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Gold:
Interestingly, the cyclical 2011 picture for gold is very similar to
the broad stock markets. Expect the current softness in gold to last
until the end of this month, followed by a rally into late March, which
will most likely not produce a new record high. If gold does
make a new record high come March, it will not be substantially above
the 2010 high, and likely not breach the $1,500 mark.
From March 23 into July 4,
gold should be on the weak side again. But thereafter, especially from
October to December of this year, gold should take off like a rocket
ship, likely reaching the $2,000 level.
You can see gold’s
cyclical 2011 picture above.
Next …
The U.S. dollar: The U.S. dollar will not do
much this year. That is, until late July. The action will most likely
find the dollar trending sideways with a slightly bullish bias for the
first seven months of the year. I do not expect the dollar to gain much
during that period.
However, come late July
and heading into the end of this year, THE DOLLAR IS LIKELY TO CRASH TO
NEW RECORD LOWS.
It will lose value against
every currency on the planet during that period (except gold). And the
decline I expect in the buck in the last two quarters of this year will
usher in a redesign of the world’s monetary system in 2012, where
I fully expect the dollar to truly begin losing its status as the
world’s reserve currency.
Also important to note:
The sovereign debt crisis that is now hitting Europe will very likely
begin hitting the United States sometime in July 2011.
Which brings me to the
next asset class …
U.S. bond markets and interest rates: Despite
all the gloom about U.S. bond prices … and despite the fact that
I, too, am bearish on bonds, I do not see a crash occurring in the bond
markets until the last quarter of this year.
The current decline in
bond prices should end just 10 days from now, on January 13.
Then, bond prices, in
general, should largely trade sideways for several months. I do see
bond prices collapsing — and interest rates soaring starting in
September of this year. Interestingly, this pattern is correlating
quite nicely with the dollar cycles above, and my forecast that the
sovereign debt crisis will not hit the United States until much later
this year.
So how do you play
these cyclical forecasts for these critical markets?
Certainly, that’s
the key question. And here are my basic guidelines …
First, and foremost,
even if the broad stock markets manage to eke out a few more gains, get
the heck out of most stocks as soon as you can. There is likely to be a
very sharp and surprising down move in stocks in the first two months
of this year.
Do not, I repeat, do not
exit any core gold holdings or core natural resource stocks.
If you have funds to
speculate with, consider buying the ProShares Short S&P
500 ETF (SH). But use a tight stop, and look to take profits
around February 24.
Second, do
not get overly aggressive in gold until later this month, and wait for
my signals! Gold is not likely to do anything for a few more weeks. It
can stage a strong mid-year rally, but then it will succumb to some
summer softness before really taking off at the end of the year.
You will want to navigate
the expected swings in gold with as accurate timing as possible,
because there will be a lot of money to be made on gold’s moves.
For now, only trade this market if you are a short-term speculator.
Hold core positions for the long term.
Third, steer clear
of the bond markets, even though the cycles are not yet that
bearish on them. Chief reason: They remain the most vulnerable asset
class to the sovereign debt crisis, and when it hits, you don’t
want to be anywhere near bonds. So simply stay away from the bond
markets, period.
Fourth,
for all of my timing signals, consider a membership to Real
Wealth Report. There’s simply no substitute. I
guarantee it. For just $99 a year, you get all of my recommendations,
flash alerts, specific buy and sell signals, analysis and more.
Considering we are just a few days into 2011, now is a perfect
time to join. Just
click here now.
Best wishes,
Larry
Updated
Market Maps on the Dow, Oil and Gold ...
by Larry
Edelson
With the critical mid-term
elections tomorrow weighing in the balance, it seems that most
investors are standing on the sidelines, waiting for something big to
happen.
But in my opinion,
they’re going to be sorely disappointed. Other than perhaps some
short-term market gyrations, the trends you’ve been witnessing
over the past few months will remain in place, only their momentum will
likely increase in the weeks and months ahead.
And no matter what the
Federal Reserve announces on Wednesday regarding its money printing
operations, don’t you be fooled by that either: The Fed, no
matter how much money printing it will announce, will always have the
ability to print more money. It also has a lot more ammo up its sleeves.
Having said that, I think
today is a great time to give you an objective update of my market
roadmaps for the Dow, gold and oil. They are cyclical charts based on
actual signals from my computer models.
