Opportunity...!
/The announcements coming from the US, and global governments, clearly indicate that they will do ANYTHING to avoid a global economic meltdown. This includes “forcing” the largest banks and financial institutions in the US to take billions upon billions of dollars via government equity stakes. There is no doubt that this will ensure that the banking system will survive, and this removes the possibility of another Depression.
This is our new socialism, and like it or not, we have implemented many of the same polices that represent the “new China”.
This will no doubt remind lots of people of that infamous quote: “I’m from the government and I am here to help”
We own stocks that will continue to prosper in a “real economy” however if you are an investor in mutual funds or other large cap stocks, you may want to use this opportunity to sell and wait for much lower prices to re-enter those positions. It is very likely that we will make an attempt to “retest the lows” before this bear market is over, and I expect that those lows could even be broken.
GOLD
In the last 24 hours, both Goldman Sachs and Merrill Lynch have said that gold is headed much higher in light of the ENORMOUS amount of dollars that are now flooding the system. Merrill’s target, which was announced this morning, is $1500/ounce. Look…the system had to be reliquified to prevent a meltdown, and had they acted 30 days ago we could have avoided the crash of 2008. However, with this massive monetary inflation, gold and gold stocks (especially our small cap gold stocks) continue to be an excellent buy and I fully expect gold to break $1000/ounce in the not too distant future.
It’s the Economy!
Once the madness of these stock market moves subsides, the reality will still be the same. The economy has cancer, and it is spreading quickly. The US, and the world, is awash in DEBT and a recession is here. With 80% of the population in the US upside down, and with housing prices headed still lower for the next 12 months at least, we will have to see how this washes out. China (and other parts of Asia and South America) will be the BIG winner in all of this, and you should continue to adjust your “portfolio mindset” with this in mind.
Hey….we just had a 2 day bull market of 20%….doesn’t it feel great? Didn’t think so….
Kip Herriage
Editor, VRA
