According to Mitchell Clark, contributor to Profit Confidential, you can plainly see the resurgence in gold stocks, which have really turned around from what was a considerable period of weakness. Clark notes that the majority of gold stocks have been trending lower all year, as the spot price has been consolidating. But as expectations for more monetary stimulus from the Federal Reserve are contributing to a weaker U.S. dollar, Clark argues, this is helping precious metals move higher, which is seeing gold stocks break out.
"If the Federal Reserve takes additional action at its next Federal Open Market Committee (FOMC) meeting in September, then the recent strength in gold prices should carry right into 2013," reasons Clark.
However, Clark concedes that across the board, mining companies have had a tough year on the stock market.
Clark says that if the U.S. economy experiences another recession in 2013, the fundamentals for gold prices remain solid; if the U.S. economy continues with its recovery, the fundamentals for gold prices get even better.
In the article "Gold Stocks Breaking Out of Their Correction," Clark recommends that investors make sure the have some exposure to gold over the near term, as he believes the market has the makings of a new upward trend in gold prices.
"It's as if institutional investors just abandoned the entire group," says Clark. "Even large-cap dividend-paying heavyweights in the gold sector have been under a lot of pressure."
"Regardless, in the age of austerity, rising money supplies, and ballooning sovereign debt, the outlook for rising gold prices is solid," concludes Clark.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
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