Presentation
John Doody is audit-proven to be the world's best Gold Stock investor
This is a personal invitation to join John as a Founding Subscriber to his new gold letter, John Doody's Fave 5 Gold Stocks.
A new gold bull market has begun. It's a quiet bull that's been drowned out by the Al and Nvidia noise. But it's solidly underway. Gold price averaged $1,940/oz in 2023 and now at around $2,500, it's up over $500/oz. And Gold is poised to head still higher when the Fed begins to cut interest rates later in 2024.
All producing miners are already getting an unexpected profit bonus, as there's no extra production cost for the revenue increase from gold's higher price. The $500/oz jump is an extra $100 mil for a 200K oz/yr miner and $500 mil more for a 1.0 mil oz/yr producer. Money that can be used for dividends, stock buybacks and debt pay downs... all actions that should increase stock price. Much of gold's price increase came after February 2024, so the extra profits will begin showing up in 2024 results due released in August.
John Retired
As you probably know, John had retired at the end of 2023. After 25 years of writing Gold Stock Analyst directly for subscribers and 5 more as part of Stansberry Associates, John rode off into the sunset… or so he thought. But John's Associate Editor decided to leave and "do his own thing". And Stansberry had no one with John's industry knowledge and analytical background to take over, and so it folded GSA into another of its newsletters.
In the ensuing months, GSA subscribers found John and asked him to resume publishing. They wanted his data-driven analysis and stock selection that's not available from any other source.
Audited Track Record
All miners produce the same thing... gold ounces. And sell them for the same market price. John has developed an analysis that separates the good from the bad. His independently audited track record as editor for Gold Stock Analyst and his GSA Top 10 gold stocks portfolio gained an average of 19.3% per year for 23 years. That's double the S&P500's 9.7% average increase for the period, and almost double gold's 10.1% return, and far more than 3.4% for the GDX, the main gold stock ETF.
See for yourself. Call the auditor if you like. All mutual and hedge funds must have results audited, but no other newsletter provides audited results to back up their claims.
Of course, John did not retire from gold stock investing, and actually has been working on improving his already best-in-the-industry track record. He wondered if 10 stocks were the right number. The gold ETFs all had many more stocks and all had much worse records, so a larger portfolio doesn't yield improved results. But maybe fewer stocks are better.
The 5 Best Averaged a 47.8% Gain per year
Working with the results of the 23 individual years, John calculated each year's return for the 5 best stocks in the GSA Top 10. The results were an amazing 47.8% average gain, more than double the gain for 10 stocks. So fewer stocks were potentially much better. But also more risky, as each stock would have a 20% portfolio weighting.
Improving on GSA's Audited Results
To cut the risk while maximizing the gain, John decided to narrow his coverage criteria:
Strong Property Title
1) Focus on stocks whose mines are in nations with strong property title laws: North America, Australia, Northern Europe, and selected other nations. The threat of confiscation exists with stocks that have mines in areas with weak title laws: Central America, Russia, China, Africa (South and West), for example.
Real Verified Data
2) To work within John's fact-driven data analysis, the companies must be in production with Proven and Probable Reserves, or have an independent Feasibility Study showing its mine would be profitable to build and operate. These criteria eliminate the risky exploration stocks as they have no acceptable data.
Most Important Metric
3) Fave 5 issues will continue to report ounces of Reserves and Production for its universe of 30-plus investable gold stocks, but it will focus on the most important metric, Operating Cash Flow (OCF) multiple, to determine which is undervalued or overvalued.
Operating Cash Flow is Key to a Stock's Price
OCF is the net cash generated by a mine/miner's production. It's gold price minus cash cost/oz times annual production. It's what is left from the gold revenues after paying for the labor, energy, and materials to produce the ounces. These costs must be paid to stay in business... you have to pay your workers and suppliers, or they won't come to work or deliver to you.
Operating Cash Flow Multiple
Enterprise Value (EV) is a stock's market cap (price times shares) plus debt and minus cash. Divide EV by OCF and the resulting multiple tells us how Mr Market is currently valuing the cash generated from a miner's operations. It's similar to a price-earnings ratio.
Over the years the industry's average OCF multiple has ranged between 4.0X in bear markets and 8.0X in bull markets. In selecting each Fave 5 stock we compare its current OCF multiple to the current Industry average. The average OCF multiple now is 5.4X based on gold price averaging $2,350/oz for 2024. The modestly undervalued 5.4X shows that gold stocks have not participated in the current bull market for the metal. For individual stocks, current OCF multiples range from 0.5X to 6.7X. Stocks with multiples significantly below the industry average deserve further study.
Revaluation Event
To be a Fave 5, we want undervalued stocks that also have a coming situation that could unleash big price gains. Events such as a key permit being granted, gold production starting, recovery from a mine disaster, or a corporate event such as a reverse share split. (The split doesn't change the economics, but it can bring more shareholders if the resulting price is above the $3.00 needed to be marginable, or above $5.00 to meet many mutual funds' criteria.)
Fave 5 issue content
Each Fave 5 issue's format will be familiar to Doody's former subscribers: A lead article of 2-3 pages focused on a company, or the gold market, or an economic situation, drawing on John's 20 years as an economics professor at Bentley University. Then followed by pages with a portfolio results update, Fave 5 News, and a several-page report on a Fave 5 stock. Plus the all-important two pages of key company data and industry averages for all 30-plus stocks in the Fave 5 coverage universe: P+P Reserves, Production, Cash Cost/oz, and Operating Cash Flow multiples. Total 7-10 pages per issue.
The first issue of Fave 5 was posted on July 20. There were some surprises - stocks in the Fave 5 that were not in the Top 10 portfolio.
The First Fave 5 Portfolio has Surprises.
In no order of preference, the first Fave 5 portfolio includes:
One that would clearly benefit from a reverse split for a potential 300% gain.
A Second expects to make a deal in the next 12 months that could unleash a gain of 500% or more.
The Third's main mine was nationalized, but the output from its remaining mines is very profitable and in safe locales. This is not now recognized in its stock price. Plus this miner has over $600 mil cash. We see a 300% price gain to a normal valuation.
Fourth: Strong cash flow allowed self-funding a new mine, with almost $1 billion capex, into production in 2024. With a debt-free balance sheet and over 400K oz/yr of profitable production from the new mine, we look for an over 200% gain.
Fifth: An unfortunate site accident cut ongoing production by over one-third but the three remaining mines are profitable at 300K+ oz/vr at $1,150 cash cost/oz. We see the stock more than doubling when the dust clears.
Our Picks Are Paying Off For Investors.
We published our first issue of Fave 5 Golds on July 20th 2024, In our first month, as of market close Friday 8/16/24, gold was up 4.5% to $2,508/oz. Gold stocks are supposed to move more than the metal. And the Fave 5 does. In that one month, our Fave 5 stocks were up an average of 17.8%! There's plenty more to go as all the Fave 5 are undervalued and expected to double, triple or more as they reach their true value.
Next issue: October 20th. The train is leaving the station. Subscribe today!
Questions? Click to contact us, or call Customer Service (754) 755-6630 M-F 10A to 5P EST.
