Investors Must Know This Lesson From The 70s Gold Bull

Today acclaimed money manager Stephen Leeb told King World News, “There is a growing recognition that austerity can only take the Europeans so far.  We are now seeing weakness in Germany and a downgrading of French bonds.  The Europeans are slowly coming around to the fact that they are going to have to continue pumping money into the system.”

Stephen Leeb continues:

“The recessions they are seeing are threatening to deepen.  Nowhere in the developed world are we seeing growth right now.  In the US, housing is getting a boost, but no new industries are being created.  There are no new factories or capital investment into manufacturing that is taking place in the US.

All we are seeing in the US is housing is beginning to bounce-back.

“Yes there is pent-up demand for housing in the US, but we need new industries.  The only country that seems to be willing to create new industry and address corruption is China.  The US and Europe are not doing anything in either of those areas.

Looking at Japan, they are not doing very much, but at least they are changing.  After a decade, Japan is finally getting around to quantitative easing.  Japan is trying to be focused by considering asking the central bank to buy construction bonds.

Now that’s a good idea because that is money which will go right into the infrastructure of Japan.  Japan is still trying to recover from Fukushima.  They have also shut-in most of their nuclear energy.  So Japan is going to need a lot of infrastructure.

So while the US is looking to create a bounce in housing, China and Japan are looking at new energy infrastructure.  Where is the future in what the US is doing?  Where are the new industries?  Regardless, all of these countries are looking to stimulate their economy.

This all leads back to gold as being the number one currency of choice.  No one in the mainstream really acknowledges the bull market in gold.  What better evidence is there for a continued move higher in gold?  What you hear from the mainstream media is that it’s too late for gold.

In this type of environment gold will continue moving higher and higher, until it just breaks out in a major way.  This dull trading range that gold has been in for more than a year has been just great for people accumulating gold.  The old adage is, ‘Never sell a dull market short.’  I would say, especially don’t sell a dull bull market short.

Investors should also be taking advantage of some of these junior gold stocks.  The lessons from the late 1970s are that these are the kinds of stocks which can fool people.  They can trade dull for quite a long time and even drift lower.  But in the 1970s, all of the sudden they just took off.

At some point in the next two years there will be a two week period where quality stocks triple.  In order for investors to be part of that move, they have to pay the price of waiting.  I remember in the office where I worked there was a guy there that was following gold, and this was in the mid-70s.  But he had basically nailed the bottom in gold at about $100.  He was invested in and following this small Philippine gold mine called Benguet.

Well, he finally got sick and tired of the stock not moving and so he finally sold it at some point in 1978 or 1979.  The stock had done nothing.  It just kind of flat-lined most of the time, and eventually went down from where he bought it.  Within a week of when he sold it, that stock immediately went up five or six fold.  I’m not kidding.  That is a lesson I have never forgotten.

If you have mining shares which are quality companies, you’ve got to stay invested until that move finally happens.  Investors will not be able to time when those type of moves are going to happen, but they can make sure they are there when it happens.  You have to be patient.  You may feel like you are just stuck in this stuff.  But then all of the sudden they will begin to move and nobody will ring a bell to announce it.

You will just have to be patiently waiting in them.  All of the sudden you will see your wealth multiply many fold, and you just have to be patient invested until it happens.”