About Dow Theory — First, we saw the recent April highs in the Averages. Then we saw a plunge in both Averages to their May 7 lows — Industrials to 10380.43, Transports to 4298.12, next a short rally. If ahead, the two Averages turn down and violate their May 7 lows, that would be the clincher. Such action would signal the certain resumption of the primary bear market.
Just as for years I asked, cajoled, insisted, threatened, demanded, that my subscribers buy gold, I am now insisting, demanding, begging my subscribers to get OUT of stocks (including C and BYD, but not including golds) and get into cash or gold (bullion if possible). If the two Averages violate their May 7 lows, I see a major crash as the outcome. Pul – leeze, get out of stocks now, and I don’t give a damn whether you have paper losses or paper profits!
I’ve had very little stock exposure the last 5 years and my portfolio has done comparatively well. I’m now completely out of stocks – meaning shares of corporations – entirely. I consider stocks a rigged game a little guy like me can’t win.
Most of my 401K retirement fund these days has been (in descending order) gold, cash equivalents (Treasuries, TIPS, and mutual funds), and then silver and oil as distant third and fourths. The oil has performed least well so far, so based on this I’ve closed out my oil positions (OIL and USO), so now I have more cash than gold.
In a severe stock market downturn the gold and silver ETFs may very well go down, too. That’s why I’m holding cash in reserve instead of going all in now. I’m happy with the price I’ve paid for gold. If the price goes down I’ll buy more. From what I’ve reading gold, $1200 an ounce today, will hit two or three thousand in a few years.
If you’re interested in gold and silver stay away from the GLD and SLV ETFs, for reasons mentioned previously. For precious metal ETFs I like SGOL (Swiss physical gold fund), CEF (Canadian 80% physical gold/20% physical silver fund), and GTU (Canadian physical gold fund). Also SIVR, though I’m in them mostly due to a lack of other great silver options I’ve been able to discover. These are Exchange-Traded Funds (ETFs), so you can buy them on TDAmeritrade, etc., and inside many 401K accounts.
If you’re not restricted to investing via a 401K get at least some physical gold in the form of 1 oz. gold coins – U.S. Eagles, Canadian Mapleleaves, Austrian Philharmonics, etc. The beauty of physical gold is that unlike paper money or equities it has no counterparty risk. No one can devalue your gold with paper trickery, defaults, or inflation.
More nervous predictions from this morning’s news
Marc Faber – Very Likely That the Rally Has Come to an End – predicts 20-30% stock market correction.
Bloomberg – Germany to Ban Naked Short-Selling at Midnight