"A perfect storm scenario has been created to push gold prices higher," Jim Cramer told
"RealMoney" radio show listeners Wednesday.
Demand for gold is through the roof thanks to the fact that people in Iran, China and India are hoarding 24K gold, he said. "Individuals here don't trust their own currency," Cramer said, so they're hoarding 24K gold.
This is going on at the same time that we're running out of gold in the ground, he said.
And, finally, there is also a shortage of gold stocks to actually invest in. While there used to be dozens of gold mining stocks to invest in, including companies in Canada, South Africa and the Americas, Cramer said that there are now only three investment-worthy mines:
These factors combined mean that the three stocks are constantly moving higher, Cramer said, adding that it's important to buy these stocks anytime there is a pullback.
Goldcorp is the cheapest, he said, because it has the lowest finding costs.
He said that he used to own
for his charitable trust
Action Alerts PLUS, but that this is not a pure play on gold because it is also exposed to diamonds.
Cramer also said to be on the lookout for companies that are flying under the radar and that
will be a stock to watch. He owns Cephalon for his trust
Action Alerts PLUS.
Cramer had sold some Cephalon, in part because the health care sector is getting hit by a rotation into precious metals and infrastructure, and in part because of news that the Food and Drug Administration rejected the company's breakthrough attention-deficit-disorder drug Sparlon.
Then company CEO Frank Baldino made an appearance on Cramer's "Mad Money" TV show. Baldino said that he believes that the drug will be approved in August -- news that Cramer said could have moved the stock had it not been off the radar.
Sparlon drove the stock up 20 points before it was rejected by the FDA, Cramer said, and he believes that it will move the stock higher again.
He said not to take any action yet, but that he'll give the signal in July when it's time to buy Cephalon.
Cramer said that the market is not behaving as one might assume, given the fact that the country is facing high oil prices, problems in Iraq, tension in Iran and the fact that the president's approval rating is very low.
But the market is reaching six-year highs. Cramer said this is because, for the first time in history, three pools of wealth are looking for a place to put their money.
The first group is "petro-dollars," meaning the money that U.S. consumers spend at the gasoline pump that makes its way back to Mideast nations.
The second stream is private-equity companies, which refers to companies that search for stakes in private businesses and then take them public. He said the last pool comes from hedge funds looking for a place to put money to work.
There's lots of money out there and not enough stock to go around, Cramer said. And that is enough to drive the market higher despite all the bad news.
To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.
At the time of publication, Cramer was long Cephalon.
James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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