News & Views
Forecasts, Commentary & Analysis on the Economy and Precious Metals
Celebrating our 42nd year in the gold business

April, 2014

USAGOLD's NEWS & VIEWS newsletter
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Extension # 100

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News & Views is the contemporary, web-based version of our client letter which traces its beginnings to the early 1990s as a hard-copy newsletter mailed to our clientele. The "Big Breakout of 1999" headlined in the November, 1999 issue of our newsletter moved the gold price from $250 to $325 per ounce. It was a major event.

The times have changed, but our mission has not. Simply put, it is to deliver value to our readers in the form of cutting-edge Forecasts, Commentary and Analysis on the Economy and Precious Metals. The very same mission that has been displayed in our banner for over twenty-five years.

Editor: Michael J. Kosares, founder of USAGOLD and author of The ABCs of Gold Investing - How to Protect and Build Your Wealth With Gold.

Pullbacks-retracements study points
to solid gold buying opportunity

We encourage our clientele to take a long-term view on gold and resist the temptations of short-term thinking. Gold is not like other investments where profit is the primary consideration. Gold is an investment, but it is also portfolio insurance. In fact it acts as an investment for some because of its demand as a safe haven by many. By encouraging the long view though, we do not mean to diminish the importance of timing one's purchases. It is always nice to acquire one's insurance when the price is right. It just so happens, if a recent World Gold Council study is to be believed, that now might present one of the better opportunities in recent years to add gold to one's portfolio.

The Council studied twelve gold price pullbacks of 20% or more since 1970, the year before gold-backing was removed from the dollar and gold and currencies were allowed to fluctuate. The average length of those corrections was 18 months. The study then took into account the ensuing rebound over a matching time period. In each instance, gold appreciated smartly. The biggest retracement on record came in 1973 -- 196% over a thirteen month period; the second largest came in 2008 -- 88% over a short 7 month period.


The most recent 37% correction (that many feel ended late 2013) lasted 28 months. If we apply the 69% average retracement figure to the $1185 bottom that came in December, 2013, it would put the gold price back at the $2000 per ounce level sometime over the next two years.


Goldman Sachs' slam dunk missed call on gold
Blame it on the weather

Goldman Sachs recently stuck with its call for gold to end the year at $1050 per ounce. Last summer when gold was trading in the vicinity of $1200 per ounce, Jeff Currie, the man behind the Goldman bearish prognostication, called the precious metal a "slam dunk SELL for 2014." Instead, gold started 2014 with a strong surge to the upside -- moving from the $1200 level to almost $1400 per ounce in the first quarter of the year. Defying Goldman's brash call, gold became the slam dunk BUY of 2014 -- outperforming most other primary asset classes by a wide margin and still up 7.5% on the year even after its recent correction. The Standard & Poor's stock index by comparison is up 1.8% on the year.

Now Currie says he is sticking with his prediction and blames gold's unexpected rise (in his view) on the weather and tensions in the Ukraine, both of which created, he says, a "transient" effect. Currie ignores the fact that gold's rise was firmly entrenched long before the mess in Ukraine. As for the weather, he might be confusing gold with commodities like corn or wheat or natural gas prices, where weather has been known to play direct role in availability and pricing. If Mr. Currie wants to get closer to the truth on why gold made its early year run to the upside, he might consider the public unveiling of new Fed chair Janet Yellen as an avowed and incurable monetary dove -- a non-transient effect likely to be with us for a long time to come.

Currie also makes this odd disconnect in that analysis: "While further escalation of tensions could support gold prices, we expect a sequential acceleration in both U.S. and Chinese activity, and hence for gold prices to decline." I am assuming the activity he is talking about is economic activity . . . . . And here we were all under the illusion that it was the slowdown in the Chinese economy that was hurting gold demand and the price. One wonders what they are putting in the water cooler at Goldman.

Gallup poll ranks gold second best long-term investment

A recent Gallup poll ranks gold the second best option among long-term investments behind real estate and tied with stocks. What makes gold's poll performance interesting is that it reflects public opinion on gold after a more than two year decline that began in 2011 and at a time when real estate and stocks have enjoyed strong performances. In 2011, after ten straight years of annual gains, the public ranked gold the number one investment. Prior to 2011 gold was not included in the Gallup survey. Polls notoriously reflect the ebb and flow of public opinion and for gold to still rank second after a two year drought indicates a swing in the public's long-term attitude toward gold. The very fact that Gallup chooses to include gold in its annual survey speaks to a gain in stature since the secular bull market began in 2003. Of the sample, 24% named gold the top investment and 24% chose stocks. Real Estate topped this year's poll at 30% and bonds, perennially the least popular long-term investment, again finished last at 6%. When broken down across the political spectrum, gold was named the top investment by 26% of Republicans, 25% of Independents and 10% of Democrats. By contrast, stocks were named first by 26% of Republicans, 19% of Independents and 30% of Democrats.

