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An Important Update on Gold Stocks

By Brian Hunt, Editor in Chief, Stansberry Research
Monday, July 22, 2013

 After suffering a horrible first half of the year, Royal Gold is starting to look interesting.
It's a potentially bullish sign for gold stocks...
Royal Gold is one of the world's premier precious metal "royalty" firms. Regular readers are familiar with the idea of royalty firms... These companies don't mine any gold or silver of their own. Instead, they finance lots of early-stage mining projects, then earn royalties on mine production if things work out. It's a safer, more diversified way to invest in the gold-mining business than owning a company focused on one big strike.
 Like every gold stock, Royal Gold has suffered this year. The price of gold has fallen from $1,685 an ounce to around $1,285 an ounce (a 24% decline). This has produced a huge correction in gold stocks. The benchmark gold stock index fell 50% from its 2013 starting level.
As you can see from the one-year chart below, Royal Gold was slammed. Shares are down from $80 to the low $40s.
 Jeff Clark has been keeping readers up to date on gold stocks in Growth Stock Wire. Right now, nobody wants to own them. Expectations of rough times are "priced in" to most gold companies.
This makes the recent low in Royal Gold – around $40 per share – worth noting...
If the stock can hold this level for a while... and move into the mid $40s... it's a bullish sign for the sector. Traders can consider buying Royal Gold or its fellow gold stocks and using a tight stop.
If the recent lows hold, the upside for these cheap, hated stocks is substantial. If you use a tight stop, the downside is minimal.
 Another market worth watching (and trading) is the Japanese equity market...
Back in November, True Wealth editor Steve Sjuggerud urged readers to buy Japanese stocks. He said the changing of government leaders ensured the country would enact major stimulus programs... and push the value of Japanese stocks much higher. He's repeatedly called it one of his top trades for 2013.
The best way to track the Japanese stock market is with the "Nikkei" average. It's the "Dow Industrials of Japan." It tracks the share price movements of major Japanese companies, like Toyota, Mitsubishi, and Honda.
Steve's call was well-timed. The government changeover occurred... massive stimulus efforts are happening... and the Nikkei skyrocketed. It soared 72% from November 2012 to May of this year.
After such a big run, it was only natural for the Nikkei to correct. Remember, markets are like runners. They can't sprint flat out for miles without needing a breather.
The Nikkei did just that in May... and fell from 15,600 to 12,500. Since bottoming around 12,500, the Nikkei has begun a recovery... and more upside is likely on the way.
Brian Hunt

Further Reading:

In a precious-metals bull market, royalty companies offer one of the world's best, safest ways to make money. But most investors don't really understand the unique features that make them much more predictable in terms of their growth and their dividends. Learn more about the many benefits of these stocks in this interview with John Doody, one of the world's top experts on gold and silver stocks:

In The Daily Crux
Market Notes
"Ultra" biotech fund BIB tops a short list of funds up 75%-plus over the past six months.
Oil-services stocks are quietly booming... Halliburton and Schlumberger surge to fresh 52-week highs.
America's biggest RV maker, Thor Industries, breaks out to a new all-time high... up 52% in the past three months.
No sign of inflation in food prices... corn, wheat, and sugar prices are all down 28%-plus over the past 12 months.
Market Watch
Symbol Price
S&P 500 1692.09 +0.2% +22.9%
Oil (USO) 38.45 +0.3% +11.0%
Gold (GLD) 125.11 +0.9% -18.4%
Silver (SLV) 18.88 +0.9% -28.5%
U.S. Dollar 82.61 +0.0% -1.1%
Euro 1.31 -0.1% +6.7%
Volatility (^VIX) 12.54 -8.9% -18.8%
Gold Stocks (^HUI) 240.33 +4.4% -39.6%
10-Year Yield 2.49 -1.6% +64.9%

World ETFs
Symbol Price
Japan (EWJ) 11.95 -0.8% +32.2%
Israel (ISL) 14.88 -1.5% +27.4%
USA (SPY) 169.17 +0.2% +25.6%
Taiwan (EWT) 13.50 -1.6% +14.6%
India (IFN) 20.55 +0.0% +12.2%
Canada (EWC) 27.91 +0.5% +7.7%
Singapore (EWS) 13.18 +0.1% +3.8%
S. Korea (EWY) 54.91 +0.2% +3.1%
China (FXI) 33.73 +0.3% +3.0%
Russia (TRF) 14.05 -0.1% +0.7%
S. Africa (EZA) 58.75 -0.5% -6.5%
Lat.America (ILF) 36.35 -1.4% -11.8%

Sector ETFs
Symbol Price
Media (PBS) 22.46 -0.8% +52.0%
Construction (PKB) 20.17 +0.7% +45.8%
Alt. Energy (PBW) 5.86 -0.2% +41.0%
Defense (PPA) 26.39 +0.3% +40.5%
Financials (IYF) 76.02 0.0% +40.0%
Biotech (PBE) 32.78 +1.5% +37.9%
Retail (PMR) 32.57 -0.5% +34.0%
Consumer Svcs (IYC) 108.49 -0.1% +33.8%
Health Care (IYH) 106.63 +1.3% +33.4%
Industrials (IYJ) 88.28 +0.9% +32.1%
Transportation (IYT) 117.49 +0.0% +28.0%
Telecom (IYZ) 28.41 +0.0% +27.3%
Water (PHO) 23.45 +0.3% +27.0%
Software (PSJ) 31.43 -0.7% +19.3%
Semis (PSI) 16.83 -0.9% +18.8%
Insurance (PIC) 19.01 +0.1% +18.3%
Big Tech (QQQQ) 74.59 -1.0% +16.2%
Nanotech (PXN) 7.07 -0.3% +15.9%
Basic Mat (IYM) 70.80 +0.3% +11.9%
Real Estate (IYR) 69.22 -0.1% +10.7%
Utilities (XLU) 39.39 +0.0% +9.1%

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