As we come to the end of the first month of trading in 2018, a massive secular bull market is about to kickoff and it will turbocharge gold and silver gains.
“Stuff Stocks”
January 30 (King World News) – Jeffrey Saut, Chief Investment Strategist at Raymond James: The year was 2001 and the month was December. That was when China joined the World Trade Organization (WTO). At the time, we had deduced that given the WTO hookup, Chinese per capita income would rise and the Chinese would consume more “stuff.” It was none other than Maria Bartiromo that credited us for the term “stuff stocks.” As my pal Dennis Gartman, of the Gartman Letter says, “That would be anything that if you drop it on your foot it hurts!” We subsequently bought stocks that played to things like base metals, precious metals, soybeans, fertilizer, energy, agriculture, well you get the idea. We stepped off that theme with the Dow Theory “sell signal” of November 21, 2007, when we wanted to raise cash, and have not really embraced that theme again until recently. Over the past few months we have suggested there is the potential for another secular bull market in “stuff stocks,” and we are not the only ones…
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Indeed, another friend of ours, namely Rich Bernstein of Richard Bernstein Advisors writes:
One of RBA’s primary investment tenets is that return on capital is highest when capital is scarce. In other words, it is more profitable to be the one banker in a town of 1,000 borrowers than it is to be one of 1,000 bankers in a town of one borrower. Simply [put], supply and demand for capital tends to set prospective investment returns . . . However, it is difficult today to find segments of the global financial markets that are starved for capital because of the abundance of liquidity. However, we have found success in our portfolios by searching for market segments in which capital is relatively scarcer if not scarce. It’s hard to argue that bonds are starved for capital when nearly a half-trillion dollars has flowed into bond funds and ETFs. However, only about 1/100th of that amount has flowed into commodity funds and ETFs during the period. This is one reason RBA’s portfolios have been overweight materials, gold miners, and gold, and why the fixed-income weights in our multi-asset portfolios have been close to their minimum allowed levels.
And then there was this from Jeffrey Gundlach, founder of Los Angeles-based DoubleLine Capital, who in his forecast for 2018 stated:
“Emerging markets and commodities present the best investment opportunities for this year.”
Clearly we agree and would note that commodities relative to stocks are as cheap as they have been in decades and we recommend tilting portfolios accordingly. As we have said for 47 years in this business, “There is always a bull market somewhere!” We think the idea of buying into the nascent commodity bull makes a lot of sense. As legendary investor Jim Rogers, who co-founded the Quantum fund with George Soros and went on to gain an eye-popping 4200% in the first 10 years, said:
Invest in something when people say they never want to invest in it again, when they are throwing it out the window. Think about that. We know people that liquidated their portfolios around the March 2009 lows vowing to never buy a stock again. The same can be said about tech stocks as they were bottoming between November 2002 and May 2003. Currently, the same thing is being said now about energy stocks, especially the midstream MLPs.
“Stuff” is Cheap
This is a chart of the S&P GSCI Total Return Index versus the S&P 500 Index. Commodities have not been this cheap relative to equities in a very long time.
Commodities vs S&P 500…Commodities Incredibly Cheap!
King World News – This is all part of the setup of the next leg higher in the secular bull markets in gold and silver. The precious metals are going to reach price levels that are unimaginable to people today. This is why the “smart money” is beginning to overweight the sector. Just like billionaire Eric Sprott, investors should be accumulating shares of these high-quality mining and exploration companies while they are still cheap because the stock prices of these companies will skyrocket during the coming phase.
***ALSO JUST RELEASED: MAJOR WARNING: The “Invisible Hand” May Finally Be Ready To Let Stock Markets Tank CLICK HERE TO READ.
***KWN has just released the powerful audio interview with Gerald Celente discussing why the world is heading into a major crisis in 2018 and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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