The 5 Best Gold Stocks to Buy Now

After six years of doing nothing, gold has quietly started what looks like the start of a big new uptrend.

In part, it’s thanks to a recent major move from a big government fund. As important as this move is, it’s going largely unreported in the mainstream media… and is totally off the radar of most investors.

We’ll detail this major move and its implications in a moment. But first, let’s look at some important charts…

Below is a chart of gold’s price performance from June 2018 to June 2019:

 

The yellow metal climbed almost 10% during that time frame.

Students of history know that gold is really just another form of money. When you boil it down, gold is simply an alternative currency.

Over the years, it has developed a reputation as a “safe haven” asset. In other words, when riskier markets (like stocks or fiat currencies) crash, people flock to gold to protect their wealth.

That’s exactly what’s happening this year. When world markets were shaken by political instability, rising geopolitical risk, and the appearance of an economic slowdown, folks started buying more gold.

When there’s a strong uptrend in place, gold investors know that when the metal goes up even a little, gold stocks can go up a lot.

For example, on December 31, 2001, gold was trading at about $280. As you can see below, it had been losing value over the preceding seven years.

But then gold made its move.

Fast-forward about 10 years and it peaked at roughly $1,828 in 2011.

That’s growth of about 575%.

Yet gold mining stocks saw even bigger gains.

From the 2000 low to the 2011 high, gold mining stocks, as measured by the Gold Bugs index, climbed 1,500%.

The point is that for a “safe haven” asset, gold can still make investors big money when the right forces come together.

So what are these “forces”?

Are they setting up for bigger gold gains? And is this the start of a new gold bull market?

As the 2002-2011 rally showed, the metal can skyrocket, making the 10% move to date potentially just the start.

The possibility for slowing Fed rate hikes and the threat of a weakening global economy may prove to be major long-term gold growth drivers.

Plus, gold has been trading sideways, or “sawtoothing” for the last 3 years, as you can see in the chart below. Sawtoothing is when lots of the price-excess from the preceding bull drains out of the market. This happens as investors who still hold the asset grow impatient with it not going anywhere. They finally give up and sell out.

Often, this sawtoothing sets the stage for the next big move higher, and there’s plenty of room for gains far greater than 10% to come.

The fact is, the problems that lead to gold’s rise the last time around are still in place. In fact, you could say they are worse. That’s because we’ve entered a sort of “Alice in Wonderland” economy.

How We Arrived in Wonderland

In the years during and after the 2007 – 2009 credit crisis, the U.S. Government engaged in a desperate attempt to stave off a global financial disaster.

Acting through the Federal Reserve, the government’s defining act during this time was to drop the federal funds rate to effectively zero.

It was an extreme act … one that made it very easy for businesses, consumers, and real estate buyers to borrow money.

Americans took the Fed’s lead. They borrowed trillions of dollars to fund businesses, stock purchases, commercial real estate projects, expensive college tuition, and single-family homes. They also borrowed to buy consumer items like cars, jewelry, furniture, and electronics.

By making enormous amounts of credit available, the Fed stoked the economy, stocks, and the housing market. Stocks tripled from their 2009 lows. U.S. home prices climbed from their lows. Companies with poor credit ratings borrowed record amounts of money… far more than they did before the 2008 crisis.

In 2015, the net worth of American households reached $85 trillion, an all-time high.

On the surface, things look good. But the long period of low interest rates has created an extremely dangerous situation. By taking interest rates to zero and holding them there for years, the Fed has created an epic amount of malinvestment and reckless speculation.

Not billions… but trillions.

For most of the 80s and 90s, the Fed funds was between 5% – 10%. This relatively high cost of borrowing acted somewhat as a “brake” on funding bad business ideas, foolish real estate purchase, and “want, not need” consumer items. It didn’t eliminate these things, but it did limit them.

Now, there is no brake. Just runaway borrowing and spending. The prolonged period of zero percent interest rates has completely warped the economy. We are now Alice in Wonderland.

