RF's Financial News

RF's Financial News

Sunday, December 6, 2009

This week in Barrons - 12-06-09

This Week in Barrons – 12-06-09:
Thoughts – Mr. Mark Twain

Mark Twain: “It isn't the sum you get, it's how much you can buy with it.” Gold ended the week near the 1,200 an ounce figure – and for the past 2 years I’ve heard every ‘guru’ tell us why gold is “baloney, no good, and barbaric.” And the fact is – they’ve ALL been wrong – terribly wrong. The fact is our country is bankrupt, our currency is being dismantled on purpose, and the world’s governments have had enough of the US’s fiat printing press money. Now the real question is: are all the guru’s really that blind, or were they "told" to dismiss it? Of course the answer is that they were “told” to dismiss it. Consider that 90% of all the "funds" you can buy into are long only. Most 401K's don't allow shorting or even have inverse ETF's where you can go short. So, if you're a "long only" fund manager is there ever a time when you're going to tell people to sell – heck NO – because you would have nothing to manage. So it's "ALWAYS" the best time to buy stocks – yes? Well the same thing happens with gold. When you purchase gold it just “sits there.” Wall Street can’t use it for derivative games, for credit swaps, and at the FED level it gets in the way of their bogus printed money. But here it is – at $1,200 per ounce. Now it will pull in – everything does – but gold still has a date with higher prices and that can’t be stopped. “Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it” – Mark Twain

Mark Twain: “If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a man and a dog.” Potentially the more interesting part of gold: is SILVER. The gains in silver could easily outstrip gold (in percentage terms) over the next several years. At $18 an ounce, you can buy 100 ounces for under $2,000. Now, some will say that silver is not as respected as gold – and that’s true enough. Some will say it's not really as good as gold at being money, and that’s false. And some will say that it’s already peaked, and that is also false. Silver was money BEFORE gold and has lasted longer as coined money than gold did (we still had silver in our coins in the 60's while gold was gone long before that). As far as "money" silver has been legal tender forever, while gold was actually outlawed as being legal tender by our own Government. Silver is in short supply, and each year we need more of it – and as the dollar becomes more worthless, it will price higher just because of the inflation factor. I have no reason to believe that silver cannot make $50 dollars in the short term, and $75 in several years. Gold has a date with a smack down, and it could be brutal. It’s like Mark Twain said: “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Gold could fall $150 per ounce if the dollar jumps on the world stage, and all that would do is give me a chance to buy more. As far as silver goes, I think it's in its infancy, and that a 100% gain is not that far off. Remember, where the metals go, so go the miners. You might want to take a few bucks and buy a small basket of good ones, because they could soar more than you think. “You can tell German wine from vinegar by the label, and denial ain't just a river in Egypt.” – Mark Twain.

The Market:
Mark Twain: “Get the facts first. You can distort them later.” To some extend – the unemployment report on Friday showed that all the people that could be cut – have been cut. You still need someone to open the door each morning. Factually, the number of long-term unemployed (those jobless for 27 weeks and over) rose by 293,000 to 5.9 million . Among the marginally attached, there were 861,000 discouraged workers in November, up from 608,000 a year earlier. The bottom line is simply that the employment number was baloney. Everyone knows it, even the most uppity of the talking heads suggested that "there could be some revisions" to this. But the push goes on, as they try and keep the markets elevated. Friday was very interesting, in the morning the averages roared higher on the bogus jobs number, but then reversed and went negative by some 40 points, only to reverse again and end the day mildly green. Some would say the amateurs rushed in and the professionals sold stock to them. Is it possible that Friday morning was some form of short term top? I believe it's possible, but you risk wading in dangerous water when you try picking tops in this market.

I wouldn't look to go long a whole lot of stuff until this market clears that 10,500 level and holds it. Then they could use that as the springboard for the last Christmas rush. But until that level is taken out, shorts will be bolder, chart players looking at "wave C" patterns will pull in, and funds that had a very profitable year might just want to lock in those gains and go play polo somewhere. Remember: “A lie can travel half way around the world while the truth is just putting on its shoes” – Mark Twain.

We have HL at 4.51, with a hard stop at 6.49.
We have SPY at 108.84, with a hard stop at 110.1.
We have NEM at 52.72 with a hard stop at 52.20 – over 55 buy more.
We have POT at 117.79 with a stop at 118.45
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
And we have about 70% of our money at work in the 401k’s – the rest in cash.

Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.

R.F. Culbertson

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