The good news is, it’s not too late to protect yourself -- and get some big upside to boot -- by buying gold. The uptrend in gold is still in early days, and the most spectacular gains are still a good ways off.
Why am I confident in saying this? Well, for one thing, We’ve been making the golden case in Taipan Daily for a good six months now... and in other venues long before that. Events have been playing out like clockwork thus far.
The Acid Test
There is a simple way to test whether a “thesis” is working, or rather, whether one’s big-picture views on markets are holding up.
If new developments, current events and ongoing facts on the ground continue to support your view, that suggests that your thinking is correct. If the thesis keeps getting blindsided or challenged by new events, though, that’s a sign that the thinking is off track.
Not to pick on them too much, but take Barron’s for example. Barron’s has served up multiple bottom-picking covers over the past six months, and every single one got whacked by Mr. Market.
Just off the top of my head, Barron’s readers were urged to buy financial stocks like MBIA and AIG (before they were cut in half yet again); they were told to buy General Motors (before the stock plunged and hit a 1954 low); and they were told more than once that it was time to be bullish on stocks overall (nope).
Now Barron’s is telling us “Home Prices Are About to Bottom.” I don’t know about you, but their enthusiasm doesn’t give me much comfort.
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Calling the Tune
In comparison, when it comes to what’s happening with gold, inflation and the financials, just look at a few examples of what’s been said right here.
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In April we wrote, “Neglected Gold Could Be a Monster Buying Opportunity”... and gave a number of reasons why. Gold is up about $100 an ounce since then.
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Six weeks or so ago we called Lehman Brothers “the new bellwether for financial stocks,” adding that, “If [Lehman or the Philly Bank Index] cracks, there could be another big downward whoosh in the financials.”
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In a mid-June piece titled Wall Street Fiddles While America Burns, Adam Lass observed, “The financial sector... has given up some 41% over the past 12 months... It is not done yet.” (Underscore emphasis his.)
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In March we talked about “The Fourth Branch of Power: How the Fed Is Set to Become More Powerful Than the White House.”
That last one might have seemed a little breathless at the time -- but not so much in hindsight. Again, just look at how things are unfolding. As the markets wait to see which major bank will implode next, the idea of Fed as “Supercop” is gaining ever more traction.
The Fed and Treasury will soon be granted the right to purchase “unlimited stakes” in publicly traded companies like FNM and FRE. The general consensus is that there’s no move too drastic when it comes to saving the “system”... and so it’s only a matter of time before the Fed gets carte blanche to carry out its mission by “whatever means necessary.”
The Smell of Desperation
Just take a look around and you can see the evidence of what’s happening…
Who would have thought, for example, that we would see angry deposit holders have run-ins with police because they can’t withdraw their money fast enough? (That is what’s happening at various branches of IndyMac Bank, the failed S&L that was seized by the Feds.)
Or who would have thought that the SEC (Securities and Exchange Commission) would be worried enough to suspend short-selling rights on major financial stocks -- a pointless maneuver and a sign of blatant desperation if there ever was one? It won’t help things, and might only make things worse if it frightens remaining shareholders. But as a sign of the times it speaks loud and clear. We aren’t headed toward a quick and easy wrap-up here. We’re headed into a major escalation of some kind.
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A Bead on What’s Happening
If you really want to understand what’s happening, I encourage you to get your hands on the March and April issue of the Taipan newsletter (not to be confused with the free Taipan Daily e-letter).
In the March issue of Taipan, editor Sally Limantour and I co-authored a piece called “A Thousand Dollars Is Just a Milestone: Why Gold’s Bull Run Has a Long Way to Go.” The piece lays out, in clear and extensive detail, why $2,000 gold (or higher) is all but inevitable over the next few years.
The April issue of Taipan is worth catching, too, in the light of all that’s going on. That one features a piece called “The Great Bubble Conspiracy: Why Financial Bubbles Persist and How Connected Insiders Benefit.” Again, after reading it, you will have a much clearer sense of what’s happening now.
If you want to gain access to those Taipan back issues -- and also find out about five safe and simple ways to beat inflation and gain upside exposure to gold -- you can get more info on that here.
Warm Regards,
JL
P.S. In our soon-to-be-broadcast Emergency Telesummit, Adam Lass and I will be going into further detail on the roots of the credit crisis, how to protect yourself from it, and how to profit. The telesummit is free to all comers. All you have to do is sign up.
P.P.S. If you would like to meet Sally Limantour, Adam Lass and myself in person -- not to mention the rest of the Taipan brain trust -- you’ll have the opportunity to do so in just a few short weeks. We’ll all be in San Francisco for the Taipan Global Opportunities Summit. Hope to see you there.
