A breakdown in U.S.-China negotiations, Brexit worries, Hong Kong protests, manufacturing and agricultural sectors in shambles – there’s a lot to be concerned about if you’re thinking about buying blue-chip index funds right now. Frankly, I can’t blame you if you’re skeptical of the “good news” that has already been taken for granted and fully priced into the stock market.
Then there’s the mountain of debt that’s accumulating that will take a toll on the economy, and we all know that the government has only one answer to this problem: print more fiat money. It’s the only tool in their toolbox, and the central banks have little choice at this point except to flood the system with more dollars, yuan, and euros.
Printing more money means lower borrowing costs, and the U.S. Government wants to keep the payments on the $23 trillion in sovereign debt as cheap as possible. Much of this debt is owned by China, a nation that’s having problems of its own: more than 13% of China’s 4,379 banks and financing firms are now considered high-risk by the country’s central bank.
As a confluence of factors place tremendous strain on the American and Chinese banking systems, gold is taking a much-needed breather in preparation for its next leg up. Technical-analysis experts use cyclical patterns to predict gold’s next moves, which is clear from the chart below:
We can easily see that the formation from February to June is repeating itself from August to December: institutional profit-taking as the market digests several months of gains in the gold price. While beginners expect asset prices to just keep going up without interruption, the smart money books profits after multi-month runs and waits for consolidation-period dips to re-enter the trade.
It’s not hard, then, to see gold’s next big move coming in the very near future. The price action that started in June was impressive, but I’m expecting several similar moves in 2020, and the angles will be even steeper and more powerful.
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In preparation for this, I’m proposing a twofold strategy: own physical gold as a hedge against crisis events and buy shares of Winston Gold Corp. (CSE: WGC, OTC: WGMCF) to capitalize on the higher gold price. Owning gold and mining shares is a common strategy, but I’m choosing an uncommonly strong company in order to lock in the biggest possible gains.
For one thing, this particular company owns the Winston Gold Project, a mineral-rich asset situated just 18 miles southeast of Helena, Montana. The Winston property hosts two past-producing mines and the district has a longstanding history of mining with an estimated total district-wide production of 100,000 ounces of gold.
Courtesy: Winston Gold Corp. Investor Presentation
This region is extremely mining-friendly and has the ideal mining infrastructure in place: year-round access via paved highway along with electrical power and a railroad siding located near the district, which is just two kilometers north of the highway.
I’ve also handpicked this company because of its outstanding team, which includes the legendary Joseph Carrabba as Winston’s Executive Chairman of the Board of Directors. Mr. Carrabba is known worldwide in the resource industry as he’s participated in multinational mining operations throughout North America, Asia, Latin America, and Australia.
Joseph Carrabba served as CEO and Chairman of Cliffs Natural Resources and recently resigned from the board of directors of Newmont Goldcorp, and is the former President and CEO of Diavik Daimond Mines. With his extensive management and operational experience in the resource industry, Mr. Carrabba is a perfect fit for Winston Gold Corp.’s ambitious plan to advance its high-grade asset into production at the lowest possible cost.
If this company’s not already part of your gold-shares playbook, it needs to be. A proven mining team, the perfect location, and a low-tonnage mining model that significantly reduces capital expenditures: on the cusp of a commodities super-cycle, Winston Gold’s got the best possible combination for outstanding returns.
Research Partner, PortfolioWealthGlobal.com
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