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Massive 2020s Gold And Gold Stock Bull Market Is Just Beginning

Feb. 16, 2020 7:26 PM ETCDE, GDXJ, GLD, GOLD, IAU, AEM, NEM, GDX, AEM:CA, ABX:CA, NGT:CA114 Comments


  • After a period of fixing balance sheets, right sizing and de-risking, gold companies are poised to expand profits in the intermediate to long term.
  • Mergers have tightened exploration spending and consolidated operations to impose new discipline on the gold mining industry which will constrain production.
  • A toxic mix of global debt, aging demographics and poor fiscal policy by governments will lead to competitive currency devaluations leading to inflation.
  • Perpetual monetary stimulus and eventual "helicopter money" or MMT will cause a flight to safety that drives gold prices higher in the 2020s.
  • Low cost gold producers stand to benefit greatly as they gradually raise production into an inflating gold market in the 2020s.
  • This idea was discussed in more depth with members of my private investing community, Margin of Safety Investing. Get started today »

A combination of factors are leading to a secular bull market in gold and gold stocks. First, the gold industry is coming off a period of cleaning up balance sheets and right sizing operations. Further, industry consolidation via M&A is causing a more balanced gold supply and demand equation. Finally, QE for longer, government policy and potential other easy money policies are being used to offset demographically driven deflation. The inevitable outcome is inflation that devalues currencies and overwhelming government debts that drives gold to as high as $3000 per ounce.

My recommendation today is that investors buy or expand their holdings in the Van Eck Gold Miners ETF (GDX) on all pullbacks, making gold stocks a core 10-15% position in a portfolio for the 2020s, not just a satellite position.

I discussed the coming gold bull market in my most recent free Friday "Investing 2020s" webinar:

A Gold Bear Turns Buggy

I am neither a gold bear nor a gold bug. I am just letting the data take me where it leads. The data today screams for firm and rising gold prices, as well as, significant profits falling to the bottom lines of the top low cost gold producers.

In an April 2012 article, I discussed why the dollar would remain relatively strong for decades and at least partially, the global reserve currency. I also stated that "gold was done leading after a decade long rally." Commenters were sure to tell me that I was wrong in very colorful ways.

After my call on gold, from September 2012 through December 2015, the SPDR Gold Trust ETF (GLD) tracking the price of gold plunged over 40%.


Courtesy TradingView

In late 2018, I told clients of my firm and subscribers to Margin of Safety Investing that I was constructive on gold

We believe the 2020s are going to be more volatile than the last decade. With that in mind, you must build a margin of safety into all of your investment decisions. Our focus is to help you do that whether you focus on growth or growth & income. 

Kirk Spano and the MoSI analysts offer deep research and a 4-step approach to finding great opportunities and managing risk. Join us today and get your first year of Margin of Safety Investing for 20% off. 

This article was written by

Kirk Spano profile picture

25+ years of beating markets with less risk. Margin of Safety Investing. "The three most important words in investing are margin of safety." - Warren Buffett 

Get my Macro view and analysis of secular trends which led to my being named "The World's Next Great Investing Columnist" at MarketWatch. Join our investing group to get ETF asset allocation, top growth & dividend stocks, as well as, learn a repeatable approach to option selling for making more retirement income.

I own and operate Bluemound Asset Management, LLC - a boutique registered investment advisory that manages and consults on 9 figures of wealth. I was lucky to have several mentors who managed billions of dollars, including, one who literally helped write the book on option selling. I have now managed money since the 1990s through several major market cycles. 

In the past decade I have worked on private equity led real estate projects, as well as, consulted to several private equity firms, hedge funds and family offices. I currently actively help accredited investors find sustainable real estate investments through private equity. 

Since 2011, I have been widely syndicated and appear as an investing expert in the media. Follow my work, as I try to help you make great returns with less risk.