Since borrowing is ridiculously, laughably cheap, no business idea is too dumb to fund… no $120,000 car goes unsold to someone who can’t afford it… and no overpriced house sits on the market for long.

The old question “Does it make sense to borrow this much money?” has been replaced with “How much can I get?”

The U.S. government isn’t the only player in this story. It’s just the biggest and most powerful. The governments of Japan, China, South America, and Europe are doing the same thing. We are living during the biggest, most reckless monetary experiment in the history of mankind.

We believe the borrowing-fueled economy is living on borrowed time. The Alice In Wonderland economy can’t last for much longer. The interest on many of the debts we’ve rang up will not be paid. The principle will not be paid back either.  Trillion of dollars in malinvestment are about to be liquidated. It could result in a financial crisis much larger than the 2008 crisis. Banks won’t just go broke, entire countries could go broke.

But there’s one more “force” that we believe will begin pushing gold a lot higher in the coming months and years…

And it all started last year in Switzerland, with a little-reported move by a big Swiss fund manager.

“Rocket Fuel for Gold’s Next Takeoff”

Under the radar of the mainstream financial media…

In February 2018, the Swiss National Pension Fund announced that it would begin switching out of synthetic gold derivatives, and into physical gold.

A synthetic derivative, basically, is a paper-money-backed option or contract, designed to mimic the gains of the underlying asset—in this case, gold bullion.

“The supervisory board has decided we are to invest in physical gold bars from now on,” the fund said in a statement.

Why would they do this?

If you recall the financial crisis of 2008, one of the results was a new global banking standard, called Basel III.

This new standard required that all systemically important financial institutions (called SIFIs) had to have a bigger “backstop” of liquid assets, in case of another global financial meltdown.

As Brandon White of Palisades Research noted:

“The need for liquidity was a key change in the creation of the new standards, and it shone a spotlight on an asset that had largely been ignored for this purpose – physical gold.

Monetary gold is defined, in the new Basel III banking capital rules, as ‘physical gold held in their own vaults or in trust.’

The gold market is bigger than all financial markets – exceeded only by bond and money markets. Gold is not traded at the commodity desks of large banks. It is traded at the currency desks. And a staggering $250 billion worth of gold changes hands on a daily basis via the London Metals Exchange.

Under the previous rules, gold was rated as a Tier 3 asset (there are now only two Tiers). This meant that an institution that held gold reserves on its balance sheet could only apply half of its market value towards its solvency requirements.

But under Basel III, monetary gold now qualifies as a Tier 1 asset, and is 100% valued for the purposes of banking viability. Essentially, monetary gold is now considered risk free.”

In other words, Basel III re-monetized gold in the global financial system.

This is a huge development.

For some SIFIs, the deadline to comply with Basel III was April 2019. Other institutions have until January of 2020, one year from now.

The result?

To comply with the new standards, and to hedge against another financial crisis, the big players in world finance are now buying massive amounts of physical gold.

For example, Russia has been adding an average of 20 tons per month to their vaults.

How about America’s other international rival, China?

In 2007, China overtook South Africa to become the world’s largest gold producer, Last year it mined 430 tons, about 50% more than Australia, the world’s second-largest producer.

China now accounts for around 15% of total annual global gold production. But China keeps all of the gold it mines. It does not sell a single ounce abroad.

As well as keeping all of the gold it mines, since 2010, China has ramped up its gold imports. In 2014, it overtook India to become the world’s largest importer, buying gold from Hong Kong, Switzerland, London, Australia and Singapore.

While China only releases its official gold holdings every five years, it’s estimated that they may have as much as 10,000 tons—which would mean that China now has more gold than the U.S.

Besides Russia and China, the list of countries ramping up their gold buying in the last year is stunning.

In November 2018, Hungary’s central bank announced that they increased their gold holdings from 3.1 metric tons to over 31—a tenfold increase, over 1,000%.

Poland added 10 tons in July and August 2018. India… Turkey… Iraq… the list goes on.

The latest report by the World Gold Council showed that central bank gold reserves grew 150 tons in the third quarter of 2018—a 22% increase from a year ago.

