Near Term Outlook
January 23, 2009 by Bob Livingston
A real washout in gold stocks and gold and silver are substantially down. This reminds me of 1973-74. There was blood in the streets.
The long-term commodity bull market is still intact. This bleeding correction has very positive implications. Number one, it will extend the bull market and number two, it is the greatest buying opportunity for gold and silver stocks as well as silver and gold coins. I have not sold anything.
It will take a while for this market to rebuild, but the wait will be rewarded. There is enough credit crisis and real estate collapse to trigger an economic tsunami like the world has never seen. Sentiment is terrible among financial writers.
I repeat that I do not believe that this current credit crisis is to culminate in a great financial collapse as many writers expect. But keep in mind that after this financial season comes the deluge. That is when you had better have your ducks in a row.
The government bailout simply means print more money.
I believe that if it is possible to create enough "money" fast enough, the system will rally a few months hence.
1) Look for banking stocks to begin a sustained rise. This is a very strong signal that the bottom is in and a crash has been averted.
2) When central bankers stop fighting inflation (which they caused with printing press money) and begin talking economic growth, this means that the new money floodgates are open.
3) Look for central banks to cut the prime rate and the discount rate.
4) The new administration will make Bush look like an economic conservative. I expect huge expenditures for repair and new infrastructure as well as many other construction projects. There will be another huge "stimulus" giveaway.