Analyst’s Disclosure: I am/we are long GDX, NEM, CDE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own Bluemound Asset Management, LLC, which is a fiduciary, fee-only Registered Investment Advisor. I publish separately from that entity for self-directed investors. See relevant terms and disclaimers at the website of Bluemound Asset Management, LLC. Any information, opinions, research or thoughts presented are not specific advice as I do not have full knowledge of your circumstances. All investors ought to take special care to consider risk, as all investments carry the potential for loss. Consulting an investment advisor might be in your best interest before proceeding on any trade or investment.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (114)

what happens when fed stops going brrr ?
Kirk Spano profile picture
then we get fiscal policy on roids and/or helicopter money
GDX is good, look at PAAS if you want to add more silver exposure and top notch management.
Kirk Spano profile picture
thank you, I'll look
Kirk Spano profile picture
The Silvertip shutdown at Coeur is more severe than I thought. So, I am selling CDE and looking elsewhere. I am likely to just expand GDX holdings on any pullback or breath.
Ben Gee profile picture
Gold may reach $1800 by Q3.
May break $ 1700 tomorrow, Monday. Spot gold opened 3:00 PM, PST, now +~ 20 to ~ $ 1663; spot silver up .16, + .16.

Watch the leverage of the miners kick in tomorrow if these levels stick
(3-4:1). Remember 2007. remember 2009-11.
Silver up $ 18.61, up .16.
Silver at 18.16.
Deeply Concerned profile picture
I agree totally with the article. From the charts, it appears to me that there's a significant divergence right now between gold and silver. I agree that both are in long-term bull markets that started in the second half of 2018. However, gold's recent price performance since the low in early February 2020 indicates to me that it has entered the heart of a strong third wave (EW). Gold's price performance could be explosive over the next few months, if not longer.

OTOH, the chart for silver continues to be in a downtrend since the beginning of September 2019. I don't think silver will bottom out until sometime in March. But whenever silver reaches its bottom, it will likely be even more explosive than gold when it turns upward.

My preferred PM investment vehicles are GDXJ and SILJ. I'm now fully invested in GDXJ that completed almost a perfect "cup-and-handle" pattern from early September 2019 until early February 2020, with a strong breakout over the past week.

But I'm only partially invested in SILJ right now, waiting for silver to bottom out. If I'm wrong and silver demonstrates convincingly that its already begun its next upleg (silver moves to exceed 19.25 and SILJ exceeds 12.25), then I'll bite the bullet and use my cash reserve to buy the remaining position in SILJ.

It's not uncommon for gold and silver to bottom at different times. Since August 2018, silver has lagged gold in most uptrends and downtrends. I think silver still has some work to do to complete its current downtrend.
Kirk are you still bullish on CDE after their latest earnings report and putting the silver tip mine on care and maintenance?
Kirk Spano profile picture
Not worried about SilverTip. Zinc and Lead prices are low for now with weakening economy. However, both are secular stories with alt energy. I am selling puts on CDE and for newer accounts with no CDE holdings yet, buying a 1/2 percent.
CDE keeps loosing money each quarter?
Kirk Spano profile picture
CDE is a high risk, high reward pick. Just saying they have been losing money though is very shallow and where the puck was. I have specific reasons for this stock. I might be wrong, but it's deeper than, they lost money. They were building something the past couple years, that changes the skew. Take a look at 2009-2012, juniors rocked. There is a possibility that happens again, soon. If so, CDE is a likely big winner.
Nice article Kirk. How high do you think we get this bull cycle? I think 2500 - 3000 is too conservative. Understood it may take 10 years but I was more leaning towards 7000-8000 range.
Kirk Spano profile picture
The $3000 is based on the devaluations coming, however, you are right, there could be a squeeze/hype spike higher for sure. You'd have to sell that aggressively if it happens.
Very good analysis. Gold has been rising in tandem with the US dollar. It has always been the opposite in the past, so something strange is happening. I believe the market is anticipating more rate cuts by the Fed to avoid recession at all costs because we are in a massive debt spiral. An economic slowdown will further balloon the deficit.
I agree that silver is likely to make a strong move up. I like SILJ and physical silver coins ( US ) as a hedge against a currency crisis.
If you buy for something for $900 with a gold coin ( 1 ounce ) coin worth $1600+, what do you accept for change? Paper money? Most likely silver coins.
Gold is rising against the US dollar, the US stock market, and an unfavorable COT report.

Gold bull market that began in late 2015 intact with the breakout and close above 1613.Trend very strong with the COT and rising dollar.
Gold is going up despite an unfavorable COT, a rising dollar, and a rising stock market. Look for new all time highs in the next few days or weeks.

@docstox 12
it will be interesting to see how gold does when the dollar corrects
The dollar corrected Friday and gold went up $24.00. Gold climbs steadily when the dollar is up and then jumps up mightily when the dollar drops just a little. The commercials are short gold but they can afford the beating because they are the miners who produce it. I look for gold to surpass the 2011 all time highs of $1900+ very soon.