Press' anti-gold scare tactics largely ineffective

Under normal circumstances, I might let a rutty headline about gold in the Financial Times pass without much notice. I say "rutty" because the Financial Times has long been stuck in a rut as one of the principle apologists for Keynsian economics -- big banks, big deficits, big governments and powerful central banks. It doesn't think much of gold enthusiasts and gold enthusiasts do not think much of it. (Although I still read it every morning.)

When I took-in the headline -- Bumpy ride in store for gold with price forecast to fall 15% -- with my morning coffee, my first reaction was to disregard it, as I do most of the day-to-day, routinely negative Financial Times' reports on gold. Scanning the article (with the hope some nugget of important information might be gleaned), something tugged at the back of my mind with respect to the entities referenced -- Gold Fields Mineral Services (GFMS), Goldman Sachs and Credit Suisse. All three obviously were predicting 2014 would be a bad year for gold. What was nagging was their near-term record in the art of gold forecasting.

bumpy rideSo I went to the trouble of backtracking some of their most recent predictions on the gold market:

* GFMS, for example, predicted last April that gold would once again visit the $1800 per ounce level before year end. At the time, the metal was trading in the $1600 per ounce range. It promptly revisited the $1200 level instead.

* Goldman Sachs, at the end of 2013 (as discussed in an earlier piece above), predicted gold would fall to $1050 an ounce in what it called the "slam dunk sell for 2014." Gold at the time was trading in the $1200 per ounce range. Gold promptly jumped to nearly $1400 per ounce in the first quarter of 2014 and is trading in the $1300 range as this is written -- roughly 25% higher than Goldman's prediction.

* Similarly, Credit Suisse predicted in May of last year that gold would get "crushed" and drop to $1100 per ounce by the end of 2013. Gold did hit $1200 per ounce shortly thereafter, but turned around to trade back at the $1300 level by year end. In that same forecast, the bank's Ric Deverall observed: "When gold is going up, it looks like a great idea to buy more gold. And when it's going down, do you really think risk-averse central bankers are going to try and catch the knife? No." The jury is still out on whether or not China's secretive central bank endeavored to catch the falling knife in 2013, but central banks in general did purchase 368 tonnes -- down from 2012's record year (545 tonnes). Contrary to Deverall's assertion, central banks do buy gold when the price is falling.

The first lesson to file for future reference is that major banks with huge balance sheets and big-name consultants do not necessarily have a better crystal ball on the gold price than anyone else. The second is that, when it comes to gold reporting, one should not accept as gospel everything one sees or reads in the mainstream media. Its traditional anti-gold bias bleeds from its pages, so to speak, and should be taken with a grain of salt.

The mainstream media, for whatever reason, continues to believe that it can scare potential gold owners away with its consistently negative coverage. As the Gallup Poll cited immediately above suggests, such tactics no longer work all that well. A full 24% of the public still believes gold to be the best long-term investment despite the efforts of those who would like it think otherwise.

Now. . . . with that out of the way, back to my coffee and the weekend edition of the Financial Times. . . . .

What Ben Bernanke learned at the helm of the Fed

"This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises." - Ben Bernanke, private citizen.

okTranslation for those who haven't spent the last several years restructuring FedSpeak into passable English:

"This will sound ridiculously obvious, but the U.S. is vulnerable to financial crises."

What is astonishing about this comment is that it was required of the Fed to learn the obvious, or that people of Bernanke's caliber might have somehow believed that it might be otherwise. The ancient Greeks warned heavily against this sort of thing and called it hubris. Bernanke, with studied aplomb, drops the comment as if he were on the evening news explaining his latest blown call on the weather. Alan Greenspan, you might recall, also made statements recently to the effect that he didn't understand what was going-on in the U.S. economy during his turn at the helm. One wonders if a properly algorithmed computer might be the answer. . . At least we wouldn't have to listen any longer to retired Fed chairman attempting to explain what they learned (or failed to learn) by doing, instead of bringing it to the table when they took the job.

