also learned that there are no signs of a slowing economy. You know that’s bullshit and Jerome does, too. 

Jerome also knows he’s trapped — forced to raise rates into a recession while the price of everything that is essential continues to balloon (if you can find the stuff at all).

What does this mean for the overall indices? Here are several takeaways…

The first is – and we've been telling you this – if you need the money that you have invested within the next 6-9 months you would be wise to raise cash now if you haven’t already done so.

It also means many housing markets will start to cool off as surging rates force borrowers out of the market.

Housing markets in places like Texas, Washington State, and Florida will see a slowdown in price appreciation, though not a reversal. Other markets will not be so lucky. Commercial real estate bargains will abound.

In the resource space, the sectors I like most for the next 6-9 months are the same ones I’ve enjoyed the past year or two: lithium, uranium, and critical metals. The stuff necessary to make the stuff people don’t just want but need.

Market shenanigans recently took several portfolios to the woodshed and while young traders who have never traded a bear market are now on standby, dreading the phone ringing for fears of a margin call, I’m looking to add to positions in companies that I believe will be the first to recover from the recent sell-off.

My two favorite lithium plays are each down over 50% in the past few weeks for different reasons, but down nonetheless. Is it consequential to me? No, because the reasons I bought them ring truer today than they did when I first initiated the positions.

Which brings me to another point: In this market you better know what you bought and why you bought it. If you have a portfolio of gold stocks and you’re upset that, despite the chaos, the gold price and equities haven’t broken out yet… you should take solace in the fact that the gold price also hasn’t broken down.

Gold equities will surge many times over in the coming months and years, but not until gold gets back above the $2,000 level and starts seeing capital rotate back into the sector. That day is coming.

Gold equity will surge.

As for the uranium and lithium equities, you should understand that the trends in motion for each are as robust as I’ve ever seen. And I expect the gains in the better uranium and lithium names to match the robust fundamentals underpinning each sector.

It’s not a time to panic, but it is a time to know what you bought, why you bought it, and why you still own it.

I’ll be using this market to continue to add exposure to sectors and companies with multiple catalysts, healthy treasuries, and favorable fundamentals that will provide a tailwind.

I encourage you to do the same.

Gerardo Del Real

Gerardo Del Real
Editor, Daily Profit Cycle