The U.S. dollar is insanely overvalued right now. And there’s absolutely no way these levels can be sustained for much longer.
The strength of the greenback over the past several months has been based on nothing more than foreign currency hedging. The world simply traded one fiat currency for another…
- With China and Japan competitively devaluing their currencies, yuan and yen holders converted to USD.
- Following Brexit, pound holders converted to USD.
- Following the recent currency demonetization in India, rupee holders converted to USD.
Right now, the greenback is seeing strength on speculation of more interest rate hikes from the Fed next year.
After yesterday’s rate hike announcement, the Fed said it was hoping to increase rates four times next year. The dollar bulls celebrated. However, they seem to forget that the Fed said the same exact thing this time last year; they were planning to increase rates four times in 2016. That didn’t happen.
The Fed hiked interest rates once in the summer. And the only reason they raised rates yesterday was to hedge against pressure from Trump to keep rate lower. The move was purely political.
So the greenback is flying high right now on both fears of other fiat currencies and hopes of a better U.S. bond market. But it won’t last long. And you need to own gold and precious metals as a hedge now.
On top of all this is the overnight global shift to cashless economies that I’ve been telling you about for weeks. As physical paper cash is phased out, hard assets like gold will be at a premium.
MOREOVER, the U.S. national debt is approaching $20 trillion, and Trump plans to add another $5 trillion to the tab.
All signs point to gold and precious metals.
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Gold is money — despite what the banksters want you to believe. Money is nothing more than a medium for labor storage and exchange. And gold is the ultimate medium for labor storage. The yellow metal is a screaming buy today at around $1,130 an ounce. And I recommend owning physical gold and large international gold miners and royalty companies. Here are my three favorite large gold stocks…
Barrick Gold (NYSE: ABX)
Barrick Gold is the largest gold mining company in the world with operations in Argentina, Australia, Canada, Chile, Dominican Republic, Papua New Guinea, Peru, Saudi Arabia, the United States, and Zambia. The company produces over 6 million ounces of gold annually. When gold prices are hot, Barrick gets a lot of media and investment attention.
Goldcorp (NYSE: GG)
Goldcorp is a very well known senior gold producer with one of the lowest production costs in the industry. The company has an impressive portfolio of high-quality assets located in geopolitically stable jurisdictions in North and South America. Goldcorp produces about 3.5 million ounces of gold annually with all-in sustaining costs (AISC) under $900 an ounce.
Royal Gold (NASDAQ: RGLD)
Royal Gold is the most well known gold royalty company in the world. The company currently owns interests nearly 200 properties on six continents, including interests in almost 40 producing mines and 25 development-stage projects. The major upside for gold royalty and streaming is less exposure to risk. Projects with high risk can be managed out of the portfolio.
Until next time,
Luke Burgess
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