This marks the eighth straight year of central bank gold buying—and the highest level of net purchases since 2015.

An unprecedented amount of gold is now being horded by central banks around the world. And it’s not showing any sign of stopping.

As one financial commentator put it: “Basel III is rocket fuel for gold’s next takeoff.”

It’s more support for an upswing in gold that’s quietly been taking place since early last year—creating a floor for the gold price, and the big recent uptrend.

As history has shown, when this precious metal takes off, it can mean huge returns

How the Ultimate Insurance Against Financial Disaster Can Soar in Value

You wake up in the morning, turn on the news, and get a sick feeling in your stomach…

The stock market is crashing again.

Another big Wall Street bank has failed.

Your 401(k) has lost another 25%. It’s bleeding value every week.

Your dream of early retirement is history. You’ve lost so much money in stocks that even a “regular” retirement is in jeopardy. If you live a long life, there’s no way you’ll have enough money.

This is the financial-disaster scenario that terrifies a lot of investors.

It’s what kept people up at night during the 2008 credit crisis.

These days, many financial experts talk about the dangers of another crisis.

Could something like 2008 happen again?

Could another crisis cause the value of the U.S. dollar to collapse?

Could the banking system seize up overnight?

Many smart people say the answer to all of these questions is “yes.”

Fortunately, we don’t need to know the answer to these questions.

The good news is that it’s very easy to buy insurance against financial disasters like these.

Many of the world’s smartest, wealthiest people own this insurance. It could mean the difference between a comfortable, early retirement… and just barely getting by.

How Financial Disaster Insurance Works

First, let’s agree on what “insurance” is…

In my book, buying insurance comes down to spending a little bit of money to hedge yourself against a disaster.

Throughout our lives, we spend a little bit of money on insurance and hope we never have to use it.

For example, home insurance costs a small fraction of your home’s value. You buy it and hope you never have to use it.

The same goes for car insurance. It costs a fraction of your car’s value, so you buy it and hope you never have to use it.

It’s the same with “wealth insurance.”

You can buy wealth insurance and hope you never have to use it.

There are hundreds of wealth-insurance policies out there. They involve intricate details, lots of forms to sign, and payments of big fees to advisors and salesmen (which are often the same thing).

But I’d rather keep things simple and keep money in my pocket instead of a salesman’s pocket. You might be in the same boat.

Here’s how we can do it…

Put a small portion of our wealth in gold bullion.

That’s it.

That’s all it takes to get wealth insurance… and protect your family against a financial disaster.

You don’t need complicated insurance products. You don’t need to pay big fees to a salesman. Just pay a small commission to a gold seller, store the gold in a safe place, and you’re done.

Here’s why this “insurance” is important…

Why Gold Could Soar in Value

Some very smart people are predicting a global depression, a collapse in the dollar, and a huge increase in the price of gold.

For example, Seth Klarman is a legendary investor. He’s probably the smartest financial mind you’ve never heard of. Klarman has warned that the Federal Reserve’s low-interest-rate policy has distorted the financial markets… and is setting us up for disaster.

Klarman and others bring up good points. The U.S. government is spending way too much money on wars, welfare, and other programs. Shaky corporations have borrowed record amounts of debt. China’s economy could decline and trigger a global recession. These are all real risks to your retirement account.

Even if you’re more optimistic and think things will be fine, I think you’ll agree that it makes sense to own some insurance in case a financial disaster strikes.

People would likely flock to gold in a global financial disaster… and cause its price to soar.

For example, the decade from 1970 to 1980 was marked by war, recession, and very high inflation. This made the 1970s a terrible decade for stocks and bonds. But it was terrific for gold owners. As people fled stocks for precious metals, gold gained more than 2,000% during the decade.

That’s why it makes sense to buy gold as a form of insurance.

The good news is that you don’t have to buy a huge amount of gold to have a good insurance policy. You can place just 5% of your portfolio into gold.

Its place in your portfolio could mean a huge difference in your family struggling to get by… or doing well.

