 Metals Soar
Howard Ruff
The Ruff Times
Posted Nov 23, 2009
We have had a rather spectacular
three weeks. Gold has soared to over $1,140, and silver is over
$18. We can enjoy our profits.
The mining stocks have done
even better. My analysis in the last Ruff Times of our Investment
Menu has attracted a lot of attention. I will do some major TV
shows this week.
I was on CNBC, C-Span and Bloomberg.
The email letter, below,
deals with something a lot of people have asked me about.
How will I know when to get
out of mining stocks and switch entirely into bullion?
That assumes that this is just
an investment call and I will find some technical analysis method
that will tell me those things have topped out. Not so!
This is not a market call.
It is not just because I am selling things because they have
topped out; it will be because I am worried about the actual
functionality of the stock market that gives you liquidity. Ready
the following email and my explanation.
I do not rely a great deal
on technical indicators and charts when making decisions like
this. I am a fundamentalist. I try to react to the fundamentals
as I see them.
The major fundamental is almost
beyond comprehension - the functionality of Wall Street and the
U.S. dollar.
The dollar is supposed to be
a means of exchange and a store of value. While it is still a
means of exchange so you can convert to dollars and back into
whatever you want, it has ceased to be a store of value
a long time ago. If you measure inflation by the price of gold,
the dollar has been crashing and burning, first at a slow rate
(creeping inflation), and then at an accelerating rate (now and
in the future).
That recommendation is not
as much an investment recommendation as it is a survival recommendation.
When the stuff really hits the fan, you will have reserved much
of your assets with gold and silver coins.
The rest of the things I recommend
are for profit only, which is not to be sneezed at, especially
when we are doing so well. But your coins and bullion are not
part of that process. They are seriously outperformed by the
mining stocks. If profit is all you are interested in, that's
the place to be. But if you are not just interested in profit,
but in the preservation of your wealth in the age of Obamanomics
and the protection of your family's resources, then gold and
silver are survival investments, not just profit investments.
Dysfunctional Attitudes
Howard,
In the last issue of The Ruff
Times you made a comment that we should get out of your gold
and silver mining stock and convert to gold and silver coins.
Now, I believe you also said the stocks were ok for the immediate
future but you would keep us informed. Since the mining stock
is doing so well at this time it's very difficult to convince
myself to sell. What signs should I be looking for as an indication
it's time to sell? Will you let us know at what point we
must sell our mining stock, while we still can, and keep the
terrific gains we've seen?
Doug
Dear Doug,
You have raised several issues.
One thing I would like to comment on is a relatively dysfunctional
attitude. I thought the road to success was to buy and sell high.
Now you are concerned that if you have too much profit "it's
very difficult to convince myself to sell."
But let's set that aside for
a minute. You asked what signs you should be looking for as an
indication it's time to sell. This is not necessarily a market
call. I am concerned about the fact that with the financial world
turned upside down there is a possibility there might not be
a functioning stock market. After all, the government is controlling
Wall Street, and when is the last time they did anything right?
That is when I will suggest we sell our mining stocks and shift
our folios more heavily towards coins and bullion.
If you are doing this right,
you will not only nail down big profits, but preserve your spending
power with gold and silver bullion and coins. A balanced portfolio
should be based in coins and bullion. The only question is, "will
you not want to keep the terrific gains even if everything becomes
illiquid in a collapsing stock market?"
I can't tell you what now signs
I will look for that will indicate it's time to sell, except
that I will monitor the stock market. When it shows signs of
becoming dysfunctional, I will want to convert my holdings into
the only things I'm sure will not be dysfunctional if everything
goes to hell in a hand basket.
In the meantime, a balanced
portfolio will have some mining stocks, but it will be grounded
in bullion and coins. If you are only profit oriented,
and are only concerned with profits, and have not also
converted some of your assets into coins and bullion to protect
yourself against the possibility of a collapsing dollar and a
dysfunctional stock market, you're out of balance.
###
Howard Ruff
email: corporate@rufftimes.com
website: www.rufftimes.com
Howard J.
Ruff,
the legendary author and financial advisor, has re-edited and
re-issued his 1978 mega bestseller, How to Prosper During the
Coming Bad Years, still the biggest-selling financial book
in history, with 2.6 million copies in print. He is founder and
editor of The Ruff Times financial newsletter. This article
is from The Ruff Times. The newsletter is much more comprehensive
and deals with a broad spectrum of middle-class financial issues
and includes an Investment Menu from which you can build your
portfolio. (You can learn about it here). The Ruff Times has served more than
600,000 subscribers - more than any financial-advisory newsletter
in the world. His updated and revised book, How to Prosper
During the Coming Bad Years in the 21st Century, is in book
stores or at www.rufftimes.com. You can get it free
when you subscribe to The Ruff Times, or if you buy the book at
your favorite bookstore, you can deduct $10 from the subscription
price.
321gold Ltd
|