I watch these signals very
closely because they tell me when a fork … speed bump …
an acceleration of recent trends … or even a U-turn is coming in
the markets. They are critical indicators, and they should not be
ignored.
They are based on 32 years
of research and development, and I can confidently say that the
economic models they are based on are right far more often than they
are wrong. They are my main forecasting tools.
My Latest Market
Roadmaps
I’ll start with
what’s on most investors’ minds: The broad stock
markets. I’ll give you the big picture, then my
proprietary signals to watch.
The big picture: All of my
indicators continue to strongly suggest that the March 2009 low at
6,469 in the Dow and 667 in the S&P 500 were major lows — and
that the broad stock markets are now back in long-term bull markets,
headed to new record highs by late 2015, early 2016.
That should not surprise
you, as I’ve often said here in my columns, that the markets
bottomed in 2009.
My models caught the
entire rally out of the March ’09 lows, predicting a move up in
the Dow to at least Dow 10,000 … and more recently refining the
target to Dow 11,256 — which is almost the exact high for the Dow
hit last Monday at 11,247, just nine points shy of my target.
That’s not to say
there won’t be any pullbacks in stocks going forward. There will
be. In the short term, I continue to believe the Dow will move down to
the 9,000 level heading into a low in April 2011.
But that’s about it.
For the next four years, the Dow and S&P 500 will swing up and down
in a very wide trading range, then blast off to new highs in late 2015.
You can see the projected pattern in this monthly S&P 500 cycle
chart.
Some key signals to watch:
In the Dow Industrials
…
11,256: A closing above
that level will lead to a rally to 11,887.19
Barring that, support
going into April of next year will be found at 9,034. In between those
two points ― 11,256 and 9,034 ― the Dow is essentially neutral in trend
on a long-term basis. A close above 11,887.19 is an all-out buy signal.
In the S&P 500, the
two key levels to watch are …
1,292.90 on the upside.
And 1,007.40 on the downside.
In between those two
points, the S&P will swing wildly, and is effectively neutral in
trend. I expect a test of the 1,000 level going into April of next
year, but any close above 1,292.90 is an all-out buy signal.
Now, gold:
Short term, gold is topping and likely headed into a cycle low due in
August of next year.
Yes, I know that sounds a
bit frightening. But there are a few things you should know about
cycles …
A. Cycles give you timing
windows for important trend changes. Not price levels per se. In other
words, a low in August of next year could simply mean that gold trades
sideways for several months, with the sideways trend ending in August,
and then gold blasts off again.
Given the Fed’s
massive money printing, which is likely to continue,
I don’t think gold has that much downside. More on that in a
minute.
B. Cycles can
“invert” — meaning when they project a low, a high
comes instead, and conversely — a projected high becomes a low.
This is precisely what
happened to gold in September 2008. The cycle projected a turning point
high. We got a low instead. But nevertheless, it was a turning point.
My main point: Even though
gold cycles are projecting a move down into August of next year —
the price action could simply be a sideways affair — or, if the
Fed gets really aggressive in its money printing, the August 2011
turning point could prove to be a high instead of a low.
So how does one tell if
cycles are on track, or, if they are going to invert?
That’s where my
reversal system comes into play, a proprietary model I developed in the
early 1980s.
If gold closes below
$1,246 — the cycles are correct, and we will likely see a move
down to the $1,126 level heading into August 2011. But that’s
about it for the downside in gold. Even in the worst of cases, I do not
see gold moving lower than that.
Which brings me to a very
important point: Even though gold could have topped on a short- and
intermediate-term basis — do not, I repeat DO NOT, let go of any
core gold holdings. Instead, use any upcoming weakness to add more gold
to your portfolio!
On the flip side, if gold
closes above its recent record high of $1,388.10 (basis the December
gold futures contract) at any time — the gold cycles are
likely inverting again, and gold will blast off and trend sharply
higher into August of next year.
So right now, in between
$1,246 on the downside and gold’s current trading levels —
gold is effectively neutral, neither in danger of falling sharply, or
taking off to the upside.
Now let’s
look at crude oil: Oil bottomed in late 2008, after a steep
plunge from its July 2008 record high of $147.