Some Math That Could Save You a Fortune

Let’s say you have a $100,000 portfolio with 95% of it in blue-chip stocks and income-paying bonds.

You place the remaining 5% of your portfolio into gold. This gives you $95,000 in stocks and bonds, and $5,000 in gold.

If the predicted financial disaster doesn’t strike, your stocks and bonds will increase in value.

Your gold will probably hold steady in price or decline a little. Since the bulk of your portfolio is in stocks and bonds, you’ll do just fine.

But what if the financial disaster strikes?

I’ve heard some top analysts say gold could climb to $7,000 an ounce in a financial-disaster scenario.

Let’s say a financial disaster sends the value of your stocks and bonds down 50%. That would be a massive decline. Throughout history, only the worst, most severe bear markets sent stocks down this much.

This epic financial disaster would cut your $95,000 position in stocks and bonds by 50%, leaving you with $47,500.

But let’s say this disaster also causes gold to rise to $7,000 an ounce.

So, for example, if gold were $1,250 per ounce… a rise to $7,000 would produce a 5.6-fold increase in the value of your gold. It would cause the value of your $5,000 gold stake to rise to $28,000.

Post-financial disaster, you’d be left with $75,500 ($47,500 from stocks and bonds + $28,000 from gold).

The disaster still would hit you, but not nearly as hard. Your insurance would play a big role in limiting the damage.

But what if you think the chances of financial disaster are higher than “unlikely”?

What if you’re more worried than the average Joe?

If you are, simply increase the “insurance” portion of your portfolio. Instead of a 5% position in gold, you could increase it to 20%.

If the previously mentioned financial disaster were to strike your $100,000 portfolio weighted 80% in stocks/bonds and 20% in gold, the math would work out like this:

The 50% decline in your $80,000 stocks/bonds position would leave you with $40,000.

Gold’s increase to $7,000 an ounce would increase your $20,000 gold position to $112,000.

Your large gold-insurance position actually would produce a net gain in this scenario. You’d be left with $152,000… an increase of 52%.

As you can see, the larger your gold-insurance policy, the better you would do in a financial-disaster scenario.

But if the financial disaster doesn’t strike, you won’t benefit as much because you would hold less money in stocks and bonds, which do well if the economy carries on.

And keep in mind… it would take a serious financial disaster to send stocks down by 50% and gold up to $7,000.

Depending on what you think the chances of a financial disaster are, you can adjust your gold-insurance policy. It all depends on your goals and beliefs.

Think the chances of disaster are slim? Consider a gold-insurance policy equivalent to 1%-5% of your portfolio.

Think the chances of disaster are high? Consider a gold-insurance policy equivalent to 20% of your portfolio.

Is the next financial disaster around the corner? I don’t know the answer.

Nobody does.

But if you buy some “wealth insurance” in the form of gold, you don’t need to know the answer.

You buy gold and hope you never have to use it. You’ll do fine if things carry on. You’ll do fine if the crap hits the fan.

And the peace of mind you get from owning gold “insurance” is worth even more than the money it could save you.

How to Amplify Gold’s Power to Create Wealth

If gold soars in value during a crisis, the companies that mine gold could soar even more.

That’s because when the price of a natural resource doubles, triples, or quadruples in price, the profit margins of the companies that produce the natural resource can skyrocket.

For example, let’s say you own a gold-mining company.

Your company can produce gold for $800 per ounce.

Let’s also say the current selling price for gold is $1,000 per ounce.

This means your profit margin is $200 per ounce.

Now let’s say the price of gold rises from $1,000 per ounce to $2,000 per ounce.

This is a 100% increase in the price of gold.

But your company’s profit margin just soared from $200 per ounce to $1,200 per ounce…a 500% increase.

This kind of financial magic is called leverage…and it can produce incredible stock market gains.

For example, from 2002 to 2008, the price of gold climbed from $300 per ounce to $1,000 per ounce.

