Andrew’s Note: If you’re feeling anxious about your finances, you’re not alone. Inflation is at a 40-year high. Layoffs are sweeping the U.S. And foreclosure filings are up 150%.
That’s why last night, Jeff Clark issued the most serious warning of his career – he calls it “America’s Darkest Hour” and it could be like the 2008 financial crisis.
To get ahead of this crisis, click here to watch Jeff’s warning. There, he’ll reveal the exact steps you need to take to turn this crisis into an opportunity to make as much as 186%, 597%, and even 954% in a matter of days.
And below, read on to see what Jeff has to say about the current gold market…
Relative to the S&P 500, gold stocks are just about as cheap as they’ve ever been.
Now, before you roll your eyes and dismiss today’s essay as “that Clark guy is talking about gold stocks again,” consider this…
The broad stock market is overbought and overextended.
If all the warning signs we’ve looked at over the past few weeks start playing out – and we get a multi-week decline in the broad stock market – then what sector is likely to perform best?
Intuitively, we might believe the best performing sector during a market decline would be the one with the best relative value. And that makes sense because when money comes out of overbought and overextended positions, it often flows into beaten-down value stocks.
And right now, the most beaten-down sector with the most value is the gold sector.
Look at this ratio chart comparing the action in the VanEck Vectors Gold Miners Fund (GDX) to the S&P 500…
As this chart moves higher, it tells us the gold sector is outperforming the S&P 500. And when the chart moves lower, gold stocks are underperforming.
As you can see, the gold sector has underperformed the broad stock market for the past four months.
The gold sector is as cheap (relative to the S&P 500) as it was last December – right before the chart reversed its trend and started to rally.
The blue arrow in January points to the first “higher low” in that rally phase. That was the first bullish sign indicating the gold sector was ready to “outperform.”
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At that point in January, GDX was trading for $30 per share and the S&P 500 was near 4800.
Two months later, GDX was $39 and the S&P 500 was 4200. In just two months, the gold sector rallied 30% while the broad stock market fell nearly 13%.
In other words, money came out of the overbought and overextended stock market and flowed into the beaten-down value stocks in the gold sector.
Take another look at the blue arrow in August…
This arrow points to what could prove to be the first “higher low” in a new rally phase for the chart.
It could be the first sign indicating the gold sector is ready to outperform.
If that turns out to be the case, then two months from now the gold sector could be sharply higher while the broad stock market is much lower.
Best regards and good trading,
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Jeff Clark
Reader Mailbag
Where do you think the gold sector will be two months from now?
Let us know your thoughts – and any questions you have – at [email protected].