And oil is still very much
in a long-term uptrend. I expect it to reach an intermediate-term high
next September, somewhere north of $125 a barrel.
And then, after a decline
into 2012 — I expect new record highs in oil in November 2013.
Short term, for the next
few months, the price of oil is likely to continue to trade in a very
wide range defined by $84.55 on the upper end and $69.15 per barrel on
the lower end.
A weekly close above
$84.55 and I have absolutely no doubt we will then see $125 oil next
year.
Food for thought: Back in
1999, my cycle work in oil showed a major turning point due in black
gold in September 2001.
The cycles now show the
next major turning point for oil in September 2011. Could we be facing
another 911 (9/11/11) then?
I am not the superstitious
kind. But cycles do have an uncanny way of shedding light on the
future. In more ways than most would like to believe.
Keep the above signals and
turning points on your radar — even print this article out and
keep it by your computer … and most of all, stay tuned!
Best wishes,
Larry
This
investment news is brought to you by Uncommon Wisdom.
Uncommon Wisdom
is a free daily investment newsletter from Weiss Research analysts
offering the latest investing news and financial insights for the stock
market, precious metals, natural resources, Asian and South American
markets. From time to time, the authors of Uncommon Wisdom
also cover other topics they feel can contribute to making you healthy,
wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.
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Read
This Now ...
by Larry Edelson
Dear Fellow Gold Investor,
My apologies
for being so bold in the subject line. But this is one of the most
important columns I've ever written. Why? Because today I am going to
give you a major heads up on the trends I see unfolding over the next
few months.
More importantly, I am also
going to show you how those short-term trends are going to set the
stage for the longer-term trends that you're going to see unfold over
the next few years.
First, a warning: The
forecasts you're about to read are controversial, and many will say I
have lost my mind. No problem. Many have said the same about me
numerous times in the past.
But the forecasts I speak
of today are based entirely upon my proprietary trading models that are
unlike any other in the world.
And today is not the first
time my trading models have made spectacular calls. Since I developed
them in 1982, they have successfully guided me and the investors that
have followed me through every twist and turn in the economy and
markets:
Through the 1987 stock
market collapse, the ensuing bull market, the first Gulf War, the peak
in the broad markets in 1999, the crash of 2000—2003, the 2007
peak in stocks, the bull market in gold right from day one, the bear
market in the dollar, and more.
My systems flagged every
one of those events and major trends well in advance.
I point this out not to
brag, but merely to emphasize how important it is that you read on to
learn what my models are saying now, and how seriously their messages
should be taken.
They are not common
forecasts. They are not based on linear logic, but rather, on more
dynamic processes, which is what the markets themselves are. Dynamic.
So here are the forecasts
and what you should be watching ...
FIRST, the broad stock markets
will attempt one or two more rallies over the next three weeks. The Dow
may even get back to 10,700, or even nudge out a new high near 11,000.
But don't you dare be
fooled. The broad stock markets in the U.S. are now rolling over.
At a minimum, by November,
we will see the Dow plunge to at least 9,000, with a high probability
of falling to the 8,700 level.
But once you see the Dow
Industrials below 9,000 — start preparing for another big rally
in the markets, one that could last for years and eventually see the
Dow Industrials more than triple by 2015, and soar to anywhere between
27,000 and 44,000.
How could that ever happen,
you ask? Call me crazy. Call me nuts. But I've written about it before,
and that kind of stock market inflation has happened in nearly every
third-world and emerging economy on the planet.
The only difference is that
this time, it will happen in the FIRST world, and chiefly in the U.S. No matter what the economy
does.
Because very simply ...
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Look
for the Dow to plunge this fall ... then stage a long, sustainable
rally.
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SECOND, as the Dow plunges going
into November, the U.S. Federal Reserve will start printing more money
to inflate away the problems. No matter how much it takes. Whether it's
another one trillion, five trillion, twenty trillion, or even thirty
trillion dollars.
The Fed will do whatever it
believes necessary to try and turn things around.
It will stop at nothing.
The Fed, in the next round of this crisis, will even resort to more
extreme measures, such as supporting the U.S. bond markets — and
keeping interest rates at near zero — by forcing banks to buy
U.S. bonds (like the Fed did during WWII).
