$1,000 GOLD – NOW WHAT?
I'm Curtis Hesler, editor of the Professional Timing Service newsletter, and I want to share with you some valuable investment advice that could be the difference between making big money and losing your financial shirt in the years to come!
I am not a Johnny-come-lately gold bug. Plenty of them came out of the woodwork once gold breached $1,000 this September, but I have been a gold bull since 1999 when gold was a mere $250/oz. and the Nasdaq was flirting with the lofty 5,000 level. Since that time, I have been forecasting that gold would reach $1,600. You can imagine the disbelief in the prospect of even $1,000 gold back then. Gold was dead, and the Nasdaq-dot-com bull was the “new paradigm.” The Street got it wrong – again. Currently, the Nasdaq is struggling to stay above 2,000 after a 50% bear market rally, while gold is zooming along at new highs and pushing toward our $1,600 goal.
This disparity between the stock market and gold is an example of what I call “comparative strength and weakness.” You can learn to identify the best opportunities on your own with this very simple technique. I will reveal how you can learn to apply this tool … but first, what is the message in $1,000 gold?
Which gold miners should you be buying now to ride the gold bull higher? Click here for both blue-chip and speculative gold buys in Professional Timing Service.
The $1,000 level has been a psychological barrier for some time, and there has been a lot of excitement as prices have pushed higher. What does it mean? Well, it first means that the easy money is behind us. However, using the comparative strength and weakness technique that I will explain presently, there is still a fortune to be made in gold.
There are other messages being announced by $1,000 gold. First, forget the deflation argument. I believe there will be consumer items and services that will fall in price due to the recession and lack of consumer demand. It will be tough to sell $100-a-plate fancy restaurant meals, expensive cars, apparel, and any consumer good that the consumer can make do without. But living expenses like insurance, taxes, education, health care--things a person has no choice in purchasing--will continue to rise. Gold at $1,000 is telling us this loud and clear. It is saying that the commodity bull market that began in 1999 is still very much alive and healthy. Raw materials, including energy prices, are going to continue higher.
In truth, gold is your best defense against both deflation and inflation. Gold does very well in both inflationary times and deflationary times because it is the go-to place for money during periods of financial crisis. I believe we should be listening with both ears. Gold breaking above $1,000 this fall means that the crash of 2007-2008 is not the end of the financial crisis. There are more financial storms ahead, and professional investors are putting money in gold as the only safe haven available. It is perhaps the only reliable place to store wealth in these uncertain times.
Furthermore, $1,000 gold is telling us that the U.S. dollar is going to continue to fall, which means that commodities priced in those dollars are going to continue rise.
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How can you exploit the message in $1,000 gold?
First - Buy Gold!
Gold is a currency. Gold is real money, but it's unique from all the other currencies. All currencies, with the exception of gold, are fiat currencies. They are synthetic. Over time, they all fall, but at different rates. This can occasionally give you an illusion of strength when one currency is not falling as fast as the rest. Gold held its value and proved its merit during the panic liquidation we saw during 2008. Yes, gold sold off, along with everything else. As the debt markets imploded last year, investors and money managers were forced to sell anything and everything, regardless of value, to raise cash in order to pay off loans. Gold was not exempt, but that presents you with a rare opportunity.
Even accounting for the recent rebound in the popular averages, as of the end of August 2009, the Dow Industrial Average is still off over 33% from its October 2007 high at 14,279. The S&P 500 is off 35% during the same period. On the other hand, gold has managed to appreciate by nearly 30% during the same time frame. This is a classic example of comparative strength and weakness.
How you can use comparative strength and weakness analysis to learn what to buy and what to sell.
When one asset class holds up better than the rest, it is considered comparatively strong, and it is the best place for you to go with your money. Gold's "comparative strength" is sounding loud and clear that you should be holding and buying gold. There are several ways to buy gold, and I discuss the most appropriate approaches in each of the Professional Timing Service newsletters. However, as gold breaks to new highs, the sleeping bargains are to be found among the major gold producers. Let me tell you why these are still bargains.
There is a ratio – the gold/XAU ratio - that I like to call “Simplicity” because it is so easy to follow and use. Until the debacle in 2008, the ratio would cycle between 5.00 and 3.50. A reading of 3.50 indicated that the mining shares as represented by the Philadelphia Gold and Silver Index (XAU) were too expensive compared to gold. They were sells once Simplicity hit 3.50. On the other hand, once the ratio moved up to 5.00, the mining shares were too cheap and were opportune buys.
The great 2008 market implosion sucked all asset classes down, and the mining shares were not exempt. As I mentioned above, though, gold bullion did not suffer anywhere nearly as badly as other assets. Mining shares, on the other hand, were beaten to death to the extent that Simplicity actually hit a reading of 11.00. I doubt we will see bargains like those again in our lifetimes.
