Archive for November, 2008



The Future Of Markets With Obama At The Helm

Tuesday 11 November 2008 @ 6:48 am
We are apt to shut our eyes against a painful truth… For my part, I am willing to know the whole truth; to know the worst; and to provide for it. –Patrick Henry

Dear Comrades In Golden Arms,

There will be many forecasting market results of the election of President Obama. I suggest we wait to see his cabinet in order to look to the future with any degree of accuracy.

What we do know is:


  1. Many of the evil money ruler geniuses are out of the lime light.
  2. Even if Wall Street is still pulling strings, this Administration will not have Paulson who jiggled every market on the planet fairly well.
  3. The PTT team, if it exists, will be made up of lesser lights because the past Administration ruled that.
  4. All the problems are still out there as virulent cancers that have spread out of control in the financial market and are not operable. Thank you all you OTC derivatives that up to now have not been singled out to accept blame. This could change but do not count on it.
  5. You can count on fiscal stimulation as it is a tenet of how the Democratic mind moves.
  6. You can count on higher taxes for Daddy Warbucks and reductions for the ordinary man who carries the Federal Budget money-wise.
  7. You can count on an interesting period in terms of geopolitical challenges to the USA from their many enemies in order to size up the new leadership.
  8. You can count on meaningless dialog with all those about to test the new Administration geopolitically.
  9. You can count on gold at $1200 and then $1650.
  10. You can count on the US dollar trading at USDX .72, .62, and.52.
  11. You can count on the reestablishment of social and economic safety nets.
  12. You can count on the now shredded Constitution remaining shredded. Once power comes into an Administration it stays their permanently.

Respectfully yours,
Jim Sinclair
 

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Why It’s Time To Be A Gold Bug Now?

Monday 10 November 2008 @ 1:38 am

 Chart 1

As we approach the end of the year, a few things are ringing clear in investors’ heads. We now know who our President of the United States will be. We also know who his chief of staff will be as well. One thing is for sure: there will definitely be change in Washington, which could spell major change on Wall Street. It has been several months since I looked at Gold as a viable investment option, but it’s looking good for several reasons right now. They are: 

As we approach the end of the year, a few things are ringing clear in investors’ heads. We now know who our President of the United States will be. We also know who his chief of staff will be as well. One thing is for sure: there will definitely be change in Washington, which could spell major change on Wall Street. It has been several months since I looked at Gold as a viable investment option, but it’s looking good for several reasons right now. They are: 

As we approach the end of the year, a few things are ringing clear in investors’ heads. We now know who our President of the United States will be. We also know who his chief of staff will be as well. One thing is for sure: there will definitely be change in Washington, which could spell major change on Wall Street. It has been several months since I looked at Gold as a viable investment option, but it’s looking good for several reasons right now. They are: 

  • Drop in the Dollar - As the US continues to drop interest rates, it makes commodities like Gold more valuable. Yes, Oil could be included as well, but Oil has been closely tied to the stock market in terms of production, while Gold is not. As our Dollar diminishes in value, it will likely prop up Gold prices. Right now, the price of Gold in US dollar terms after inflation is around $2000 an ounce.
  • Recession or Depression - Right now the total debt on the US economy is in the trillions and keeps climbing. As long as this continues, and there’s almost certainty that it will, this will likely push Gold higher, as it did back in the 1930s. That’s the last time we had huge debts on our country.
  • Supply and Demand - according to many Gold producers, the amount of Gold that is mined from the ground has actually fallen by 5-10% this decade. If this trend continues, Gold should rise on its own despite the problems outlined above. As far as demand is concerned, India and China are the world’s largest consumers of Gold. Unlike oil, which is used for production, Gold is seen by these countries as a form of savings, in both good times and bad.
  • Correlation to the Stock Market  - Gold in the long term is a great hedge against paper assets. Look at the last few decades, as the 1970s were great for gold. The 1980s were great for stocks. Now we see the trend for stocks as down as the trend for Gold up again.

How to Invest In Gold

While I don’t recommend owning the physical asset, there are ways to bulletproof your portfolio with Gold without having a commodities account.

 

Chart 2

GLD is the way to trade Gold in an equity account. This is the streettracks gold index, and trades at 1/10 th the price of Gold. This really is the best way to hold Gold in your equity account without needing a commodities account. Another good possibility is the symbol GDX, which is a mix of several gold mining stocks.

Individual Gold Stocks

 

Chart 3

If you want to do some homework, Chart 3 displays the top Gold companies that are trading in the United States by price. There are some cheaper traded stocks, but cheaper isn’t always better. Just ask the shareholders of Sirius Satellite Radio. Whatever the case, Gold can diversify your portfolio in good times and bad.

 

Happy Hunting! 

Tom Gentile
Chief Strategist
Profit Strategies Group, Inc.


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