It's the first time it's happened in the markets in 500 years...
The Dutch Anomaly
How this signal from the other side of
the world could indicate an imminent
rally for five Aussie stocks.
the world could indicate an imminent
rally for five Aussie stocks.
Read on to discover what could be your only opportunity to make
profits of 195%, 200%, even 278% in this global bear market.
profits of 195%, 200%, even 278% in this global bear market.
Dear Reader,
An anomaly has appeared in the markets.
It's the first time it's happened in 500 years.
This signal indicates that institutional investors are starting to panic and pull their funds out of the stock market.
This mass-migration of money could bring most investments crashing down...but send a select few sky high.
If you act now and invest in a handful of small Australian stocks that are poised to profit from this market anomaly, you could be looking at gains of 195%, 200%, even 278% over the next 18 months.
I'm confident that this unprecedented signal in the markets could trigger a phenomenal rally for one group of investments...
And I've found five stocks that are set to fly
First, let me explain what's going on.
My name is Dr. Alex Cowie.
As a resource analyst, I spend my time hunting for Australia's best explorers, miners and refiners.
But I'm not interested in the same big-name firms as everyone else. I believe the best way to make extraordinary profits in any market is to look for under-reported, small companies on the verge of big discoveries.
These types of firms aren't discussed by the mainstream media, and that means they still have lots of upside in their stock.
I share my most promising discoveries with people who, like me, believe that the best way to prosper over the next few years is to invest in real, tangible assets.
I do this through my newsletter, Diggers and Drillers.
Now normally I spend my time looking at ore grades, talking to geologists, and analysing new mineral resources.
But over the last few months I've been forced to add another factor to my analysis: the bond market.
You might think it's odd for a resource analyst to be concerned with the bond market, but recently I've noticed a huge anomaly that has forced me to pay closer attention.
Because what's currently going on in the bond market could have a very significant impact on resource stocks and, more importantly, it could open up an excellent opportunity for you to profit.
Let me show you why...
How the bond market reveals what the 'smart-money' is thinking — and how you
can profit from this knowledge
can profit from this knowledge
Bonds make up the biggest market in the world. By the end of last year, it was estimated to be worth US$157 trillion. That's three times the value of the $54 trillion global stock market.
Now, there are a few things you need to know about the bond market.
- Big money investors can move huge amounts of capital in and out without significantly affecting prices.
- For large investors, it's very easy to quickly convert your cash into bonds.
- Some bond markets are seen — rightly or wrongly — as a relatively safe place to invest.
But what can the bond market tell you about the share market and where the next opportunities will be?
Well, let me explain.
Bond prices move inversely to bond yields (another way of saying interest rates).
When there is low demand for bonds, prices go down, and yields go up (higher interest rates).
And when there is high demand for bonds, prices go up, and yields go down (lower interest rates).
When investors are out chasing profits in the stock market, there is less demand for bonds. This is what is sometimes called a 'risk on' market — investors are willing to take higher risks for higher returns.
On the other hand when investors are afraid of risk, they move to safeguard their money in bonds. This is what is sometimes called a 'risk off' market.
So when bond yields are low, it suggests we're in a 'risk off' market and investors want to put their money in the 'safety' of bonds.
Bonds |
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Low Demand |
High Demand |
Low Prices |
High Prices |
High Yields |
Low Yields |
'Risk On' Market |
'Risk Off' Market |
In other words, watching the bond market shows you the psychological attitude towards risk held by the world's largest, most cashed up investors. It shows you when they're fearful, and it shows you when they're greedy.
Right now the bond market is screaming, 'SOMETHING IS WRONG!'
The One-in-500-Years 'Dutch Anomaly'
that could send a small handful
of Australian stocks soaring...
that could send a small handful
of Australian stocks soaring...
On June 1st 2012 so-called 'safe haven' bonds hit multi-century lows.
If you look back to the table above you'll see that low bond yields equal high demand — so these record low yields suggest record high demand.
