Thursday December 15, 2011
by Curtis Hesler, editor The Professional Timing Service
Gold is still your friend. The reality is simple. Debt has to be paid, and you can only pay debt with real money -- and gold is real money.
Our economic debt problems will be ignored if possible, then swept under the rug; the can will be kicked down the road with short term solutions. More money will be printed and more debt will be created to pay off the debts we already have.
There will come a time when things will change. I believe our government will at some point do the right thing, but only when forced by a serious crisis or by a series of progressively worse emergencies.
Our challenge as individuals is to protect our wealth in the meantime. Indeed, I look for another recession and another financial crash next year.
My cyclical analysis is pointing to a significant top in the stock market averages sometime next spring. At this point, this work is indicating that the beginning of the next leg in the secular bear market that began in 2000 will begin in March.
So, what is one to do? Well, it is wisely said that you cannot direct the wind, but you can adjust your sails.
My general caveat to avoid the stock market and other paper intangible assets remains intact. There will be rallies during this period of choppy roller coaster action, but the popular averages will assume higher risk as we approach next March.
As for gold, it has broken under support of $1,700, but I am not disturbed. There seems to be a lot of gold bears out there, which is good news for the bulls. Markets do not end in a mood of skepticism, and gold has much further to go.
I look for gold to break over the all-important overhead trend line - probably at the $2,000 level - during the next rally phase. Once over $2,000, the up trend will begin to accelerate.
The transition from hard assets back to financial/paper assets will be a gradual affair, not sudden. There will be widespread exuberance in the gold market by then. How high will the price of gold reach? I look for something in the neighborhood of $5,000.
Among our recommendations, Central Fund of Canada (CEF) is a closed-end fund holding silver and gold bullion. Buy under $22.
Central Gold Trust (GTU) is a sister fund that holds only gold. It is accumulation time at $65 or less.
Learn more about this financial newsletter at Curtis Hesler's The Professional Timing Service.