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. Harry Schultz
Life Strategies
Harry Schultz Gold Gold charts are suddenly appearing
on TV screens with increasing frequency. Awareness is rising
that here is an asset that is stateless, that is neither a symbol
nor a prisoner of any nation, & is not an IOU - which all
other currencies are - & an IOU that can't be paid. Also,
gold is not overpriced by standard yardsticks. By the inflation
yardstick it is in fact grossly underpriced. Gold returns to
its currency status when faith fails in unbacked paper currencies.
When the US$ was king, gold was considered a commodity. Now gold
is a currency again. Welcome back, Mr. Gold. By the way, Simon (an HSL thinktank member for 26 yrs) also said bullion will outperform gold shares now. I've been urging U, dear reader, to buy gold (in coin or bar form) for some time, & to regard it as your core holding. I recommend trading all gold shares, to maximize profit (that is the purpose, isn't it, not as a sleeping partner?). If U are especially fond & supportive of 1-2 gold companies, then retain a core position in them & only trade 1/3. But mostly, shares are for trading, not marriage. This email from reader ES is of interest: "A few months ago U asked in HSL (or GCRU) to hear from readers who have taken delivery of gold bullion. Well, since 1999 I have taken delivery of tens of thousands of gold ounces. During the last big reaction I took delivery of an additional 5,000 ounces at $330. I hold all the gold bullion I have ever bought. I also buy gold shares, to trade." A good role model R U, ES. It takes courage to buy on big corrections. But it's easier when U have past profits to give U confidence. Tactic: I'm doing more of my buying/selling "at the open." Because the mkt makers/brokers can't cheat U so easily. Another way to get honest prices is to buy/sell at fixed prices. I'm doing less trading "at the mkt," though it's hard emotionally when U want to jump in with a fast buy/sell. And often U must. But often we only think we must. Tactic: As mentioned in GCRU: if U are misfiring with buy/sell procedures, try (not always pos) to place a buy order at the same time U place a sell order. Builds discipline & results. As per GCRU: gold mines didn't cover their hedges in 3rd qtr., on net basis. Which probably explains double top in gold, til this wk, via less demand. Gold is breaking out in various currencies, which positively affects the psychology of each country, eg, gold in Swiss fr & euros in the EU. Watch 520 in SwFr. Simon also said most mkts are so volatile & undependable now, it's best to "smash & grab" - that is get in & out fast, take your profits when U have some. He means all mkts. It applies in spades to the general stk mkt, & bonds, commodities, basic metals & gold stks too. The Schultz Gold Stock Advance/ Decline Line has, since last HSL, moved vertically, had a 1 wk correction, now resuming its uptrend. The Schultz Gold Index did likewise, but outperformed the gold group, hitting a new record high on Nov 12. PS re gold coins: gold rose $6.30 on Nov 12, but MS63/64 St. Gaudens gold coins went up $20 each. MS64s are expected to jump $50 when gold breaks $400 & sticks there, even if in very low $400's, according to dealer Ed Lee. Says: MS64 Saints have gained 60% from their wholesale lows after Y2K non-event -- about the same as gold, but with far higher former highs... important for psychological reasons. MS64's reached $1,850 wholesale in 1989 vs Au at $850. Just the facts, ma'am.
Big Picture
2. Because most don't know exactly what to do. 3. Because many (mostly those living in the US) aren't aware that everything they own is denominated in $'s, eg, their homes, cars, biz, stocks, bonds. So just buying a fistful of euros doesn't change the balance by any useful degree. 4. Because alternative currencies aren't well understood & the euro wasn't seen as reliable until this last year. 5. Laziness sets in. Switching currencies requires some homework. 6. Even many of those who have opted out of the US$ haven't bothered to diversify among more than one currency. Most Europeans hold euros, but not euros plus £'s plus yen plus Norwegian kroners-as they should! If you don't have enough funds for 5 currencies, get at least 2. Is it too late to switch out
of the US$? U jest! But, don't jump to the conclusion
the $ will fall every week, anymore than gold rises every week.
These are longterm moves in $ & gold, with lots of gyrations.
Not many are skilled at day- trading currencies & most don't
want to learn. So most should just place substantial portions
of their liquid assets in time-deposits of at least 5 currencies.
I do 7. Which 5? The £,Oz-$, Cda-$, Swedish or Norwegian
kroners & NZ$. U don't need any US$ time deposits if U live
in the US as most residents have 95% of their assets in $'s via
their homes, cars, biz, stocks, bill paying bank acnts, So US
residents should move all cash possible into other currencies.