During this time, leading gold company Kinross Gold climbed from $2.25 per share to nearly $27 per share (a 1,093% gain). Another gold company, Yamana Gold, climbed from around $1.53 a share to more than $19 per share (a 1,165% gain). The gains were so great in this market that a simple gold stock index gained 692%.

These types of gains are impressive. But please keep in mind that these companies are also very risky. They are some of the riskiest stocks in the entire market. That’s because mining is a capital-intensive business. The firms have no control over their product. When gold falls in price, these companies can fall more than 80% in a short time.

But if a financial crisis forces the value of gold much higher, and paper currencies much lower, these companies could rise 500%…1,000%…or more.

That’s why it can make sense to make them part of your “wealth insurance” position.

“Stock Options that Never Expire” Will Pay Off Big in a Crisis

Around the office, we often say these firms are like stock options that will pay off big in a financial crisis. And they are stock options that don’t expire.

As you may know, a stock option is a type of security that offers massive upside. And we’re not talking about “only 100%” upside.

Stock options can return 10, 20, even 50 times your original investment.

It’s not uncommon for traders to turn $10,000 into $250,000 with well-placed option trades.

But while buying options gives you the potential to make giant gains, they come with some negatives, too.

The biggest one is that options have finite life spans. For example, you might buy an option contract in January that expires in June.

If the outcome you expect doesn’t happen by June (known as the “expiration date”), the value of your option will be worthless, and you’ll lose 100% of the capital you place in the trade.

The best mining stocks have the same upside as stock options.

It’s not uncommon for professional mining-stock investors to turn $10,000 into $250,000 by buying the right stock at the right time.

However, these miners are actual businesses. They don’t “expire” like option contracts do. The right miners have plenty of cash on hand to fund their operations…which allows you to hold these stocks for years and get exposure to their incredible upside potential.

Because the upside of these “stock options that never expire” is so great, placing just a small amount of your portfolio in them can produce incredible gains if gold increases in price.

Placing just 1% or 2% of your portfolio in these stocks can result in a huge positive change to your overall net worth.

Below, we’ll discuss the best ways to own gold and gold stocks.

Investment No. 1: The Easiest Way to Own Gold

There are several ways to own gold through the stock market.

You can either buy stocks of companies involved in the production of gold, shares in a gold fund, or exposure to the metal itself, in share form.

For starters, you can consider owning gold by owning the SPDR Gold Shares ETF (symbol is GLD). This is an investment fund that tracks the price of gold. It’s an easy “one click” way to own gold through the stock market.

Each share of GLD is worth exactly one-tenth of an ounce of gold. Buy 10 shares of GLD and you own one ounce of gold. It’s that simple.

With this ETF, you own gold without all the hassles of buying and storing.

Recommendation: Buy the SPDR Gold Shares ETF (NYSE: GLD)

Investment No. 2: The “One-Click” Way to Buy the Best Gold Miners in the World

If you’re looking to invest in gold stocks, consider the VanEck Vectors Gold Miners ETF (GDX) – at $8.84 billion in assets, it’s the largest gold mining ETF in the world (also the most liquid).

GDX is engineered with the goal of replicating the price and yield of the NYSE Gold Miners Index. This simply means GDX gives you exposure to the performance of many of the biggest gold miners in the world.

On that note, the fund is weighted by market capitalization. This means the largest companies make up the majority of the fund. For example, out of its 47 different holdings, GDX’s top five stocks account for nearly 40% of the ETF. Of course, these mining stocks are all best-in-breed – Newmont Mining Corp, Barrick Gold, and Newcrest Mining to name a few.

One of the biggest benefits of investing in GDX is its simplicity.

Analyzing the operations and financial statements of mining companies has its challenges. Beyond that, external factors such as geopolitical tensions or wars in the countries in which these miners operate can affect the profits of any specific mining company.

Because of this, an investor looking to pick the right miner has their work cut out for them. That makes investing in GDX a simple solution that reduces stress. It’s an easy way to invest in the best gold mining companies in the world, thereby diversifying your invested dollars across a portfolio of mining companies versus just one or two.

