Wall Street can't do it. Hedge funds can't do it, either. And most investors won't do it.
Nobody is looking at small gold mining companies. So many of these companies - the ones that should benefit the most from the gold rally - haven't kept up with the rise in gold prices.
Investors like you have a unique opportunity to make some big money on small gold mining stocks as gold prices jump higher this summer.
Ask any expert and they'll tell you - part of the reason for gold's historic rally is supply. There's just barely enough supply to meet the gold market's demand.
And yet, many of the companies that have committed all of their resources to pulling gold out of the ground have barely moved up in value at all.
In fact, many of them are worth less today than they were 2 years ago.
Don't believe me? Check out DRDGold Ltd. (Nasdaq:DROOY).
2 years ago, when gold first hit $600 an ounce, it was trading above $15 a share. Today, it's below $10.
2 years ago, Banro Corp. (AMEX:BAA) was a $12 stock. Today, with gold still soaring, it's an $8 stock. Golden Cycle Gold (Nasdaq:GCGC) has to be one of the best gold stocks on the planet - it trades right where it did 2 years ago.
Of course, I'm joking.
But in all seriousness, there's something wrong here. Gold prices have jumped 50% in the last year. But many of the companies that have the gold have not followed gold higher. What's going on?
That's what Jeffery Christian, managing director for CPM, a leading mining consultant firm, says.
Mining companies pay Christian and his firm a pretty penny for his insights on the gold market. And if he says the market's in disarray, well, he knows what he's talking about.
As for me, when I hear that a market is in disarray, I immediately think opportunity. Because some assets are being mis-priced. My research shows that gold mining companies are mis-priced right now: especially the small mining companies.
Not everyone agrees with me. Some believe that gold mining companies have underperformed because investors understand that a recession is a temporary event.
They forget that the recession talk started recently -- just a few months ago. Sure, gold really took off when the fallout from the housing bubble began to threaten big banks. Gold will always rally when there's a financial crisis.
But they forget that gold prices rallied right along with stocks for much of the last few years.
For example, during the four and a half year rally beginning on March 10, 2003 at 7,739.39 and culminating in a historic high of 6,425.14 the Dow surged 83%. During the same time gold when from $349 to $738 for a return of 111%, proving that gold not only goes up in bad markets, but even during bull markets.
I believe that gold prices have run to record highs because of oil prices, the massive devaluation of the U.S. dollar and inflation.
I'm not here to blame anyone. In large part, the weak dollar and high energy costs are due to globalization. As emerging economies like India and China industrialize, they use more oil and prices rise.
As their standard of living improves, their currency gets stronger. And since the U.S. dollar is the world's de facto currency, it makes sense that gains in emerging economy currency come at the expense of the dollar.
The point here is simple. Globalization is here to stay. It isn't going away anytime soon. And neither is the inflationary environment created by high oil prices and a weak US dollar.
China has put up double-digit growth numbers for 30 years. That, my friend, is a long-term trend that will continue for decades. And a big one, at that. Investors betting on lower oil and gold prices are basically betting against China. And India. And Brazil and Russia.
That doesn't sound like a very good bet to me.
Today, there is no safety net for Americans. Most of our manufacturing has moved off-shore. Pensions are a thing of the past. Social Security isn't worth mentioning. It's no longer good enough to make average gains on your investments. These days, your investments have to substantially outperform the stock market if want to retire comfortably.
In the last 5 years, the dollar's value has been cut in half. That means that if your investments haven't doubled in that time, you're losing money.
This is truly a unique opportunity for profit-minded investors.
That way, there's plenty of time for us to get positioned. Gold's next move higher will take into uncharted territory. And anyone holding undervalued gold mining stocks is going to cash in - big time.
Investor behavior is funny sometimes. When gold was trading for $349 an ounce, it seemed like nobody wanted it. But in 2007, gold demand in dollar terms was off the charts.
Still, many investors believe that the strength in gold prices won't last.
The true value of gold is considerably $1641.60 per ounce.
For the last 60 years, the amount of oil you cold buy with an ounce of gold has remained somewhat constant. But today, that ratio is totally out of whack. As it now stands, gold needs to move 67% higher to restore order to this Secret Valuation Ratio.
I firmly believe the price of gold will rocket $663.60 over the next 12 months. And the next leg higher for gold prices will start during this summer's driving season.
For gold investors, this summer will be one to remember. Many analysts are saying gasoline prices will hit $4 a gallon by June. And like clockwork, when oil and gas prices rise, gold prices will rise, too.
But this summer's move could be huge for gold. Gold's already as much as 67% undervalued relative to oil. So when oil rallies this summer, gold will have even more ground to make up.
That should lead to windfall profits for investors who hold the most undervalued assets in the gold universe.
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