This tells me that institutional investors are pulling their funds out of riskier investments and pouring them into the perceived safety of bonds.
Consider...
- The US has already sold $969 billion worth of bonds at auction this year.
- Foreign demand for US bonds is at a record high. Holdings rose by around $200 billion last month to reach a staggering $5.16 trillion.
- Even though the US debt was downgraded last August from AAA to AA+, so far this year, for each dollar of US bonds sold there have been at least three buyers in the queue.
The recent global turmoil has made bonds look like a comparatively safe bet.
But there has been so much demand that yields recently hit rock bottom levels.
How low are we talking? Take a look at this roll call...
- The US 10 year bond yield hit 1.44% — a 200 year low
- The German 10 year bond yield hit 1.17% — a 200 year low
- The French 10 year bond yield hit 2.26% — a 260 year low
And the big one I've been talking about...
- The Dutch 10 year bond yield hit 1.53% — a 500 year low!
When bonds start hitting these kinds of records, you know that something has spooked big investors in a major way.
US 10 year treasury bonds now yield just 1.75%.
So why would any sane investor pour money into these when the US inflation rate is at 2.3%? The low yield combined with the rate of inflation means you're almost guaranteed to lose money (unless yields go lower and prices go higher, in which case you can sell for a capital gain).
It's like taking two steps forward, knowing you'll go three steps back. After taking inflation into account, investors are effectively PAYING a 0.55% annual fee to own US government bonds. That doesn't seem like an investment. It seems like financial suicide.
Yet investors are still buying bonds.
What does that tell you?
It means investors are so worried about the risks posed by stocks, they are willing to accept negative real interest rates from bonds.
ATI Asset Management chief investment officer Simon Burge sums it up nicely:
'Investors are just fleeing risk assets... Even in the global financial crisis we didn't see bond yields at the levels that they have reached now... This is a flight from risk assets that is unprecedented.'
The big financial institutions are rushing to protect their money...and that's where
your opportunity to profit comes in
your opportunity to profit comes in
All of this capital suddenly concentrating into one area has driven a massive rally in the bond market.
And this rush of money into 'safe-havens' could drive a completely different group of investments sky high.
I believe I've found five Aussie resource stocks that are uniquely positioned to take advantage of this situation.
Five stocks, with one looking at a potential gain of up to 278%.
Right now investors are fleeing the stock market and putting their money in the perceived safety of bonds. This has driven bond yields to historic lows — in some cases to negative yields.
That's why investors are now looking for other places to store their billions.
The five stocks I've uncovered are positioned to take full advantage of this overflow of panic money from the bond market. I'll tell you more about them in a moment.
But before I go on, a question:
What could be so bad that US 10-year bond yields are at a 200 year low...or severe enough to send Dutch bond yields to a 500 year low?
Simply this — The markets are
preparing for Europe to unravel
preparing for Europe to unravel
These ultra-low government bond yields lead me to a single conclusion: I believe the European debt crisis will reach a climax in the next six months. And when it does, it will send the five stocks I've selected soaring. That's why I'm writing to you today. You still have time to prepare...but perhaps not as much time as you think.
Consider: Greece, an economy the size of the state of Victoria's, has caused global markets headaches for two long years now.
But now Spain, with an economy larger than Australia's, is in need of major financial assistance..
Spain is Europe's 4 th largest economy. Unemployment is at 24%, or more than double that for 16–24 year olds. Its banks need a major recapitalization and the government is about to run out of money.
They've just received a €100 billion loan from the European Central Bank (ECB). But it doesn't seem to have done much good, at least with respect to restoring investor confidence.
Bond investors are now even more reluctant to lend Spain money — on June 18th Spanish generic 10 year bonds hit a euro-era record of high of 7.16%. And credit-default swaps (a bet that the country won't pay back a loan) are up in record territory at 622. This means it costs $622,000 to insure every $10 million of Spanish debt. That's double what it was a year ago, and 6 times higher than Germany.