@goldstd69 @Kirk Spano
StephanJK profile picture
Good article! Imo you are still a bit conservative, I would go for at least 25% Gold/gold stock allocation.
1e90ff profile picture
Just another metals market scam.
almoni profile picture
it's strange that adults who are sane don't understand that a forecast or a trade view must include charts and stop-losses and time frames - otherwise they're fools.
almoni profile picture
Kirk Spano
Kirk Spano = you wrote that the price of gold would be 3000$
okay, I count 30,000.$
if we didn't say when exactly we were both liars or worse.
Kirk Spano profile picture
In my webinar I say during the 2020s
If it's not going to happen by the end of next week it is too far away because in the long term we are all dead.

@Kirk Spano @almoni
almoni profile picture
I hope you're well. -
Kirk Spano
I don't care what you've written or said before. It's about your specific article - and it's not here. Why the clumsy excuses?
gnwilliams profile picture
While I suppose an out-of-control national debt would be good for gold, we should not wish for it. For a recent view of the situation, see "We Are Now Greece On Steroids:"

Kirk, I think you are way off . I think we should have 50% of our portfolio in gold and silver stocks at present.
Kirk Spano profile picture
Wow, that’s bold
With the stock market as high as it is, I sleep much better with 50% of my assets in gold and silver. Especially with Wu flu going around.
Breakout engaging now.
Beam me up Scottie!

Me to. I suppose we will see some investment at $1650 to $1700 though. I am a buyer here.
@Kirk Spano - Do you think it is prudent to wait until the next dip in the gold price, possibly over the next couple of months, to buy GDX/miners?
Kirk Spano profile picture
Yes. I said buy the dips. A small starter if you have none makes sense too because you never know it it will run away.
Skychris profile picture
Hi Kirk,
Hope this time you are true and gold performs better than oil!
with the USD strong, little to no inflation, and the velocity of money near zero....makes gold vulnerable to sell offs...the debt issues are bullish for gold …..but this is another recent very bullish article for gold....makes me nervous with so many very bullish gold articles....contrary opinion time??? flip the coin....no one knows...jmho
Claude-Vincent Perez profile picture
With your multiple bearish comments on every single article, me thinking that gold and gold miners are not for you. May I suggest 2yrs US Treasury Notes? Or invest in S&P ETF... You will feel better unless you have an agenda and you are not telling the truth about it.
The big speculators who hold record long gold future positions according to the COT, will unload and sell gold if the dollar continues up.

Rockbear profile picture
One should never look at Gold and it’s proxies just from the USD perspective. This is a big mistake a lot of investors do get caught. Gold is already making all time highs against various currencies (let you check it!) and thereby confirms at best what this well written article is all about. Asset inflation is already in full motion and it will most likely be joined by consumer price inflation caused by handing cash out for free (helicopter money). Since along time governments and the CB’s can’t afford a solid monetary policy which was proven recently as the FED had to back down from raising rates and shrinking the balance sheet in the light of revolting markets. The World is full of debt junkies and those who try to stop this addiction will get turmoil and revolution. There is no alternative than to continue this path which will inevitably further undermine the real value of money something that is proven already. Gold deserves a solid allocation in anyone’s fortune.
Cory Cramer profile picture
Thanks for the article, Kirk. This is a topic I've been thinking about a lot, and after not owning any precious metals since early 2013, last year I added a small gold position for many of the reasons you discuss and I've been debating how much I should increase that position. If I had to place my bet, I would say some form of stagflation is coming over the next decade.

I don't think we are going to see helicopter money for quite some time and if we do, whether we get serious inflation out of it is probably dependent on how much helicopter money we get. If we take your SS method, it seems to me that would just offset deflation, and we shouldn't expect it to cause inflation beyond what it is offsetting, right? Or, am I thinking about this wrong?

And then, since SS payouts rise with inflation, putting inflationary money into SS as a way to 'shore it up' seems counterproductive because the effect would be to drive up the cost of SS to the government by a nearly equal amount.

I think a more likely (and probably better) way to inject helicopter money is via some sort of student loan forgiveness or interest elimination. That is money that would both stimulate growth by putting more money (slowly) into peoples' pockets, and probably cause some inflation. It also seems to have some political support in the Democratic Party right now (although not technically helicopter money as it's being discussed currently).
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