Monday July 16, 2012
by Mary Anne and Pamela Aden', editors The Aden Forecast.
Yes, things seem to be looking better and there are some signs of improvement, but we’re by no means out of the woods yet.
This tells us to keep our guard up and do the best possible under the circumstances. Again, hope for the best but be prepared for the worst, just in case.
Once we see bluer skies ahead it’ll be another story. For the time being though, we’ll keep our portfolio evenly divided between precious metals investments and long-term U.S. government bonds. Our cash will also remain in U.S. dollars.
The chance of an accident is still a wild card that also has to be considered. The derivatives market alone is massive and it’s an accident waiting to happen.
Don’t forget that the 2008 crisis actually started with Iceland, a small country most people don’t pay much attention to. Then the subprime crisis hit, again something most people had never heard of.
And all along, the ratings agencies kept their AAA ratings on the faulty banks, right up to the bitter end.
We’re still avoiding stocks for the time being. They’re actually marginal and they could go either way. Overall, however, we feel the opportunities are much better in bonds and metals related investments.
We again recommend buying iShares 20+ Year Treasury Bond Shares (TLT), SPDR Long-Term Treasury Barclays Capital (TLO) and Rydex Series Government Long Bond 1.2x Strategy (RYGBX).
As for gold, the June months tend to historically see the most lows. The next popular low month is August. So we’ll be watching the $1536 lows carefully lazy days of Summer. If $1536 is broken, we could see gold, in a worst case, slip down to the $1400 level.
On the upside, if gold breaks above $1650 and stays there, the worst will be behind us. Then $1700, $1800 and $1900 will be the next stepping stones in the renewed rise.
Gold shares are bombed out versus everything. They got beaten up this year and they’re trying to bottom in an oversold level. The downside is limited.
If you are a new investor or you want to add to your positions, we would go ahead and buy new positions in the metals at this time, primarily in gold and a few select gold shares, such as Gold Fields Ltd. (GFI), New Gold (NGD), Royal Gold (RGLD).
Learn more about this financial newsletter at Mary Anne and Pamela Aden's The Aden Forecast.