In other words, investors are willing to put money on the fact that Spain is going to default.
Does the European Central Bank have the financial firepower to keep a country as large as Spain afloat much longer?
Remember, Greece's first bailout in 2010 turned out to be just that — the first of many.
Spain, in my opinion, is toast.
If you listen to the bond markets, they're saying the Euro experiment has failed.
Those yields are at multi-century lows because large institutions, the so-called 'smart-money' are protecting their cash against the very real prospect of a European break up.
And that's the driving force behind the potential 195%, 200%, 278% gains
I've been talking about
I've been talking about
You see, if one of the world's major currencies is about to disintegrate, then quite simply, gold and silver are the assets you want to own right now.
The Euro-crash is happening as you read this. You could see the price of gold and silver soaring very soon — and that means good news for gold and silver companies.
That's why I'm recommending the five best Aussie gold and silver stocks on the market in a special issue of my newsletter Diggers & Drillers.
Each month I send my readers my latest research and tips on the hottest Aussie resource firms on the market. But as I've said, don't expect me to recommend BHP, RIO or any other similar lumbering giants out there. You can get that information anywhere.
My goal is to find the hidden gems that aren't covered by mainstream analysts.
That means there's still heaps of upside potential in their stock — and a lot more room for you to profit.
I delve deeper into the resource markets to find Aussie-listed companies on the verge of huge resource discoveries. These companies often operate in unusual locations, or look for obscure, high-value commodities that many people have never heard about. That's why they're over-looked and undervalued.
If you'd like to give Diggers & Drillers a try...
- I'll tell you about the five Aussie gold and silver stocks set to soar off any panic money flowing into gold.
- I'll show you some truly exciting Aussie resource firms that have the potential to shake up their respective industries.
- I'll also give you my thoughts, insights and analysis regarding Australia's place in the global resource market. The era of making 'easy money' in industrial resources like iron ore and coal might be slowing, but there's still plenty of opportunity for profits — you've just got to look in the right places. I'll show you where they are.
- You'll learn about companies that are looking for rare or obscure commodities that I believe will lead the next phase of the great commodities boom. For example, recently I've been exploring what I call 'strategic minerals'. These commodities are integral to the defence, aerospace and energy industries and face supply restrictions. My last 'strategic minerals' tip was sitting on a 157% profit...and counting.
- AND you'll have the opportunity to make some spectacular profits in the process.
It starts with my five must-buy gold stocks.
With the news coming out of Europe getting worse by the day, this may well be your last chance to buy these stocks at the pre-Euro-meltdown bargain prices.
Once the panic money starts flooding into gold these stocks could soar. You may not get a chance to pick them up this cheap again for a long time — if ever.
Act now, before the rally starts, and you could get in on the ground floor and potentially ride these stocks all the way up to triple digit profits in the next 12 months.
Even as the Euro crisis starts tearing other investments apart, you'll be kicking back and smiling if these stocks head skyward.
I'll be the first to admit — I've had a few doubts about gold recently. It's had a pretty flat year and the chart isn't anything to write home about. Gold and silver stocks haven't been doing too well either.
But the markets have given us a clear wake up call. In fact, it can't get much clearer than this.
By the end of 2013 we could be
looking at $2,500 gold - MINIMUM
looking at $2,500 gold - MINIMUM
If the Euro is crumbling, gold becomes the ideal asset to own.
Because gold is the only currency with no counterparty risk.
Right now no one trusts anyone with their money. That's why they're putting it in bonds. The Bank of International Settlements (BIS) just reported that bank lending across borders fell by $799 billion last quarter.
But with bond yields at record lows, investors face not only negative yield, but a limit on the upside in bond prices. Big investors are running out of options to store their cash. Those lifeboats are full.
