Since the days of the pharaohs, gold has been the most sought-after metal known to man.
And in the 50 centuries since then, little has changed: Gold is still one of the best investments you can make. Ever.
Moreover, it can be a viable, highly-profitable investment at any time, regardless of what the market is doing.
Now... Does this mean that an investment in gold will always win? No. Not by a longshot.
What it means is that no matter what the current market conditions are, or where the trends are heading, there is a way to use gold to leverage those conditions, or that trend, into profits.
And while there is no way to pick stocks which are guaranteed to rise, there is a way to target companies which will become profitable at different points on the gold value spectrum.
That is precisely what I wanted to tell you about today.
I call this method 'compound gold' — even though it works for any precious metal, and just about any other resource that requires mining and refinement.
The mechanism behind it is painfully straightforward: To make money off gold, regardless of the current spot price, you need to find a gold producer that is on the threshold of profitability, and invest.
Once you nail that sweet spot, every percentage point that gold gains will translate into tens of percentage points for shares of the producer that just stepped over the profitability threshold.
Compound Gold investments will allow you to make more money in gold, take on less risk, and tie up less investment capital. It’s the best of all worlds.
But it’s not some “system” that works a few weeks here and there or some untried theoretical strategy… it's proven to work, and has made fortunes for some of the biggest names in metals.
In fact, every household name you've ever heard of — from Soros to Buffett, has absolutely used Compound Gold thresholding to pick their targets for mining investments.
Every precious metals expert I know swears by it... And if you don't have a solid handle on how to use this basic method for filtering out dead-end investments, you will suffer.
And that's not just a prediction. That's a fact.
Compound Gold 101: The More “Worthless,” the Better
The key to the Compound Gold strategy is to buy “worthless” assets.
They’re not actually “worthless”, of course. Far from it.
They’re merely 'pre-profitable' because they contain resources with lower-grade ores and higher extraction costs, so they can’t be mined profitably at current market prices.
In other words, they’re virtually “worthless” at current market prices.
As the old joke goes, you can’t mine gold at a cost of $500 an ounce, sell it for $300, and make up the difference on volume. It just doesn’t work.
As a result, mineral deposits which are too low-grade, have troublesome metallurgy, or other drawbacks are deemed “worthless” — and often sell for pennies on the dollar.
The thing is these “worthless” assets are also the most highly-leveraged to the prices of the commodities which they contain.
In a bull market, that leverage can lead to massive profits.
It has already happened many times before and will happen again in the future...
Let's jump back to the 1980s when there was a mini-bull market in gold. The strategy worked well then. The potential gains were incredible. Now that we’re in a full-scale bull market, they’re only better.
But let’s start small. Let's say you have a 3 million ounce gold deposit, an entry-level purchase for any major mining operation.
With cost of production at, for example, $400 per ounce, that deposit would be functionally worthless when gold's market value is at $400 per ounce. The owner would neither profit nor lose from the development of that property.
But if the market price rises by just a single dollar from that $400 per ounce baseline...
That property suddenly becomes worth $3 million.
If you'd bought this same imaginary 3 million ounce property back in February 1987 — when gold was trading for $400 per ounce — you'd have an asset with an overall value of zero dollars. It’s essentially worthless.
Three months later, when gold hit $470 per ounce, that formerly worthless property would now be valued at $210 million.
By December of that year — with gold up to $500 — it would be worth $300 million.
It went from “worthless” to worth $300 million with just a $200 move in gold prices.
That’s the power of compound gold.
But remember, the $400 per ounce cost is just an example.
Every property — every mine — has its own specific break-even point.
Some higher-grade deposits break even below $400 per ounce, sending their stock skywards in the early stages of a bull market in gold. Lower-grade properties break even well above $400 per ounce, launching their stock later in the cycle.
The trick is to know the point where the cost of production is exceeded by the market price...
And knowing which stocks to buy when the market price of gold is as close to that point as possible.
Hit that "sweet spot," and any subsequent jump in market price immediately launches the stock into exponential growth.
So it's not just a gold investment, but a Compound Gold investment, as it compounds incremental changes in gold price to generate major profits from a specialized type of property.
That’s just a theoretical example.
There are many real world examples and a number of personal fortunes which have been made from them...
Nail The Sweet Spot, and Your Portfolio Will Blossom
Here's a story which will put some force behind this concept.
The main character is Dr. Bob Quartermain — former president and CEO of Silver Standard Resources (NASDAQ: SSRI).
It turns out he used the Compound Gold strategy to produce one of the most successful silver companies in the past 30 years.
Quartermain, a geologist by training, started Silver Standard in 1985, a few years after the precious metals bubble of the 1970s imploded.
He had one goal: acquire as many large silver deposits as possible.
After the late-70s precious metals bubble, no one wanted silver projects. Many of them were inviable based on the market prices of that moment.
As a result, silver deposits were cheap and plentiful. And Silver Standard was buying them aggressively.
But when silver prices started to rise, the share value of the companies that were formerly unprofitable suddenly spiked — and by suddenly, I mean literally overnight.
This strategy took Silver Standard from a company holding a few dozen “worthless” silver projects to a leading silver mining giant worth more than $1 billion today — even though it never mined a single ounce of silver the entire time.
Its silver deposits just increased exponentially in value as silver prices rose.
Quartermain harnessed the power of Compound Gold in a rising market for precious metals to turn every $1,000 invested in his company into $400,000... every $5,000 into $2 million... and every $10,000 into as much $4 million.
That's how simple it is. The only trick is to pinpoint that overhead cost in order to identify where your profit threshold is, and then... Sit back and watch your investment double, triple, even quintuple the percentages gained by gold on the same timeline.
This is not a "get-rich-quick" scheme.
But you can get rich. And in a bull market for metals, it doesn’t take more than a few months or years...
The key is to know what you’re buying — and when to expect profits to start rolling in.
I would say that there are plenty of examples of how this concept works, but that would be a gross underestimation.
Every gold, silver, uranium, or rare earth metals producer lives and dies by this simple mechanism.
And every investor lives or dies by their ability to put their money as close as possible to the threshold of profitability.
Done right, and applied to small, development stage gold/silver miners and explorers, a disciplined approach to this strategy can and will make fortunes from relatively modest initial investments.
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