Russell’s warnings continue. He sums up the stock market, the economy and the election as follows:
Subscribers who are buying or holding stocks on the on the basis of the better employment news should remember that deteriorating internals in the face of improving newspaper headlines give us the worst of all markets. I cannot warn subscribers strongly enough that they face hard times in both the market and the economy during the months ahead. The operative words now are “extreme caution.” Please be out of all common stocks with the exception of the mining shares. According to my studies this year it’s going to be a long, cold fall and winter.
If the market and economy turns down during the months ahead, President Obama’s chances for a second term will drop to zero. This increases the importance of a final choice for any Republican candidate. I think that Obama and the Democrats will be double crossed by both the stock market and the economy in the months ahead.
Gold closed on Friday above 1600, and gold bulls are hoping that 1600 will be the new base for gold.
One thing that worries me is that American consumers are not prepared for a declining stock market or for hard times. As I said before, nobody under the age of 80 has ever seen hard times, nor have their parents experienced hard times. Sadly, instead of building savings, Americans are still deeply in debt, and they are in no shape, psychologically or financially, to face a deepening recession. The big money in the stock market this year will be made by the shorts, but remember, those that have profits will have those profits treated as earnings from a tax standpoint, rather than long-term capital gains.
Russell, Sinclair, Chapman and Jeff Clark are bullish on gold. So is everyone else you read in these pages. Larry Edelson is short-term bearish on gold and silver, and bullish on the stock market. Gary Shilling is bearish on almost everything and expects further de-leveraging and deflation. Wall Street is always bullish on stocks and the economy – and usually wrong.
Backwoods Jack (who acts as a proxy for the “man on the street”) is bullish on everything and keeps repeating, “God bless America!” over and over. He told me he shot over 100 squirrels last fall, (or was it 200?) on his estate/bunker in Northern Minnesota, on the shores of Lake Superior. I don’t know what that has to do with anything, but that’s what he said after he informed me that he is holding onto his stocks, and thinks Russell and Sinclair are wing nuts.
Backwoods sees nothing but blue skies ahead. At least his wife listened to me – Judy sold her stocks and put the proceeds into gold. Backwoods and Judy are coming to visit us here in the Miami area at the end of the month. They will stay with us in our guest bedroom, for a week. I don ‘t know what he will do in his spare time since I haven’t seen one single squirrel in the nine weeks I’ve been down here and I’m certain the authorities would frown on discharging a firearm within the city limits.
Andy Hoffman is so busy Ranting that he is getting hoarse. I am certain he will throw things at the wall when he reads my comments today at the mere mention of Larry Edelson.
What do I think will happen in 2012? Well, with less than total certainty, I can tell you this much – being an election year and knowing that the PTB (Powers That Be) will do all that they can to keep the economy from sinking, unemployment from rising, the Dow from collapsing and of course capping gold and silver, it is hard to make any sure fire predictions. The question is, “Can their efforts succeed against a backdrop of further unraveling of the EU (that’s Europe, not Eastern University, Backwoods), a Middle East time bomb, continued real estate and bank deterioration?” We can assume that sometime soon, the Fed will do what they can to help keep things afloat with further Quantitative Easing. That should be reason enough for gold and silver to resume their decade-long bull markets. It may be enough to keep the economy and stock market afloat this year too.
2009 was a tough year to call and 2012 will be equally difficult. When in doubt, play it safe. Cash and gold can’t hurt you. Being out of stocks may cost you some profit, but it may also save a lot of your hard-earned portfolio. Years ago, Russell wrote, “There is no law that says you have to always be in the market.” It’s hard for me to argue with his reasoning and I have recently shed all of my stocks, but three (Avalon, Scorpio Gold and Western Silver) and have cut way back on all three. That freed up a lot of money, which went into physical gold, silver and platinum. It’s possible that I jumped in too soon and that prices could fall further (Edelson sure thinks so – sorry Ranting Andy, for mentioning his name twice in three paragraphs), but then again we could well have seen the bottom and my entry points will turn out to be very wise. I’ll find out soon enough, but either way, I am convinced that by year’s end I will not be sorry that I significantly increased my physical holdings of precious metals. Sometimes you just have to go with your gut feelings and in this case it is easy for me to do so since I am so very, very long-term bullish and I just KNOW I can’t go wrong if I focus on the Big Picture.