If money is looking for a low risk home, I'm convinced some of the funds pouring into the bond market will find its way into the gold and silver markets. There's still plenty of space on THESE lifeboats.
The World Gold Council estimates the financial market in gold to be around $2.4 trillion. To put that in perspective, the gold market is larger than all but the US and Japanese bond markets. That means it's got a lot of capacity to absorb funds from big investors.
Gold hasn't been as popular as bonds since it doesn't offer any yield. But with many government bonds at negative real interest rates, gold is starting to look a lot more attractive.
I believe we could be looking at a 59% increase in the price of gold to $2,500 within the next 18 months.
And that's not even factoring in all the secretive buying Asian central banks have been doing , or the potential rally from QE3 or another LTRO, or recent developments at the Basel Committee for Bank Supervision (BCBS), which could re-class gold as a tier-one asset...
If you're not familiar with many of these terms or abbreviations, don't worry. That's my job. Every week I break down the factors that affect resource prices for my readers. Lately, a lot of my time has been devoted to analysing emergency central bank lending programs (QE and LTRO).
But I won't go into that here.
For now, I want to focus on the real opportunity for you...
Turbo-charge your portfolio
with gold and silver stocks
with gold and silver stocks
Gold and silver stocks should and traditionally do outperform gold and silver as metals. That's because, when gold and silver prices rise, the companies that mine it see an increase in revenue without an increase in costs.
Investing in gold and silver mining stocks is a way to leverage gains of precious metal prices.
Now, until recently investors have shunned gold stocks.
Take a look at the chart below. Until May 2011 gold miners (GDX) and junior gold miners (GDXJ) closely followed the gold price (GLD). But then they split.
The growing disparity between the gold price and gold stocks since May 2011
Gold (GLD), Gold Miners (GDX) and Junior Gold Miners (GDXJ)
Source: Yahoo! Finance
As you can see, since May 2011, while gold has gained 2%, miners have dropped 25%, and junior minors have plummeted 51%!
In fact gold stocks are at the same level as they were in April 2010, more than two years ago. Over the same time gold has increased 40%!
But things have started to swing the other way.
The gold price is up 0.86% from mid-May 2012. But over the same period gold miners are up more than FIFTEEN times that at 15%, and the juniors are almost 8 TIMES that at 7%.
But I'm not talking about the possibility of a 15% or 7% gain, I'm talking about the opportunity for you to rake in triple digit gains.
It's not the first time it's happened.
During the 12 months after the market crash in October 2008 the gold price went up 41%. From its low on the 24th of the same month, gold miners (GDX) went up 192%! The mining stocks absolutely smashed the metal performance.
I'm confident we're in for a repeat performance.
But there's more to it than that. The beauty of the five companies I've uncovered is they're not just dependant on a rising gold price.
Each of these companies is at a potential turning point in its business. For example, one of these stocks is sitting on massive gold reserves. Another has just posted incredible drilling results. A third is already raking in profits with the lowest production costs in the industry.
In my view, these five stocks are a good buy in any market.
But now that this one-in-500 year market anomaly signals big investors are panicking and flooding their funds into so called 'safe' investments, these five stocks are screaming buys.
Make no mistake: these five stocks are highly undervalued and it shouldn't be long until investors start noticing and drive up the price.
If panic money pushes up the price of
gold we could be looking at even bigger
gains than 195%, 200%, or 278%!
gold we could be looking at even bigger
gains than 195%, 200%, or 278%!
You see my profit projections for these five stocks HAVEN'T factored in a rise in the gold price . That means any increase in the value of gold could push these stocks up even further.
Let me show you what I'm talking about.
One of the firms I've picked out is a gold and silver producer. It has a gold production cost of around $350/ounce. With a gold price of $1,570 it's making a profit of $1,220/ounce. That's a very healthy profit margin in any terms.
But if gold moves up to $2,500, it's suddenly looking at a 76% profit increase to $2,150/ounce with no increase in costs for them!