Just keep enough $'s to pay the phone bill How long will it take the $ to fall a further 20-30%? Unknowable. Stephen Roach, chief economist at Morgan Stanley, says 2 yrs. Whatever! But when the $ bottoms, it won't rebound in 3 days. On cyclical terms perhaps 5 yrs, to mirror how long it took to go from top to bottom. So, act now or forever live with regrets. PS: Don't forget: every stock/bond U buy is denominated in some currency. NYSE stks are in US$. London stks in £'s, European stks in euros. U can get some diversification just by buying foreign stocks (many gold mines are in Canadian $'s) & bonds, & T-notes in their country of original. Your local broker can do it. But to benefit from the higher yields, I recom time deposits for the most part, in 5 different currencies. It's easiest via Swiss banks (they're the most accommodative to multiple currencies, & among the most free of all nations) or banks in Hong Kong, Monaco, or wherever U can get professional, intelligent service. Avoid Swiss banks with US branches. They now wish they hadn't opened US branches. I warned them yrs ago in their own lead magazine (Bilanz) not to, but they ignored me. They've paid dearly since then, in lost control & paid reparations. Everbank in the US is helpful re currencies. Many small banks never heard of foreign currencies so U need to search. But the effort will pay rewards in having currencies that increase your buying power, pay U higher interest & provide a feeling of security via diversification. People with all eggs in 1-currency basket are at risk, & if that basket is US$'s, heaven help their retirement plans! Should U rush? A slow rush. The US$ may rally (bounce) shortly. If so, use it to get a better price for your $'s in a switch. But it also takes time to make these changes in your asset rearrangement, maybe requiring new banks, new countries, etc. So U should start at once. By the time U have completed arrangements, the $ rally may be over. See Currencies article in today's HSL for fine-tuning. A bigger big picture may emerge as a surprise. Hslm Joel Smith puts it this way: "Something else to think about is the incredible impact that nanotechnology is going to have on all of us very soon. It is predicted more change will be generated in the next 20 years than in the last 100. I predict the likely effect of this is going to be mega-destabilization between the 1st & 3rd worlds, particularly if, (& I personally believe this is our only salvation, from Perot's great sucking sounds of jobs fleeing the US/Europe/Japan), we use nanotechnology to maintain a standard of living in the face of the Chinese onslaught. "We will be using nanotechnology's
promise to create machines with the ability to self-replicate
& create materials to order atom-by-atom. We won't
need cheap labor! There's a very good reason Steve
Forbes started up a special service exclusively devoted to nanotechnology.
Love your work, Uncle Harry. God bless! Joel Smith, CPA, MBA,
Hslm." Thanks Joel. If U are right, this could turn the
Chinese competitiveness upside-down. Let's monitor it, see how
fast it materializes (& replicates). Are world economies tilting up or rolling over? The evidence is a crazy-quilt of mixed patterns. At the moment I'm slightly optimistic, shorterm. The DowJones World Index (all major stk mkts) has a potentially positive 2-yr base chart pattern, but is coming into resistance, which may stop it or slow it down for a year. Of course. stk mkts are not economies - which seem to be modestly improving (with exceptions, like Germany, Italy). The US economy seems likely to carry a 4% growth label for a while. Real inflation will slowly rise, whatever govt data says. Interest rates are destined higher & bring pain to stk mkts & those in debt (which is almost everyone -- govts, biz, consumers). But with careful selection, U & I should find our way & accumulate profits. A chart of US vs world stk mkts shows a steady downtrend, ie, non-US mkts are doing much better. Every part of Asia still offers the best opportunities, followed by Europe. Ex HSL staffer, leading
UK advisor to banks, Simon Crane, predicted on Sept 11 &
in last HSL: tariffs on China loom likely. And so they
have. 2 Congressional bills propose punitive tariffs on China's
exports to US (H.R.3058 & S.1586). China has been chosen
as the scapegoat for the jobless US economy. I doubt the bills
will pass but if they do, huge damage will be done to world trade,
psychologically & actually. If they don't pass, the warning
shots will not be unnoticed in Beijing. Amusing PS: US T-man
Snow accused China of "piling up $-reserves." Some
crime! Would he rather they changed $'s for euros? I got kind words for my half-serious suggestion lastime that B52 bombers fly over Palestine & drop money to end/reduce the violence. And that baby-size loans to almost anyone can help turn all poor societies around. One reader says U need only look at Latin America for proof that deep poverty causes violence & unrest. For too long, politicians have tried to counter violence with violence of their own, + political solutions instead of economic ones. Man doesn't live by bread alone, but if he doesn't have any, he often gets violent. ("Let them eat cake" -- if no bread -- advice didn't work out well in 1770 & still doesn't). Big Picture PS: To keep the record clear, I must
repeat now & then, that though I have been bullish on stk
mkts for about a year, nothing changes the very big mkt picture
which is: we are still in a primary super bear mkt, within which
it is normal & predictable that 2ndary (technical) reactions
or mini bull mkts occur. This mini bull is merely average so
far. It is, however, getting a bit creaky. It is in the mkt end
times. It's not yet a sell, but the risks are increasing, PE's
are climbing, debt mounting, mkt volume & volatility dropping.
I'm still trading the mkt. Lots of opportunities remain, but
they are fewer & with less upside potential than in the last
year. Stops are now essential, not optional, & they can be
brought up a bit. Not squeaky tight, but not distant. I guess
U can now call me a bearish bull. Lots and LOTS more follows
for subscribers, ###
Who is? Harry Schultz Chevalier Harry D. Schultz, KHC, KM, KCPR, KCSA, KCSS, is the highest paid investment consultant in the world at US$2,400/hour-US$3,400/hour on weekends (International Edition Guinness Book of Records 1981-2002). To keep in touch with developments around the globe, Harry draws from correspondents in many countries, plus mountains of international newspapers, magazines, and other data. At the top command posts of Harry's elite HSL team are Chief Market Analyst, Paul Griffiths, and Research Editor/geopolitical analyst Gordon Frisch. Loyal HSL subscribers in 90 nations are much more than simply names and addresses; Harry and his team consider them part of their cherished global family. Mr. Schultz is regularly quoted in books, articles, and interviews and by other newsletters (the "alternative press"). Arthur Hailey, a longtime personal friend and HSL subscriber, based his character Lewis Dorsey in the bestseller The Moneychangers, directly on Harry Schultz. Harry has lived for extended periods in 18 nations, and shorter periods in many others. Knighted five times, Harry is a man for all seasons and a true citizen of the world. Contact: E-mail:
HSLmentor@racsa.co.cr
The Letter for Millionaires -- current & prospective (& former) |
1. Because it has happened rather slowly,
like the frog in a pot of water that slowly heats up, people
(& frogs) don't notice gradualism.