The Ed Stein cartoon above first made its appearance at the USAGOLD website in July, 2010. It more or less captured the moment. Needless to say, this lack of rudimentary understanding heightens the need for gold ownership in the personal portfolio.

Link Reuters

Fed now the largest hedge fund in the world
Why the former head of the Federal Reserve's QE trading room owns gold

Andrew Huszar, formerly a managing director at Morgan Stanley and the man who set up the Fed's trading room to run the quantitative easing program, now believes that the Federal Reserve has set a dangerous course for America and the world. In this surprising interview at King World News, he reveals the Fed's deep involvement directly in markets and explains why he now includes gold in his own investment portfolio.

"I think when you see the Fed go from having a balance sheet of $800 billion to $4 trillion in the span of five years, and pump over $4 trillion of cash into Wall Street, you've seen a lot of cash liquidity flowing throughout the world. I would argue that the markets have become addicted to the liquidity that the Fed is pumping out there.

So when you pull back any punchbowl this big you are going to see substantial issues. We saw this first last summer when the Fed initially talked about a taper and we saw a $5 trillion global equity market selloff. In January, in anticipation of the second QE cut by the Fed, you saw more volatility in the emerging markets.

I think what you are going to see in 2014 is the unintended consequences of this stimulus hit as the Fed tries to pull it back. ... At this point the Fed effectively owns 30% of the US Treasury market, it owns 10% of the housing market, it has become what is effectively the biggest hedge fund in the world.

You have a lot of hawks on the Federal Open Market Committee (FOMC) who are confident they can pull back (on QE). I think the Fed will be surprised again -- by what happened in the emerging markets, for example, spreading to the US markets. I believe the idea that the Fed would finish QE by the end of 2014 is unrealistic.

The volatility in the markets will be a rollercoaster ride. If the Fed really sticks to its guns, I think we could see a 20% - 30% selloff in the US (stock) market pretty easily in the course of a few months. ... If the market really believed that central banks around the world were going to step away meaningfully, and there was no so-called 'Greenspan/Bernanke/Yellen put' in the market, I believe you could see far more dramatic declines."

Huszar also points out that the Fed is now buying 90% of newly issued mortgages. Pete Grant, our resident economist, has repeatedly expressed his doubts about winding up the QE money printing program at the USAGOLD Blog page and in his Daily Market Report. We invite you to visit these pages daily to stay informed on the gold market and all that affects it. . .

Spring, 2014: Market opportunity, danger abound

I do not write often about specific trading strategies simply because I believe that gold is essentially a safe-haven asset – a buy and hold item and one of the premier armchair investments given the times. Those who choose to make gold a "trade", do so at their own risk. At the moment, however, we have an important confluence of trends that I believe can be exploited by the contrarian investor.

The following chart summarizes that opportunity:


As you can see the S&P Stock Index and gold price have crossed at roughly the 1575 level. The chart suggests an arbitrage opportunity likely to whet the appetite of those who believe gold's downside was a pause in its secular bull market and stocks' upside the result of a bubble created by the Fed money-printing process.

Financial Times closed 2013 with a warning that "half of all UK money managers believe that stock prices are in a bubble territory." In that same survey, two-thirds of money managers considered corporate bonds "richly priced." Simultaneously, gold is coming off its worst year in the past thirteen – down nearly 30% from the beginning of 2013 and over 35% from its all time high.

Taking a closer look at recent stock market activity, the Wall Street Journal ran a largely overlooked article at the end of December describing how many private equity firms "are set to return a record amount of cash to their investors for 2013, after taking advantage of buoyant markets to sell hundreds of billions of dollars of investments." One private equity manager summarized the attitude of many insiders by saying "There's a time to reap and there's a time to sow. We are selling everything that isn't nailed down."

Though private equity firms operate in the securities of companies not publicly held, the sentiment can be applied readily to publicly traded stocks and bonds. Too often, the small private investor is late to arrive for the party and late to leave while their more seasoned professional brethren tend to do just the opposite. If there is significant selling going on among the professionals, it might be time to take note.

As for gold, one recalls the ultimate contrarian advice of Nathan Mayer Rothschild, who made more than one fortune in the financial markets in his lifetime. The time to buy, he counseled "is when there is blood in the streets – even if the blood is your own."

