What to Do About Gold Stocks…
Seabridge Gold has over $200 billion worth of gold and other metals in the ground at just one project…
Yet as I write, at $13 a share, Seabridge’s stock market value is only $580 million.
Seabridge shares have fallen by nearly two-thirds since their highs last April (13 months ago). The crazy part of this fall is… the price of gold today is actually higher than it was last April, when Seabridge shares were in the mid-$30s…#-ad_banner-#
It’s not just Seabridge – the whole universe of gold stocks has been decimated.
The story at Seabridge hasn’t changed… The company is simply sitting on one of the biggest undeveloped piles of gold in the world, looking for the right “suitor” to put it into production.
Since Seabridge does not produce any gold, it has been hit particularly hard by the bear market in gold stocks (as have other non-producers).
At this price – and with 80 million ounces of gold in the ground at just one project (called KSM)
– you are paying just $6 per ounce of gold in the ground at KSM… and getting all its other metals and projects for free.
Gold stocks – particularly non-producers like Seabridge – are CHEAP!
So… is it time to be buying gold stocks? Gold Stock Analyst editor John Doody thinks so…
In an interview with our sister site The Daily Crux earlier this month, John said:
We don’t know exactly where the bottom is, but every indicator is telling us that we’re either near the bottom or at it. It would be a huge mistake not to be invested now.
As of May 1, gold stocks were on average trading 29% below where they should trade with gold in the $1,600s. The only time they have ever traded at a greater discount to gold was in the October 2008 crash, when they traded at a 34% discount. Investors buying at that bottom saw a 237% gain in the next 15 months.
The Daily Crux asked John for his favorite way to get into gold stocks now…
If I had to choose, the area I would probably favor most right now is the royalty companies. They’re the safest… They have the broadest geographic distributions and portfolios… Royal Gold and Franco-Nevada are the cream of the crop in that group.
I’m a believer in Royal Gold too… I explained the full story of how it works last year in DailyWealth. I urge you to read it.
So should you buy either Royal Gold or Seabridge Gold now? Or should you do nothing?
I can tell you what we’re doing… Right now, in my True Wealth newsletter, Royal Gold is a “hold.” We hit our trailing stop on Seabridge Gold a while ago, which was definitely the right move in hindsight.
We believe John Doody is right about gold stocks being cheap. We know that gold stocks soared by 237% in 15 months the last time they were this cheap. And gold stocks may have found a toehold, as Editor in Chief Brian Hunt points out below… But we are still waiting on the uptrend before we buy.
John Doody is bolder than me… He says to buy: “It would be a huge mistake to NOT be invested now.”
Conservative investors could buy Royal Gold. You could possibly see a double within a year simply if sentiment goes from negative to positive on gold. Royal Gold is currently on both my recommended list and John Doody’s.
Aggressive investors could consider Seabridge, which has the potential to make you a few times your money. But note that Seabridge is not currently on my recommended list… or John’s.
(When I say you could make a few times your money on a gold stock like Seabridge, I am serious… Subscribers pocketed a 900%-plus profit on my initial recommendation of Seabridge shares. Yes, the stock rose over 900% while we owned it. And yes, we sold it and banked that profit.)
The point today is simple…
Gold stocks are near-record cheap. Investors have given up on them. The last time gold stocks were this cheap and hated, they soared 237% in 15 months. Riskier non-producers (like Seabridge) will go up more than the big names when the uptrend returns.
The thing is, we don’t have our uptrend yet… So we’re not backing up the truck to buy.
We may have just hit bottom this month in gold stocks. The time to buy gold stocks is coming very soon… I’m sure of it.