By reversing the existing
policy of paying banks interest on reserves parked at the Fed, and
penalizing the banks instead for not lending out to the economy ...
By slashing reserve
requirements, by restricting foreign capital outflows, and more.
All of this will be
ultimately designed with one end goal in mind: To massively DEBASE the
U.S. dollar.
You see, the Fed thinks
— rightly or wrongly, only time will tell — that by
devaluing the dollar and eventually inflating financial assets higher,
that trillions of dollars of wealth will be recreated.
Hence, from that will flow
new businesses, a wave of new innovation, millions of jobs being
brought back, millions more new jobs being created, real estate prices
appreciating once again, and more. In short, everything will be
hunky-dory once again.
As I said before, whether
or not the strategy works remains to be seen. I doubt it will. But
that's not my main point.
My main point is that if
you fight the Fed on this, you're going to lose your shirt.
So once you see the Dow
below 9,000, start getting ready to go LONG the market, because the Fed
is determined — and does have the ability — to inflate the
financial markets higher, much higher.
No matter what
philosophical or political bend you come from, if you want to protect
your wealth and grow it, don't fight the Fed on the
next plunge in the economy and the stock markets.
THIRD, gold will soon be giving
you the ultimate opportunity to buy — before it heads to way
north of $2,000 an ounce. The short-term cycles in gold point down into
late August, when I expect gold to fall below $1,100 an ounce. It
should, however, hold the $1,000 mark.
But no matter what,
thereafter, gold should explode to new record highs, most likely by the
end of the year — and then, through 2011 and 2012, march to at
least $2,300 an ounce.
By 2015, I expect to see
gold at near $5,000 an ounce.
The driving force will NOT
be inflation. That will come later, and will show up in the CPI, but
not for at least another couple of years.
The driving force instead,
will be the final recognition that the U.S. is broke beyond repair ...
that the Fed will print however many trillions of dollars it wants to
paper over the mess and retain control for as long as possible ...
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Don't
be surprised to see gold prices at near $5,000 an ounce by 2015.
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And that the
U.S. dollar is doomed as a reserve currency.
So start preparing for all
of this NOW, with the following steps. I cannot overemphasize them ...
Step 1: Minimize your exposure to
the stock market, right now. Get out of all stocks with the exception
of core gold shares and other select natural resource, tangible asset
stocks.
Later, in a few months,
when the Dow falls below 9,000 — I will tell my Real Wealth Report members
exactly how and what to get positioned in to capitalize on the Fed's
next aggressive moves, and the financial and tangible asset inflation
we're going to see.
Step 2: For any liquid cash you
have, not earmarked for gold, keep it in safe, liquid, short-term
investments such as money markets.
Or, use the strategy I've
outlined in some of my special reports, which involves buying the iShares Barclays TIPS Bond
Fund ETF (TIPS), but hedged by investing a third of
what you place in that fund into the inverse bond fund, the Direxion Daily 10-Year
Treasury Bear 3X Shares (TYO).
Step 3: If you don't use the
upcoming weakness in the gold market to buy or add to positions, I
think you could be making a huge mistake.
The best way to buy gold,
in my opinion, is the SPDR Gold Trust ETF (GLD).
Each share represents 1/10 of an ounce of gold. When you buy this fund,
it's like buying a mutual fund, but one that holds only physical gold.
Plus, you eliminate storage and shipping worries because the gold is
held in trust for you.
Or, if you'd rather buy a
gold stock mutual fund, consider the Tocqueville Gold Fund
(TGLDX). As an alternative, look at the Market Vectors Gold Miners
ETF (AMEX: GDX). This single investment holds 10 of the
largest gold miners in the world.
No matter what you do, I
urge you to stay open minded and think dynamically going forward. That
means not accepting the status quo, not accepting mass hysteria, not
following old models and old economic rules, and using "uncommon
wisdom". Period.
That will be the only true
way to both psychologically and financially survive not just the next
few months, but also the next few years.
All the best,
Larry
This
investment news is brought to you by Uncommon Wisdom.
Uncommon Wisdom
is a free daily investment newsletter from Weiss Research analysts
offering the latest investing news and financial insights for the stock
market, precious metals, natural resources, Asian and South American
markets. From time to time, the authors of Uncommon Wisdom
also cover other topics they feel can contribute to making you healthy,
wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.
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