If the contrarian in you agrees with the assessment that there is a time to reap and a time to sow, as stated above, the time might be right to reap some stocks and sow some gold as we move into Spring 2014. Of course there is always the presence of danger in such undertakings, the stock market could very well continue trekking higher while gold continues to trend lower. In such matters, it always the duty of each investor to make his or her own assessment, but perhaps some judicious portfolio rebalancing makes sense at this juncture.


Notable & Quotable

"We believe that the architecture of the gold market is set to undergo significant change in the current year and that these changes, which have little to do with macroeconomic considerations, will result in attracting capital flows. These changes begin with inquiries by regulatory authorities in Germany and the United Kingdom into possible price manipulation by bullion banks in connection with the London fix mechanism for gold. These inquiries have been followed by lawsuits seeking damages for plaintiffs possibly injured by price manipulation. We believe many other lawsuits could follow." -- John Hathaway, Tocqueville Funds

"[B]ecause we've had monetary policies throughout the world over the past 5 years that are completely unprecedented, particularly on the part of central banks, who knows what the unintended consequences might be over the next few years? What I am saying is that there is a need for protection against potentially extreme outcomes, and that is exactly the type of protection that gold offers." – Jean-Marie Eveillard

"For the last four years my best performing asset has been fine art. Not everyone can spend $100 million on a Picasso, I certainly can't, but there are some very good funds where you can invest significant amounts of money and the fund managers will pull the money, buy the art, over time sell it and distribute the proceeds. So, that has been a very good performer . . . Land has done very well. Cash has a place in the portfolio. People are surprised to hear me say that. They say, 'Hey Jim, you're talking of The Death Of Money why would you have cash?' And, the answer is, you might not have it forever but it is a good hedge against deflation. You know I'm warning about inflation, but deflation is a danger. Cash also gives you a lot of optionality; the ability to jump into something else when you want to. So, I would say a mix of silver and gold, land, fine art, cash and some alternatives, some hedge funds, carefully selected. That's a good portfolio that will stand up to these kind of crises that I expect." -- James Rickards, The Currency Wars

"Silver is now dirt cheap and is beginning to trend up. Personally I have been buying US silver Eagles for myself. If it can reach 21, silver will have hurdled both of its moving averages." Richard Russel, Dow Theory Letters at King World News

"According to Forbes Asia, the China Gold Association showed that China's gold consumption increased by 41 percent over 2012 to 1,176 tonnes in 2013. (China does not publish official numbers so discrepancies range in the hundreds of tonnes) Adding these imports to China's domestic production of 428 tonnes indicates that China accumulated at least 1,604 tonnes last year. India's imports, as reported by Bloomberg, were 978 tonnes last year. Therefore, China and India together accumulated 2,582 tonnes or over 86 percent of total worldwide production of 2,982 tonnes. Furthermore, combining China's aggregate domestic production and apparent imports indicates that she has now over 3,514 tonnes. Assuming the U.S. still owns all the gold held by the Fed, this would make China the world's second largest national owner." - John Browne, Euro Pacific Capital

"The most hated asset class in 2013 has become one of 2014's darlings: gold. Since the start of the year, gold has outperformed the S&P 500 (^GSPC) by 10%, and is finally showing a technical breakout by getting upside of the 200dma (200-day moving average), a first in a year. Given gold is used as a 'inflationary hedge,' many market watchers have been shocked by the rally, as deflation, not inflation, seems to be in the headlines globally. Gold could easily regain the $1600/oz level in 2014, a level it has not seen since the dreaded 'taper' word crushed the commodity last year." -- David Lutz, Stifel Nicolaus

"Money is a perpetual, non-interest bearing liability issued by an insolvent central bank." -- James Rickards, The Currency Wars

"Bernanke got the party going and like a lot of men, left the mess for a woman to clean up. So far, it seems Janet Yellen's words don't carry quite the same weight as her wizard predecessors and the market Toto has a firm grip on the curtain hiding the levers of monetary policy. So the outlook for the economy is decidedly uncertain right now and I think so is the confidence in Janet Yellen. I think the more dire outcome for stocks would be if Toto fully pulled back the curtain on monetary policy and revealed it to be nothing more than a bunch clueless economists sitting in a conference room with no ability to control the economy or the markets." -- Joseph Calhoun, Alhambra Partners

"If you are not Professor Paul Krugman you probably agree that Washington has left no stone unturned on the Keynesian stimulus front since the crisis of September 2008. The Fed's balance sheet started that month at $900 billion–a figure it had accumulated mostly in dribs and drabs over the course of its first 94 years. Bubbles Ben then generated the next $900 billion in 7 weeks of mad money printing designed to keep the tottering gambling halls of Wall Street afloat. And by the time the "taper" is over later this year (?) the Fed's balance sheet will exceed $4.7 trillion." -- David Stockman

