THE NEXT FINANCIAL CRISIS – Part II
Protecting Yourself with GOLD, Oil and Index ETF’s
In 2009 I shared my big picture analysis, investment forecast and strategy in a book called “NEW WORLD ORDER ECONOMICS – What you can do to protect yourself”. In January 2009 I forecasted that the Dow Jones Industrial Average was going to make a bottom within a couple months which it did. I also predicted the price of gold to start another major rally, and for crude oil to bottom and rally for years, which were also correct.
You can call it luck, skill or a mix of both… but the truth is that the markets cannot be predicted with 100% certainty. With that said, the US stock market, gold and oil look to be setting up for their NEXT BIG multiyear moves.
GOLD BEAR MARKET IS ABOUT TO END
Gold and silver have a little trickier of a situation to navigate and invest for maximum returns over the next 2+ years.
The most important thing to realize is that when a full blown bear market starts virtually all stocks and commodities drop including gold, silver and oil. Knowing that, investors must be aware that when the stock market starts its bear market the fear will rise and investors will inevitably sell their holdings and this means we could see gold and oil continue to fall much further from these levels before a true bottom is in place.
Is this time different than the 2008/09 bear market? Yes, this time we have possible wars starting, oil pipelines overseas being cut off, counties and currencies failing and even negative bond yields in some parts of the world – it’s a mess to say the least. There are a lot of things unfolding, most seem to be negative for the economy.
The currency problems and possible war breakout will be bullish for gold and oil. So if a bear market starts in equities, and a war or currency fails gold and oil should rally while stocks fall.
But if we don’t have those sever crisis’ then if gold and oil break below their critical support level which is the red line on the charts and a bear market in stocks start you do not want to be long stocks or commodities.
I have drawn a line in the sand for gold at $1050. If this level is broken then $815 per/ounce is not out of the question. It seems everyone is bullish on precious metals and have been buying like crazy. But as I wrote in 2009 this bullish sentiment actually pointing to much lower prices if support is broken.
LISTEN TO LIVE FORECAST OF GOLD & OIL
Below are some ETFs that can be used to take advantage of rising gold prices. While there are other funds that cover gold miners I feel they may not perform well during the equities bear market. Investing in physical gold is the best play at this stage of the game but when the equities bear market looks to be nearing an end, gold mining stocks will be the best place to be.
PART 2 CONCLUSION:
In this article we talked about gold and gold stocks which are showing signs of a major bottom being put in place this year. And in the next article PART 3 I will who you what to expect long term for crude oil, how we are up 28% in our short oil trade, and how you can play this multi-year cycle bottom when the time is right.
In the meantime, be sure to join my Free Newsletter so that you receive PART 3 along with more trade ideas: www.GoldAndOilGuy.com
Chris Vermeulen
