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Too late for gold?

I was 13 when India was in crisis. He had borrowed too much dollar money and was desperate to pay it back.

India needed a lot of dollars. So the government came up with a plan to get it from people like my father, who were making money in petrodollars.

The Middle East was booming, and thousands of Indians had followed my father’s example and got jobs in Dubai and places like that. They were benefiting from the fast growing economy there.

Dubai’s currency is easily changed into dollars, and India was desperate to convince my father and others like him to lend those dollars to the government.

To do this, India offered my father a once-in-a-lifetime deal: lend his dollars to India and earn 18% annual interest tax-free for 30 years. To sweeten the deal, the government set it up so you could get your dollar money back after a couple of years if you wanted, or keep earning 18% tax-free for 30 years.

Eighteen percent is a staggeringly high rate of return. You would be lucky if you got it from risky stocks or assets. It is unthinkable to get that basically by putting your money in a bank account guaranteed by the government.

It was a once-in-a-lifetime opportunity to get equity-like performance and risk-free.

And even though I was only 13 at the time, I learned something absolutely critical about investing from what my father did when he received this offer …

My father correctly guessed that although India was in crisis, there was almost zero chance that the government would stiffen it. In other words, this crisis was his chance.

My father did his best. He put all the UAE dirhams he had in this offer. It was a complete home run for him. And even though my father died in 2000, my mother collected the interest payments on this settlement until a few years ago.

And this is what I took from my father’s bet: when the odds are in your favor, you have to make the bet. You have to take the initiative and go for it.

The shining star of the market

Earlier this year, I told readers that gold mining companies were a shouting match. That’s because the stocks of these companies had just gone through an incredible sales panic that lasted six months.

I showed that it really was a panic, because the gold mining companies were MAKING money during this time. In other words, nothing was happening in the companies to cause this panic. It was pure excitement at work, fueled purely by irrational investor sales.

At these prices, it was not necessary for gold prices to rise to make money. All you need is the sale to stop. And then the natural demand from savvy money investors, sniffing out these panic situations to make big money quickly, would drive prices up. That is the scenario that I presented.

And that is exactly what has happened. Since that article, gold stocks have risen 56% in just over four months, while the S&P 500 Index has risen just 10% in the same time period.

The rally is not over

If you bought gold miners and have experienced these phenomenal returns … congratulations! Give yourself a pat on the back or maybe treat yourself. You have done well.

Now, if you bought and made money, I want you to know that I think there is still more profit ahead. That may sound crazy. However, I can tell you after 25 years of investing that when stocks make big moves like this, it is a sign that more profits are coming.

This is because behind these gains for gold mining companies is a huge demand from all kinds of investors who are just waking up to the opportunity here. These stocks have yet to be destroyed by Big Money, the same group that spent two years getting rid of them, causing their downfall.

Additionally, gold and silver prices are up 30% and 50%, respectively, so far in 2016. That means gold / silver mining companies will show increased sales and profits in 2016 and 2017 since the jump in the prices of gold and silver.

Finally, the fall in shares of gold mining companies prompted management to implement massive layoffs and cost cuts. These are still taking place today. As a result, profit margins are increasing. Even bigger gains are coming … and investors with a lot of money will want to come back.

This is why I have no hesitation in saying that it is not too late for those of you who have missed out on these first few easy wins to participate. Even though gold mining stocks have risen more than 50% in four months, there are still plenty of returns left on this trade.

You can be sure that corrupt market makers and shoddy hedge funds will produce volatility for you to sell your gold mining stocks, so expect more volatility as this trade enriches you.

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