"I think it's very likely that we're seeing, in the next 12 months, an 1987-type crash .. And I suspect it will be even worse .. it's not a very good time right now to buy stocks." - Dr. Marc Faber

"In the past, central bankers felt like lonely warriors whose primary task was to hurl a powerful 'no' at politicians at just the right moment. Today the comparison they are more likely to use is to explorers like Vasco da Gama, who discovered the sea route around the Cape of Good Hope in the 15th century. We are sailing through unfamiliar waters, says [Dallas Fed's Richard] Fisher, and we don't know if we will end up falling off the globe." -- Michael Sauga and Anne Seith, Der Spiegel (Out of Ammo, The Eroding Power of Central Banks)

"The point is there are 4 billion people in Asia who have got a very old-fashioned view of gold, and they have become wealthy over the last twenty years. And their view is likely to prevail against the ~1 billion of us in North America and Western Europe. I mean it really is as simple as that. It's not a question of Austrian economics, or Keynesian, or whatever. We're outnumbered."-- Alasdair Macleod,

"[T]o me, the very first line of the introduction of [Michael Lewis'] Flash Boys is the most intriguing thing in the whole book. Why do I think that? Because it's a topic I wrote about a number of times in 2009 when a guy named Sergey Aleynikov, who developed high-frequency trading programs, was arrested by the FBI for stealing computer code from his employer, Goldman Sachs. Lewis writes: 'I thought it strange, after the financial crisis, in which Goldman had played such an important role, that the only Goldman Sachs employee who had been charged with any sort of crime was the employee who had taken something from Goldman Sachs.'

And -- this is the drumroll moment -- Lewis (as I did in my 2009 columns) quotes an FBI agent who said that in the wrong hands, the computer code Aleynikov allegedly stole could be used to 'manipulate markets in unfair ways' 'Goldman's were the right hands?' Lewis asked. As Lewis points out, everything the FBI agent knew about high-frequency trading he learned from Goldman. . . Lewis doesn't get into this, but I think Goldman by 2008 had been using its high-frequency trading program to rig the stock markets. And -- this is the most important part -- it was doing so with the blessing of Uncle Sam, hence the FBI's attentiveness." -- John Crudele, New York Post

"Princeton professor Harold James sees echoes of events before the First World War when Britain and France imagined they could use financial warfare to check German power. He says the world's interlocking nexus means this cannot be contained. Sanctions risk setting off a chain-reaction to match the 2008 shock. 'Lehman was a small institution compared with the Austrian, French and German banks that have become highly exposed to Russia's financial system. A Russian asset freeze could be catastrophic for European – indeed, global – financial markets,' he wrote on Project Syndicate." -- Ambrose Evans-Pritchard, The Telegraph (From article titled US financial showdown with Russia is more dangerous than it looks)

"In 2001, as the painful end of the long stock bull market finally seeped into my consciousness, I began to grow quite concerned about my traditional stock and bond holdings. Other than a house with 27 years left on a 30 year mortgage, these paper holdings represented 100% of my investing portfolio. So I dug into the economic data to discover what the future likely held. What I found shocked me. It's all in the Crash Course, in both video and book form, so I won't go into that data here; but a key takeaway is that the US is spending far more than it is earning, and supporting that gap by printing a whole lot of new money.

By 2002, I had investigated enough about our monetary, economic, and political systems that I came to the conclusion that holding gold and silver would be a very good idea. So I poured 50% of my liquid net worth into precious metals, and sat back and waited. So far so good. But the best is yet to come… unfortunately. I say 'unfortunately' because the forces that are going to drive gold higher in current dollar terms are the very same trends that are going to leave most people, and the planet, much worse off than they are now." -- Chris Martenson, Peak Prosperity

"China has begun allowing gold imports through its capital Beijing, sources familiar with the matter said, in a move that would help keep purchases by the world's top bullion buyer discreet at a time when it might be boosting official reserves. The opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong's pole position in China's gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying. China does not release any trade data on gold." -- A. Ananthalakshm, Reuters-Singapore