Now, one thing to know about investing in mining companies is that their market values tend to rise and fall more than the price of gold itself. That’s because these miners often operate with leverage – borrowed money. This can lead to big drops when gold prices are facing headwinds, but huge gains when gold is in demand.

For example, on December 31, 2001, gold was trading at about $280. But then gold made its move. Fast-forward about 10 years and it peaked at roughly $1,890 in 2011. That’s growth of about 575%. But gold mining stocks saw even bigger gains.

We can measure this through the HUI Gold BUGS index. GDX didn’t exist back in 2001 to enable us a direct comparison, but HUI is an index of companies involved in gold mining – many of which are held in GDX.

From the 2000 low to the 2011 high, gold mining stocks, as measured by the Gold BUGS index, climbed 1,500%. As you can see, when gold’s price begins to take off, gold miners should do even better.

Recommendation: With a gross expense ratio of 0.53%, GDX is a reasonably-priced, one-click way to access many of the biggest, best gold mining companies in the world.

Investment No. 3: The World’s Best Business Model: Gold Royalties

If you’re looking to concentrate your gold investment, consider Franco-Nevada (FNV).

The reason? A superior business model.

You see, mining for gold is challenging to say the least. There’s the challenge of finding new veins that might have substantial gold holdings… there can be negotiation challenges with the governments of the countries in which those veins exist… then there are tussles with environment groups… and, remember, the gold vein itself may end up being something of a dud… finally, even if substantial gold is found, miners are only able to sell it at whatever the prevailing market price is – regardless of how much it cost the miner to get it out of the ground.

This means if gold prices have tumbled, miners can feel lots of pain even if they’ve been “successful” in finding new gold.

Enter Franco-Nevada and its superior business model.

Franco-Nevada isn’t a traditional miner. You might think of it more like a “gold mining investor.” You see, instead of trying to find its own gold veins and dealing with all the related logistical headaches, it buys into other gold mining projects that are nearing production. In exchange for its investment, Franco-Nevada then receives a portion of all the gold mined from the specific site.

Think of it as a gold royalty. Franco-Nevada never has to put up another dime to continue receiving this gold. For as long as the mine produces, this royalty giant keeps reaping the rewards.

So, what does this superior business model look like in practice?

Well, thanks to smart management moves in years past, Franco-Nevada’s all-in cost per ounce of gold is around $300 today. And remember, as I write, gold is trading at about $1,280 per ounce. As I’m sure you can tell, buying something for $300 and then selling it for $1,280 is a surefire way to make lots of money. And making lots of money is what this company does.

Looking at its financial statements, we see that in 2013, Franco-Nevada had earnings per share of $0.08. According to research company Morningstar, over the last 12 months, earnings per share have come in at $1.14 (TTM). That’s growth of over 1,300%.

And this growth has come while the spot price of gold has gone nowhere over this same time period. See for yourself…

I hope you’re seeing the beauty of how Franco-Nevada operates.

By avoiding the actual operations of gold mining itself, it sidesteps huge risks. Then, thanks to its world-class team of analysts, it finds great projects with a solid likelihood of success, then invests in those projects on terms that usually lead to big profits. Best of all, those profits get shared with investors. At the time of this writing, Franco-Nevada offers investors a 1.4% dividend yield.

As we mentioned earlier, investing in Franco-Nevada would mean concentrating your bets. That can be good, or bad, depending on the timing of your bet.

But to give you an idea of what to expect, let’s look at Franco-Nevada’s chart relative to GDX:

As you can see here, over the past three months, GDX has climbed 11% at the time of this writing. During that same period, Franco-Nevada is up nearly 18%.

Recommendation: If you’re looking for an investment that offers gold mining exposure without many of the associated gold mining risks, we suggest you start with Franco-Nevada. 

Investment No. 4: “The Golden Lottery Ticket”

This Explorer Gives You Maximum Gold Price Leverage

A good friend and colleague of ours once called Seabridge Gold (NYSE: SA) “the ultimate Golden Lottery Ticket.”

That’s because when the price of gold enters a bull market, shares of Seabridge can make you feel like you just won the lottery.

