A Precious Way to Game the G-20
Tough to play the G-20. You know why? Because I think that the only way to make money off the conference is to bet that it won't go well or that it will be reported that it doesn't go well. That means buy gold.
Gold's been on a tear of late. I am sure there is a propensity to believe that the run is done, or has to be done soon. But meetings like the G-20 are going to be all about the U.S. telling the world, "Look, this is how it is going to be. We are not going to allow you to take our markets, have us defend you militarily, let you dump goods on us and tell us what to do." We are in a "new sheriff in town, and his name is Bernanke" mode.
That's a prescription for people who own dollars to go into the only currency that will hold its value no matter what, one that has increased in value for a decade: GOLD.
Coming out of the G-20, I think it will be more evident than ever that gold is
not
a commodity but a currency, a substitution for every currency out there that's duking it out with the dollar, not just the dollar itself.
I have always favored the
SPDR Gold Shares
(GLD) - Get Report
as a way to play gold. But of late I have switched directions. With gold so high, and so many miners with $400 costs -- like
El Dorado
and
Agnico Eagle
-- I think it is time to overweight the miners over the actual commodity.
My new favorite, the one we have been buying aggressively for
ActionAlertsPlus --
NovaGold
(NG) - Get Report
-- is still one more play for the G-20 and its aftermath. It is a multiyear play because you are really just buying the asset of gold, not the mined gold. That's because I do not expect any production from NovaGold until 2015 at the earliest.
I know this will sound like a strange analogy, but NovaGold is like a biotech stock. It is something that you know will be huge -- it's got the largest deposit of gold in North America -- that I think will only build in value over as I believe that gold is going to have a very long run.
I have been telling people that, until gold represents 5% of an average portfolio manager's holdings, they should continue to accumulate the precious metal. Not until then -- wherever the price is -- will we have reached the peak of gold.
Given that gold is less than 0.5% of the average portfolio manager's holdings, you can see why I believe we are going to see a long-term run in gold as we get to my target. That's why having a long-dated asset like NovaGold is the best way to play the trend.
The G-20 will be just another Bernanke bash session. I say take that bash session for what it is, an attempt to get the dollar down to where we are going to see economic growth imported to our country. That means the dollar will be a terrible place to be. Whether you think it should or not, gold will be the default currency.
I am not daunted by the $1,400 price. Meetings like the G-20 just remind you how valuable gold is.
Just another reason to buy the GLD, the coins or bullion, Agnico Eagle and El Dorado, or the Ttrust's new favorite, NovaGold.
At the time of publication, Cramer was long NG.
Jim Cramer, founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
Confessions of a Street Addict
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.