Short & Sweet . . . . . . . . . . . . . . . According to Der Spiegel, the German magazine, the world's top central bankers including Janet Yellen and Mario Draghi meet secretly at the Bank for International Settlements once every six weeks . . . . . . . . . . . . . . . . . .Despite importation curbs, gold inflow for India was 962 tonnes with smuggling accounting for 179 tonnes, according to Gold Fields Mineral Services. "India's gold import has started up again," says GFMS, "and with any rupee-denominated price drop, strong buying can be expected.". . . . . . . . . . . . .Also according to GFMS, worldwide jewelry, coin and bar demand were up a strong 24%. . . . . . . . . Apparently when the price dropped last year, people bought. . . . . . . . . . . . . . . . . . The influential British research firm Chatham House says "Gold can serve as a hedge against declining values of key fiat currencies, and can be useful for central banks looking to diversify their foreign reserves.". . . . . . . . . . . . . . . . . . .Mysteriously little Belgium has rocketed to third place as a buyer of U.S. Treasury debt just behind China and Japan and just ahead of Caribbean banking centers. . . . . . . . . . . . .Much speculation centers around Belgium's sudden appearance near the top of Treasuries' buyers list, but one explanation caught my eye: It seems the Fed is tapering through Belgium what it cannot taper in the United States. After all the federal government behemoth still needs to be fed. . . . . . . . . . . . . . Bank of America's profits for the first quarter were wiped out by legal fees, settlements and fines stemming from its questionable mortgage loans. Since 2008, BoA has paid out over $50 billion to cover its legal woes. . . . . . . . . . .Other banks find themselves in similar straights -- investigations into foreign exchange manipulation, interest rate rigging, price fixing in the gold market and now run-ahead high frequency trading (as well as gathering tsunami in associated private lawsuties) are sure to create even deeper problems for the banks in the weeks and months to come. . . . . . . . . . . . . . .. . . . . . .The market for Japanese bonds is drying up at ultra-low, Abenomic driven yields. Recently its 10-year bond did not attract a bid for nearly two days. . . . . . . . . This translates to one buyer for Japanese bonds. You guessed it - the Bank of Japan. . . . . . . . . . . .Charles Schwab: "High frequency trading has run amok and is corrupting our capital market system by creating an unleveled playing field for individual investors and driving the wrong incentives for our commodity and equity exchanges.". . . . . . . . . . . . . . . . . . . . .Nine out of the ten most commonly held jobs in the United States pay less than $35,000 per year, according to the Bureau of Labor Statistics. Nursing was the only top job that paid more -- $69,000 per year. . . . . . . . . . ."The price of beef has reached its highest level in almost three decades, $5.28 per pound in February, and is expected to stay that way for some time amid growing demand in some Asian countries and droughts that have plagued some U.S. farmers," reports Time magazine. . . . . . . . . . . . . . . . . . . . . . . . . Earlier in this newsletter we cited a Gallup poll on Americans' preference on long-term investments. Gallup also released a poll recently on Americans' confidence in federal leaders with respect to the economy. In that survey 57% indicated "little to no" confidence in the president. Dismal a showing as that was, 61% had little to no confidence Congressional Democrats would recommend the right thing for the economy and 71% registered little to no confidence in Congressional Republicans. . . . . . . . . . . . . . . . . Now-retired Securities and Exchange Commission trial attorney James Kidney says his bosses were too "timid and fearful" to bring charges against Wall Street Executives in the aftermath of the financial crisis. Kidney says the SEC has become an agency "that polices the broken windows at street level but rarely goes to the penthouse floors". . . . . . . . . . . . . . . . . . . . .Well-known market analyst Bill Bonner: "We buy stocks when they are cheap, not expensive, relative to their historic average. And on a CAPE (Cyclically Adjusted PE Ratio) of 24.7, the S&P 500 now trades at a 50% premium to its historic average CAPE of 16.5. My advice: Get out. And stay out, until the index is cheap again." . . . . . . . . . . . .And with that timely piece of advice, we bring this issue in for a landing. . . . . .Happy Trails until we meet again. . . . . . MK


Michael J. Kosares is the founder of USAGOLD and the author of "The ABCs of Gold Investing - How To Protect and Build Your Wealth With Gold." He has over forty years experience in the physical gold business. He is also the editor of News & Views, the firm's newsletter which is offered free of charge and specializes in issues and opinion of importance to owners of gold coins and bullion. If you would like to register for an e-mail alert when the next issue is published, please visit this link.

Disclaimer - Opinions expressed on the website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the the accuracy, timeliness or completeness of the information found here.

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