From Richard Russell, editor of Dow Theory Letters, in remarks posted on his website on January 19th:
''When a great boom built on credit-expansion tops out, the usual result is a deflationary depression. I think we can look forward to a long period, maybe years, when periods of deflation envelope the land. In deflation, money becomes very difficult to obtain. In deflation, debt becomes a nightmare. Anything with debt behind it becomes a liability.
And that includes many currencies.
I keep thinking of the safety of the one no-debt currency -- gold. The trick ahead over the next ten years will be to avoid losing money.
This concept runs against the stance of almost every other advisory, all of which seem fixed on 'how to make money,' and 'how to profit in the difficult times ahead.'
I have stated that right now things are AS GOOD as they're going to be in coming years. Thus, the idea is to avoid losing purchasing power.
The best idea I can come up with is the one item that cannot go bankrupt, and that item is gold. Gold represents WEALTH in any kind of economy. The idea is to accumulate gold with an accent on the number of ounces you hold. The price will vary, but the number of ounces you own will determine your level of wealth.
I might add, that the action of gold is now bullish. Gold rises in a series of tiny steps typical of bull market action, and then the corrections come suddenly and with a sharp swoon to the downside. In other words, we'll see a series of 12 tiny advances of 3 to 5 points each, and then a 20 point drop. The tiny upward steps are typical of bull market action, and the sharp and larger drops are typical of minor corrections in a bull market.
And I ask myself, what do I feel safest in holding for the coming years -- bonds, stocks, commodities, real estate or gold?
My answer is 'mainly gold along with some cash and a home.'
Diversifying is another way of saying, 'I don't have the ultimate answer, so I'm trying to play it safe.' And that's the way I feel, and that's the way I see it.
The old adage is that 'The market can do anything,' and this is one of those times when you better believe it. ''
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. . . and from Felix Zulauf, of Zulauf Asset Management in Switzerland, in a roundtable interview in Barron's on January 18th:
'' . . . gold could have a correction sometime this year, but investors shouldn't let their gold go. Gold could correct to $1,000 an ounce from a recent $1,130. Use that shakeout to buy. Gold is the only currency with no liabilities. It can't default. It is in a bull market.
In the disbelief phase, it fell to $811.70 an ounce. Now it is in the recognition phase, and eventually it will go to the overbelief stage and trade for a few thousand dollars an ounce. It will take a few more years. Gold will perform better than stocks in the next five years.''
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- i could not have said it better. |
