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Wednesday March 21, 2012
Bear on stocks, bull on gold
by Curtis Hesler, editor The Professional Timing Service My longer term cyclical work indicates we are approaching a time frame where investors should be extremely cautious. The best strategy is to hold your gold positions, be patient, and buy into weakness. While I do not look for a repeat 2008-type crash in 2012, I do expect the beginning of the next bear leg. This time it will be less dynamic, but persistent. There will be an occasional rally just often enough to keep the players in the game … but every time the market recovers enough to re-establish hope, the decline will resume. Look for this to continue until the PE for the Dow Industrials is 10 or less. The whole process could take two years from top to bottom. Meanwhile, gold prices will look like a mirror image of the decline in the Dow, rising relentlessly with a blowoff on the up side as stock traders panic out at the lows in the Dow. Confidence in government paper will be weakened, confidence in the stock market will be shattered, and confidence in gold will be … well, golden. New highs are definitely in the picture for gold this year. My minimum expectation is to see $2,500/oz. by December. If you are of a mind to add to positions in bullion, buying Central Gold Trust (GTU) at $65.00 or better will serve you well. GTU is a closed-end fund that holds gold bullion. If you want to add a little silver to the mix, consider Central Fund of Canada (CEF) at $22.00 or better. The mining shares have continued to lag the bullion price; but once gold breaks over $2,000, they will come into their own. As they catch up, the run will be fast and furious. You need to be invested now while they are underpriced in relation to gold bullion. My favorite miners remain Goldcorp (GG) and Yamana (AUY). Both of these are doing very well fundamentally. Goldcorp is a buy under $50. Yamana is a buy up to $15. Learn more about this financial newsletter at Curtis Hesler's The Professional Timing Service. Related articles: 
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