For example, after gold bottomed in 2001, Seabridge shares soared nearly 7,000% by March 2008.

From 2015 to 2016, the price of gold moved 21%. Seabridge soared 300%.

Just bear in mind: Seabridge has a long history of dramatically outperforming the gold price when it goes up… but it can drastically underperform when gold goes down. It’s similar to a leveraged fund or ETF.

Take a look at the chart below and you’ll see what we mean…

When gold is going up, you want to be in on those incredible, lottery-like gains. It can turn a small initial stake into a significant amount of money, giving you enormous leverage to the price of gold.

Unlike gold royalty company Franco-Nevada, which we recommended earlier and doesn’t do any mining itself, Seabridge is an explorer and miner.

What makes Seabridge unique is the sheer amount of gold and copper it owns in the ground.

The company’s biggest project is called KSM, located in mining-friendly British Columbia and approved by the government in December 2014. The KSM mine is one of the world’s largest undeveloped gold projects, with proven and probable reserves totaling 38.8 million ounces of gold and 10.2 billion pounds of copper.

The sheer amount of gold and copper here is extraordinary. But the story goes beyond KSM…

Seabridge also owns Canada’s second-largest undeveloped gold project, Courageous Lake in the Northwest Territories. This mine boasts proven and probable reserves of 6.5 million ounces of gold… with several other exploration projects in their pipeline.

Seabridge hasn’t entered production yet. It’s busy finding more and more gold. Exploration and mining is a tough business, to be sure. But when these companies strike it big, the rewards are incredible. And that’s exactly where Seabridge is today.

With the price of gold primed to move—if history repeats itself—shares of Seabridge Gold should move exponentially more.

Recommendation: Buy Seabridge Gold (NYSE: SA) today. Plan to hold as long as the coming gold boom plays out.

Investment No. 5: Even More Gold Price Leverage and Upside

The gold market right now is like a coiled spring that is offering a meaningful amount of upside for small speculations in explorers like Seabridge.

The final company in this report could do well, even if the gold price does absolutely nothing.

But if the gold price make a move higher, Seabridge and Yamana Gold (NYSE: AUY) could produce dazzling results.

The company is a so-called “mid-tier” gold and silver miner. But it is a fairly sizable one. Based on either its annual production, or its proven and probable reserves, Yamana ranks among the top 20 gold mining companies in the world.

The company operates seven main mining projects: Two each in Brazil, Argentina and Chile, and one in Canada.

Together, these projects produced just shy of one million ounces of gold during the last 12 months and five million ounces of silver. But production levels are rising across all its mining projects.

In fact, Yamana’s newest project, the Cerro Moro mine in Argentina, did not begin its first commercial production until four months ago.

Over the next three to four years, the company is on track to boost its production of gold, silver, and copper, while also slashing its capital spending, lowering its cash cost of production, and reducing its debt.

In other words, the company has completed a lot of heavy lifting over the last few years. And now it is well-positioned to reap the rewards of that hard work. Or, as the company’s management puts it, Yamana is finally “transitioning to cash flow harvesting” and is “on the cusp of a step change in free cash flow and earnings growth.”

That’s a cycle that’s as virtuous as it is rare in the mining industry.

In combination, these favorable trends should enable Yamana to double earnings per share from $0.11 per share to $0.22 per share by 2020. And this forecast assumes zero increase in the current prices of gold, silver or copper.

So the argument for Yamana is pretty straightforward. This is a company that has been investing heavily in its future during the last few years. That future has now arrived, and the company is ideally positioned to begin reaping the cash flow from that investment, even without any increase in metals prices.

However, when the prices of gold and silver increase significantly from current levels, Yamana shareholders would reap an even larger bounty from its hard work.

Recommendation: Buy Yamana Gold Inc. (NYSE:AUY) at the market.

Altogether, the five gold recommendations in this report make a great “one-stop” gold portfolio—which should ideally make up around 5% of your overall portfolio—with significant upside to benefit from the “New Gold Standard” and the rising price of gold.