Although that is water under the bridge and the mining shares have recovered, Simplicity still stands over 6.00. Folks, the mining shares are still historic bargains even though gold is breaking to new highs. The best news of all is that we still have the advantage of picking through the wreckage of 2008, and we can still select the very best mining companies at historic low prices in relation to gold. With Simplicity over 6.00, we still have a once-in-a-lifetime opportunity to buy the miners.
Which gold and silver miners will give you the best chance at doubling or tripling your money in the next year? Click here for recommended buys in Professional Timing Service.
Gold - Is there a down side?
There is always a down side. You have to begin by separating the short term outlook from the long term picture. Over the long term, gold is going much higher. I think you will find that my long held forecast of $1,600 will fall well short of the mark in another three years.
Nevertheless, gold (like everything else) will cycle on its way to that $1,600 mark. There will be brief periods of consolidation and periods of profit-taking. My strategy, which I have formed over some 40 years of successful investing, is to buy weakness and sell strength. This is the single best way to manage risk and enhance returns. All of our recommendations come with specific buy prices, which are typically below the current market. It is best to take advantage of short term swings to put more money in your pocket. In fact, my shorter term work is indicating that we may have one last chance to buy gold under $1,000.
Over the long term, I do not see a down side, at least not yet. There will, of course, come a time to sell your gold. Later, I will say more on how you can tell when it is time to sell your long term gold investments.
Subscribe now, and I will give you my Gold Expectations study. This report discusses why you need to consider gold in your portfolios. We will show you how you can apply the principle of comparative strength and weakness in your investment strategy to find those gold stocks with the greatest potential. To subscribe and get this free report, click here.
To take advantage of the next leg in the gold bull market - buy physical gold, buy gold ETFs (paper gold), or buy mining shares.
It has become a little more difficult to buy physical gold of late. I prefer to buy bullion coins like Krugerrands, American Eagles, Canadian Maple Leafs, or Austrian Philharmonics. However, the allure of physical gold and the dire future in store for the dollar and our economy has not been lost on large investors. Merrill Lynch has announced that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on purchasing gold bars in their accounts. The demand for physical gold has driven premiums up and delivery times out. I believe everyone should have some physical gold, and all three approaches (including buying paper gold) are discussed in our Gold Expectations report. This booklet is included with all subscriptions.
The second way to invest in gold - and discussed in the Gold Expectations report - is to buy gold mining companies. They are not immune to the problem of obtaining credit when there is little to be found. Rob McEwen of Goldcorp fame recently said that finding financing was more difficult than finding gold. Nevertheless, the more promising companies are attracting investors, and they are still underpriced. The Gold Expectations study, along with your subscription to Professional Timing Service, will reveal what specific mining stocks you should avoid, which you should consider buying now and at what price, and which mining shares should be put on your radar for future purchase.
Gold Expectations will also introduce you to the ‘Simplicity” ratio. You can keep this easily on your own to determine when the gold mining sector is overpriced and when it is underpriced. As gold shares were hitting their extreme lows in October and November of 2008, this simple model was giving us its most bullish readings … EVER! Since then, the XAU has more than doubled - up 150% - and many of the gold issues on our list have tripled or more. One flew from a low of $0.41 to $3.80 in less than eight weeks.
We update all of our indicators and present our current analysis in each issue of the Professional Timing Service newsletters. I can't forecast what our models will be saying in the future; but as we go to press with this flyer, our work is pointing to highs well over $1,000 in 2010. I think by April 2010, $1,000 will be left behind as but a fond memory of when gold was “cheap.”
Why don't you take this opportunity to find out more about gold and energy
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Everyone needs to own some gold, and you need to consider gold in your portfolio now. Our report Gold Expectations will give you the tools to assist you in finding the best gold buys. The report further details just why the Obama victory, economic stimulus, and debt deleveraging has created a rare entry point into the gold market as well as just how you can exploit it.
With the fundamentals and technical aspects as bullishly aligned as they are presently, buying gold under $1,000/oz. is as close to a slam dunk as you will ever find in the markets. Buying gold while egregious monetary and fiscal programs are being instituted is almost like buying fire insurance after your house burns down. The bargains will not last forever. I anticipate that by spring of 2010, you will be seeing $50 to $100 daily up moves – although by then, it will be too late to find anything to buy that is not fully valued.
Buy Some Crude Oil!
The second major opportunity we are facing is investing in other commodities, including crude oil. Gold is showing the way, and crude oil is following. It always does. My technical work is not yet as bullish on crude oil and the overall commodity complex as it is on gold, but the green flags are starting to appear. You will read about all the technical and fundamental developments as they emerge in our monthly and mid-monthly newsletter publications as well as in our Tuesday and Thursday online updates.
Click Here for New Buys in Energy Trusts and Gold Mining stocks!
Don't Buy Bonds!