I believe that this rise in profits could translate to a big jump in its stock price.
And that's on top of the 200% gain I'm already predicting for this firm.
Make no mistake: this could be your only opportunity to pull in triple digit gains
during this global bear market
during this global bear market
As investors flee from most shares, I believe this is one of the few pockets of the market where you can still make big profits.
But you need to move quickly, before the overflow of panic money from bonds kicks up the gold price — and along with it these 5 stocks.
You can access my full report and all five stock tips right now by taking a no obligation trial-run of my newsletter, Diggers & Drillers, for the next 30 days.
The five gold and silver stock tips I've uncovered for you are a mixture of explorers and producers.
- Explorers have the potential for massive returns if and when they strike gold.
Of course, there's always the possibility they'll come up empty handed, in which case their stock price could go to zero.
This is a real risk you need to be aware of with all 5 of my gold stocks. As much as I believe you could bank triple digit gains on them in the next year, you can also lose everything you put into them very quickly. That's why I always give detailed buying and selling instructions in my newsletter and keep in touch on a weekly basis, sometimes more often. - On the other side of the gold sector, you've got producers.
These are already mining and selling gold or silver on the open market. Naturally, they probably won't deliver as much bang for your buck since the market already knows more about them (they've been 'de-risked'). But they are usually lower-risk stocks for the long-term than exploration stocks.
That's because producers already have known reserves of resources and are in or close to production, so they're a lot easier to value (I always establish an easy-to-understand current and potential valuation for every stock I recommend). On top of that producers also have relatively low capital expenditure requirements, they're unhedged and they usually have cash costs of less than half the trading price of gold.
To minimize any risk you've got to separate the potential stars from the ones that are just blowing hot air. And that's why I make sure I research every aspect of every company I recommend. And I don't mean just looking over their accounting books.
Go the extra mile (or hundred thousand)
I chase up management and grill them with questions, talk to their geologists on the ground, and if I have any doubts, I sometimes even visit their sites to make sure everything is as they say it is.
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Most analysts don't go to half the lengths I do. And very few actually bother spending the time or money to visit projects out in Peru, Botswana, Morocco or the Dominican Republic. But for me it's been one of the most important aspects of my research.
I've lost count of the amount of times I've found firms that only look great on paper, or are talked up by management. You get the real story by visiting a site and seeing a resource firm's operation with your own eyes.
Sometimes it can be disheartening to travel thousands of miles only to have to throw a tip out the window...
But when I find that hidden gem that shoots up in price — it more than makes up for it. My hands-on method doesn't always guarantee success, but it goes a long way to boosting your chances of buying a winner.
A Tiny Aussie Firm on a Mountain of Gold
The first explorer on my list is already sitting on close to two million ounces of gold in one of the world's best gold mining jurisdictions.
It's been pummelled along with the rest of the gold stocks on the market and now it's at rock bottom prices.
That's even though 7 separate investment funds including Casimir Capital, Canaccord BGF and RBC, have all valued the stock at an average of more than 3.5 times its current price!
On top of that it's still only explored 10% of its highly prospective 3,100km2 worth of licenses.
That means not only is it heavily undervalued in the current market, it still has thousands of square kilometres of potential gold reserves left to explore. It could be in for a massive ride when the gold price picks up. I'm predicting we could be looking at a 278% gain within the next 18 months for this one.
I'll show you exactly how I reached that figure in my full research on this company. You can read it by taking a no-obligation 30-day trial of my service here. I'm positive that once you see my research you'll fully agree with me that this is one stock you should snap up while it's cheap.
Low-cost producers can
profit at almost any price
profit at almost any price
On my list, I've also got a good, dividend-paying, low-cost gold producer.
In fact, it's the lowest cost producer on the Aussie market. Its cost per ounce is less than half the industry average.
That means that even if the gold price falls to $1,400 from its current price of $1,570, it'll still be raking in profits. And any increase in the gold price could have a phenomenal effect on this company's profit margins.
