|Gold is once again set to explode.The funds have awaken and central bank buying may be on pace to reach levels not seen for over 40 years. According to World Gold Council managing director for investments, Marcus Grubb, if this trend continues over the remainder of 2012, central banks will be entering a “new territory” of gold buying that has not been seen since the early 1960s and since the end of the Bretton Woods System in 1971.As a result, many of the gold producers are finally beginning to break out. Only this time, their move upwards will be much more aggressive.The stronger companies within the sector have already experienced a bounce from their 52-week lows. And I think we’re barely scratching the surface.
It’s no wonder why one of my latest gold recommendations has gained nearly 100% in less than two months. But I don’t think the real move upward has even begun.
That is why I am about to introduce you to another opportunity that many analysts believe is, “poised for considerable growth in both production and earnings over the coming quarters.”
More on this story in a bit. (Or you can CLICK HERE and download my free report now.)
The World’s Secret
We’re at war. But not one that’s fought with guns and missiles; one that is fought with currency.
Currency wars are fought globally in all major financial centers by bankers, traders, politicians and automated systems – and the fate of the economies and their affected citizens hang in the balance.
For those of you who have never heard of the term currency war, it’s a fight between countries to achieve a lower exchange rate for their own currency. In other words, its competitive devaluation.
In short, the cheaper your currency, the more money you attract from foreign entities, which leads to increased exports, growth, and job creation.
The dollar, yuan, and the euro, are the three super power currencies leading the global currency war. The one on top will be the one that devalues its currency the fastest.
However, devaluation and currency wars never produce either the growth or the jobs that are promised, but they reliably produce inflation.
At the end of the day, one thing is for certain. The price of gold will rise, as it always has, to match the continual, yet competitive, nature of currency devaluation.
Central Banks Race Toward Gold
According to the WGC’s quarter-end data, official sector institutions purchased 158 tons of gold in the second quarter – or about 16 percent of the quarter’s total gold demand. During the first half of 2012, central banks have acquired 254 tons of the metal, which is about 25 percent higher than the same period last year.
The central banks from developing markets led the buying trend once again. This should come as no surprise as they continue to defend themselves from the competitive devaluation of the three super powers: the European Union, the United States, and the People’s Republic of China.
America’s Troubled Finances
No one truly understands just how out of hand America’s finances have become. America has, in fact, run trade deficits large enough to wipe out its gold hoard under the old rules of the game.
If we were to think of America’s current finances under an evolved Bretton Woods system, China’s redemption of US Treasury notes would be more than enough to wipe out the entire gold supply of the U.S. and more. And this is perfectly plausible if we were under the rules of Bretton Woods.
While this may seem extreme, this is exactly how most of the world monetary system worked up until 40 years ago.
Sixty years ago, the US had over 20,000 tons of gold. But because of consistently large trade deficits, it dropped to 9000 tons. In 21 years, US gold reserves dropped 11,000 tons of gold that mostly went to a small number of export powerhouses to make up for its trade deficits.
Prior to 2011, no one was winning the currency war; China wouldn’t allow their yuan to appreciate as requested by the U.S. to “rebalance” the growth between the two countries.
So the U.S., empowered by its world reserve status, pulled out its secret weapon: Quantitative Easing. The U.S. effectively devalued its own currency by increasing its own money supply. It now had an edge on this currency war.
But there’s a big problem.
When the US prints dollars and another country tries to peg its currency to the dollar, that country ends up printing local currency to maintain the peg, which causes inflation. That means as the US prints, the world experiences inflation.
The Fed just announced it may soon unleash another round of QE. Previous rounds of QE have already sent gold to record-breaking prices. Imagine what it will do this time around.
The stage has been now been set for gold to reach highs unlike anything we have ever witnessed.
The Fed has once again hinted at yet another round of stimulus and central banks are on trend to shatter new gold buying records.
It’s no wonder why the new Basel III accord is forcing banks to keep more gold in its vaults. As a result of the currency war, countries are protecting themselves with the only thing that has kept them alive throughout history’s currency battles: Gold.
The Real Leverage
While gold will reach new highs, I expect the rise in the share prices of quality gold producers and explorers to be much more violent.
But there’s a problem.
Gold exploration plays and mines are being shut down as we speak due to the rising costs of production and exploration.
It is difficult to emphasize just how much the world has changed for the miners in the last eighteen months. Things that were being contemplated are now obsolete, shelved or reversed. It’s rare to see such a rapid shift.
All around the world, costs are rising. What once was profitable is profitable no more.
The result has left many producers and explorers with little room for growth. The only ones left standing are those with strong production growth, positive cash flow, and an upside in exploration.
There is one gold company that is not only a strong cash flow machine, but its revenues are on pace to grow yet again. This company is on pace (again) to increase production, increase revenue, decrease production costs, and grow its resources – despite the rising costs of production.
It has already been reaping the rewards of high gold prices.
But you can too.
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It’s simple, simply sign up to our free weekly newsletter and receive your first free report on how to play this rapid shift in the gold boom – instantly.
This free report will not only show you why gold is about to explode, but it will introduce you to a company that continues to grow and prove it’s a money maker – despite extreme rising costs.
It’s no wonder why so many analysts have strong buy ratings and high target prices for this company.
A Cash Flow Machine
Union Securities says this company is likely “poised for considerable growth in both production and earnings over the coming quarters.”
Jennings Capital views this company as “a compelling investment for investors wanting to play a junior gold stock with a near-term growth profile and tangible exploration upside.”
MPartners says the company “should continue to generate substantial operating cash flows throughout the remainder of the life of mine…and it could also attract the attention of more senior project-rich but cash poor producers.”
Casimir Capital believes the company’s current valuation “offers investors an excellent entry point in the stock. The Company offers the appeal of a potential takeover target, and appears undervalued when compared to its peers.”
Dahlman, Rose, and Co says the company “provides investors with exposure to a low risk, growing gold operation in a stable mining jurisdiction. We believe the company has potential to provide investors with significant upside by achieving continued exploration success and production expansion.”
The list goes on…but all-in, the overall consensus for this junior gold producer remains the same: strong buy.
So don’t wait.
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Remember, every fiat currency since the Romans first began the practice in the first century has not only ended in devaluation but eventually in collapse. Not only did currencies fail, but the economies that housed them failed as well.
Is our modern civilization on the same path?
If you compare the fall of previous fiat currencies, they all have a similar cycle and consequence. In almost every case, so much money was printed that they became useless and lost nearly all of their value as serious inflation took over.
The fall of civilizations, economies, and currencies don’t happen overnight. Some of these currencies failed within years, some within decades, and some within a century. While the US implemented fiat currency since the late 1800’s, its current currency issued by the Fed (and no longer by the US) is just over 40 years old. How much longer do you think it will last?
While it may seem farfetched today, this point of failing fiat currencies will eventually make sense.
We’re already seeing this in gold’s slow and steady rise over the last ten years, right alongside our monetary base.
In one way or another, every failed currency led to a rush back in gold. Slowly, but surely, gold will continue to rise. There will be a point where gold will show its force and turn speculative. That point is coming soon.
So DOWNLOAD MY FREE REPORT NOW to learn how to take full advantage of this situation.
President, Equedia Weekly