Fear in the Streets - The Real Deal
You may recall our previous article in August
2007, “Fear
in the Streets – A Dress Rehearsal”.
Well it looks like now the fat lady has not only
warmed up but is singing and hitting that high C. This time the
fear is real with IndyMac Bank in California disappearing, and
Freddie Mac and Fannie Mae under a great deal of stress. Yes, more
government bailouts which will cost billions and even more reason
for a U.S. Dollar collapse. So, the credit and liquidity crisis
continues, the economy slows, oil remains high and inflation is
rising in the world setting the stage for much higher prices for
gold and silver in the coming months and years.
As a brief, refresher, in our original article,
we said….”as we write this article it appears that fear is abating
and that the financial markets are getting back to business as
usual. Nevertheless, one major piece of bad news could send the
markets tumbling once again. So, have we just witnessed the worst
of the market declines or was this just a dress rehearsal for
a much more severe and perhaps catastrophic decline ahead?
None of us has a crystal ball going forward from here, but we as
investors continue to seek opportunities always aware of the
potential short term downside risk.”
On the charts below, you can see that back in
August of 2007 the S&P 500 plunged down to 1375 and then rebounded
to new highs in October. Gold was trading in the $650 - $700 range
and the U.S. Dollar was trading around 80 to 82.
If you dare, look where we are now.
The S&P 500 has traded down to touch 1200, what a
nasty looking chart. The U.S. Dollar has fallen out of bed and is
now at 72. Some are still looking for a dollar rally. To me from
the chart below, we have already had the ‘rally’ up to 74 and are
will be breaking out to new lows soon.
The bright spot, as it should be, is our
favorite, gold. On balance, gold has performed exceptionally well
recently and appears to be coming back into favor as the defense
hedge for investors. Gold hit $1030 in March, then fell back to
around $850 and now we are back on track with gold in the $960 range
as we close this article. Even a couple of days ago on CBNC, some
of the fast money boys were talking positively about gold. Of
course, it only takes a $20 pullback and these guys think the party
is over and run for cover.
What I take away from the charts is that the S&P
500 is due for at least a brief rally before heading lower and gold
is due for a brief correction which is exactly what is currently
happening.
This time the fear is real and the possibility of
a meltdown is possibility is real. It is getting scary and you must
make some tough decisions. Do I go down with the ship (financial
markets) or get into gold, silver or related assets? Your financial
survive may be at risk and as we like to say, ‘no time to hide, your
needed on deck’.
Each investor must decide for themselves in which
markets or sectors to invest and then make some informed decisions
as to which specific stocks, ETF, etc., to purchase.
Probably most readers on this website are
already on board the train for the bull market in gold. Where else
can you be in these treacherous times? But I realize that many
investors, including myself, having purchased the junior mining
shares have questioned our strategy over the last 2 years or so. It
is not been pleasant and frankly, with the incredible drawn downs on
many of this stocks, I am sure many investors have run to the exits
only to return in the coming weeks and months at much higher prices.
For those of us who have been around for awhile, we realize that
things change and they can change very fast in junior mining
sector.
There are so many reasons for the juniors to be
down; from the high energy costs to the shares falling with the
general markets, but we continue to believe the future rewards will
be outrageous. We see the next great opportunity from September
into perhaps the first half of 2009 with the juniors finally having
an incredible run.
We have recently seen some of the senior mining
shares doing very well and a few hitting new highs and we believe
this is setting the stage for the next leg up with the juniors
following or perhaps leading. So, we suggest investors continue to
accumulate shares in quality companies. Good management, good
properties and cash in the bank are essential. If the companies you
like have long-term warrants or LEAPS trading, we suggest you give
them serious consideration. There are many great companies with
warrants in our database, and one with a remaining life of 9 years,
and several producing properties. In addition, for our subscribers,
we have just completed our database for all natural resource
companies having options or LEAPS, giving investors access to more
great companies and leverage opportunities.
A necessary skill for investors during this time
is patience. In the coming weeks and months we suspect that fear
will become our friend, driving many investors into our sector for
the first time. Inflation is now in the daily news and everyone
will soon know that they must have gold or silver in their
portfolios.
For those readers desiring more information on
warrants you may wish to visit
www.PreciousMetalsWarrants.com where you will find much more
information and education on warrants.
July 17, 2008
Dudley Pierce Baker
Guadalajara/Ajijic, Mexico
Email:
info@preciousmetalswarrants.com
Website:
PreciousMetalsWarrants
Dudley Baker is the
owner/editor of Precious Metals Warrants, a market data service
which provides you with the details on all mining & energy companies
with warrants trading on the U. S. and Canadian Exchanges. As new
warrants are listed for trading we alert you via an e-mail blast.
You are provided with links to the companies’ websites, links to
quotes and charts, tips for placing orders and much, much more. We
do not make any specific recommendations in our service. We do the
work for you and provide you with the knowledge, trading tips and
the confidence in placing your orders.
Disclaimer/Disclosure Statement:
PreciousMetalsWarrants.com is not an investment advisor and any
reference to specific securities does not constitute a
recommendation thereof. The opinions expressed herein are the
express personal opinions of Dudley Baker. Neither the information,
nor the opinions expressed should be construed as a solicitation to
buy any securities mentioned in this Service. Examples given are
only intended to make investors aware of the potential rewards of
investing in Warrants. Investors are recommended to obtain the
advice of a qualified investment advisor before entering into any
transactions involving stocks or Warrants.
