Recently, we had a chance to sit down with John Doody, Editor of Gold Stock Analyst http://www.goldstockanalyst.com. His publication has been meeting investor expectations for more than a decade now, and a look inside his innovative process was more than satisfying.
The recent market instability has led hundreds to choose gold over any other investment, but making the move to metals isn’t as simple as talking to your broker in most cases or even to others you know. It can be far more difficult to get the advice you need in this market, and as a result, many are turning to information based solutions such as newsletters like John Doody’s Gold Stock Analyst for the research and advice they need.
The Need for Extra Help with Gold
Is it really that complicated to invest in gold? Ask almost anyone who has tried, and the fast answer will be “Absolutely.” Wondering what makes this such a complicated equation? After all, mines all produce the same thing, right? Sure, but with more than one thousand publicly traded metals stocks, with prices all over the board, it’s tough to tell which companies are undervalued and which are a bit too inflated for your investing dollars, and that’s where Doody’s newsletter comes into the picture again and again.
Gold Stock Analyst has been part of the picture since 1994. John Doody was once a Professor of Economics and Finance at Bentley College in Waltham, MA. By looking at just seventy of the top gold and silver mines that have the production capacity necessary to meet the standard of the US Securities and Exchange Commission, Doody and his staff diligently research their SEC filings, the mines themselves, and the management of the company to come up with the top ten stocks you should be considering.
Of special interest to Doody are those that remain undervalued despite all of the information out there. Most of these have the potential to shift within the next eighteen to twenty-four months, assuming that the price of gold won’t shift significantly during that time period.
If Gold is so Complicated, Why Bother?
While many believe something as complicated as gold should be avoided at all costs, Doody’s position on this issue is very different.
“I left the ivory tower because I have an innate distrust of politician’s motives,” said Doody. “Their single purpose in life, in my way of thinking, is to get reelected. Once you’re on the gravy train, you don’t want to get off. In order to do this, they promise the electorate more than the economy can deliver . . .and the way you do that is you basically inflate the money supply or debase the currency or run fiscal deficits, and that has the same effect as debasing the currency so, over time, we’re in a gradual decline of the value of the dollar . . .We’re all in this environment where the heat is rising on us and the value of our money is deflating or inflating away . . .and gold is one way out of this dilemma.”
Looking at historical measures of this metal is essential to creating an understanding of where it could go. Once a controlled market, from the nineteen thirties until the sixties, it only sold for $35 an ounce. These days, it goes for $1200 an ounce. Because it’s primarily an investment for those protecting against inflation, a price increase like that, especially when you take into account the fact that it’s a trend that will go well into the future, proves irresistible for many.
The Big Question – Stocks vs. Bullion
Some individuals, though, still question whether to purchase the bullion itself or buy stocks in the companies, and here, Doody has a fairly unique opinion.
“I think that people should own gold as a protection, but in general, you can get a lot better protection out of gold stocks than you can get out of gold bullion because when gold bullion goes up a dollar an ounce, the value of all the ounces still in the ground goes up by a multiple of that. Companies typically have ten times the reserves in the ground that they do from a year of production.”
This idea continually drives Gold Stock Analyst. With an intimate knowledge of the fact that the stock market itself is inefficient and unable to price all companies properly all of the time, Doody and his team handle the research to decide which companies are truly the best buy in terms of stocks. Because they understand the market as well as the companies themselves, they’re in a better position to look at what’s behind the stocks, and as any investor can tell you, a look behind the curtain is invaluable when you’re shelling out valuable investment capital.
Even here, though, diversification is important. You shouldn’t simply sink part of your portfolio into gold, but diversify the types of gold stocks you’re buying as well. Doody suggest buying big stocks like Goldcorp is an essential part of the strategy, but so is adding aspects like royalty stocks, where you get a percentage of the sale of the produced goods after costs.
An Effective Proposition
The ideas behind Doody’s formula seem to be working quite well, too. Every stock Doody lists has a target price. There’s a short term target price for some and a long term target price for others. Short term target prices come into play, of course, when an event might happen that will drive the price of the stock up. Long term targets are based on the company reaching its potential at the current gold price. Last year alone, Doody’s predictions were up 130%. Over the last decade, they’ve consistently outperformed the XAU and gold bullion, and that’s the kind of information that keeps subscribers coming back for each prediction.