The third opportunity we are facing is not so much an opportunity as a strong warning. Don't buy bonds. Bonds at today's prices are the absolute worst investment on the Street. Yes, I know that the Fed has been holding interest rates lower, and the bond market has benefited. For several years, my advice has been for you to only approach the bond market on a trading basis. Do not invest long term, fixed income money in bonds. Our trading approach has worked out quite well for our readers. We offer all subscribers access to the signals from our bond trading model as well as what specific bond fund trades you should take with each signal.
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A further caveat - you must be wary of chasing yield. This is a difficult environment for income. By forcing rates this low, the Fed and the Treasury are encouraging the public to take enormous risks in the search for paltry yields. DO NOT FALL INTO THIS TRAP! You will learn how best to approach the yield problem and how to buy Treasuries, including Treasury Inflation Protected Securities (TIPS), in the safest investment account on the planet. Also, you will pay no commissions or transaction costs. All subscriptions will receive a copy of "Buying Treasuries in the World's Most Secure Investment Account" absolutely free.
Get The Heck Out of the Stock Market!
This final opportunity, like the last one, is negative. For the last three years, our brochures and newsletters have been warning folks to get out of the stock market. If you did nothing more than that, you would have not wasted your time in reading them. The forced liquidations and selling panics are not over. There is a lot of bad debt yet to be settled.
Bear market rallies aside, there is a lot more potential now on the down side for the averages than on the up side. The bear market will not be over until everyone has sold their stock. Unless you are a trader, you are not going to make any money in financial/paper assets for some years to come. We offer several trading models tuned to the stock market's popular averages that are available to all subscribers. Our Nasdaq Slow Tracker alone, which is included with all subscriptions, has given our readers valuable guidance with the twists and turns in this market.
Our cyclical work began indicating that an "Obama rally" would spring from lows in early March. This work was followed by solid buy signals from my timing models. The rally is on, but momentum and other technical indicators are weakening. As fall approaches, I believe the rally is going to run into big trouble … but the market does not care much what I believe. The rally will struggle on until my timing models generate sell signals, at which point subscribers will be immediately alerted via our online updates and in the market letter. Nevertheless, I think that the end of this rally is fast approaching, and it is time to prepare for that eventuality before the top is in.
You can learn to navigate the stock market if you have the proper technical tools. Your subscription will include A Handbook for the Perplexed. It will not reveal how to calculate our proprietary models, but it will teach you how to formulate and apply other important tools so you can learn to manage the markets better on your own - learn to be your own advisor. Incidentally, this booklet includes a simple method mentioned above that you can use to tell when it is time to liquidate your gold and other commodity investments. You can learn how to determine in only a few seconds a day when the time is at hand to shift out of commodities and into financial/paper assets. This little model may be all you need to be your own advisor.
Your letter is certainly the best of the dozen or so I've subscribed to over years. It stands out in combining easy reading with teaching me about the market.” C.M. 6/5/09
Click here to begin your subscription to gain instant access to all recommended gold and energy stocks and ETFs that should be in your portfolio now.
What you will receive with your subscription to Professional Timing Service:
* Ongoing analysis of the gold market, including bullion, paper gold ETF's and mining shares.
* Monthly newsletter and mid-monthly updates.
* E-mailed mid-weekly updates on Tuesday and Thursday.
* Exclusive access to our “Special Reports” folder that includes all of our current studies.
* Signals telling you when to be in and out of gold funds, including the Rydex Precious Metal Fund.
* Objective signals on trading the U.S. Dollar Index, bonds, and the Nasdaq.
* Income-producing energy investments that put the dollar to work for you rather than against you.
* Sane and sensible information that will assist you in managing your financial future.
Every subscriber will receive absolutely free the Gold Expectations report. Take a step toward becoming your own advisor. This booklet will help you get a firm grip on the emerging gold market.
I will also include Buying Treasuries in the World's Most Secure Investment Account. Subscribers have told us that this report alone is worth the price of the subscription.
And, you will receive a copy of A Handbook for the Perplexed. This booklet reveals my favorite technical tools and techniques. They are all quite simple to keep, and they are very effective.
Last, but not least, you will also receive Timing Gold with Simplicity, an essential approach for assessing when gold stocks are overpriced or underpriced.
Perhaps most important, each monthly letter includes an updated list of what stocks to buy now and exactly what price you should pay for them.
Why not take a minute to join us now, and yourself Professional Timing. Click here.
The second major leg of the millennium's great gold bull market is getting under way, and gold should far outperform other asset classes this year and next. I hope that you're able to profit with us. Join today.
Editor, Professional Timing Service
P.S. Subscribe today and you can immediately gain access to all of the Professional Timing special reports including these five special reports:
* Buying Treasuries in the World’s Most Secure Investment Account
* A Handbook for the Perplexed
* Gold Expectations
* Timing Gold with Simplicity