It's sitting on a very high grade gold deposit of 12.5 grams per tonne. That's four times higher than what most other gold producers would be happy with.
It's also got 161 grams of silver per tonne mixed in. This silver grade would give most silver producers a run for their money!
It's already sitting on over $40 million of cash, has no debt whatsoever and is expecting to almost double its output over the next few years.
This company reminds me of a similar gold producer I tipped back in 2009, Perseus Mining (ASX:PRU). It ended up delivering a 108% gain to my readers in 18 months. Over the same time the gold price went up by 36%.
That means Perseus Mining outperformed gold by three times.
But I'm even more excited about this new firm than Perseus Mining.
That's because it has almost HALF the production cost that PRU had, and that leaves more room for profit.
This stock has been beaten down along with the rest of the market, but as soon as people start to realise what a solid producer this is, I reckon it could shoot up 195%.
Look, there's heaps more to tell you about these stocks. But I'll show you everything if you decide to take a no-obligation trial of my newsletter, Diggers and Drillers.
That's not all you receive for taking a look at my research today...
Every month you'll get in-depth
research and analysis of the best
Aussie resource stocks on the market
research and analysis of the best
Aussie resource stocks on the market
Once a month you'll get access to my latest issue containing detailed analysis of any new resource investment ideas that I think could make you money.
I provide an easy-to-follow summary of all the stocks I recommend, along with details of the exact action you need to take each month...whether to hold, sell or buy more.
As far as I know, you simply won't find this kind of resource stock analysis, insight, advice and recommendations anywhere else in Australia.
With every new recommendation I'll tell you how to buy, when to buy, any risks you should be aware of, and when to sell.
Also, as important market news and earnings are released you'll stay in-the-know with weekly updates on current stocks in play.
Remember, you have the next 30 days to read my analysis. If you like what you see, you can choose to stay with Diggers and Drillers and receive my regular updates, recommendations and firsthand insights into the Australian resource market.
If you want to prosper in the next few years I believe your best bet is to invest in the owners of real, tangible assets.
And these are the kinds of companies you will discover if you decide to take a 30-day no obligation look at Diggers and Drillers today.
In this free report I've told you about two of the five precious metals stocks I think have great futures ahead of them. You'll receive details of the three others when you take a 30-day trial.
If you take me up on my no-obligation offer, make sure you read my full research on each of the firms before you decide whether to invest or not.
It's not often that you find stocks with such potential. In fact, even if I didn't expect a big move up in the price of gold I'd still recommend all five. That's how confident I am in the future success of these stocks.
But if panic money pushes a rally in gold prices, we could be looking at triple digit gains.
To begin your trial subscription now, click here.
You'll go through to a secure order form where you'll be asked to pay a small fee of $134 for the first year of my research.
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Sign up now and I'll give you instant access to my issue with the 5 gold / silver stock plays so you can get straight into the action.
Be clear: the flood of 'panic money' into gold has already begun.
In May 2012 the gold price was down 6%, the worst month for gold since 1982. But on 1st June — the same day those historic low yields happened — the gold price shot up over 3%.
In one day!
And remember, when gold stocks move, they move fast. The gold miners' index gained 51% in 8 days off its low in 2008.
We could be looking at an equally rapid swing this time around.
If you want to be in with a chance of riding the bounce-back from these lows I recommend you act now. Take a 30-day obligation free trial of Diggers and Drillers and grab my latest issue here.
Best Wishes,
Alex Cowie
Editor
Diggers & Drillers
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Calculating Your Future Returns: The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you've invested. While useful for detecting patterns the past is not a guide to future performance. Some figures contained in this report are forecasts and may not be a reliable indicator of future results. All advice is general advice and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment. All figures accurate as of 2/7/2012. Please download and read our Financial Services Guide Diggers & Drillers is published by Port Phillip Publishing Pty Ltd.
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