I think we all realize we are in the grip of the bear at this point. Even Kudlow is starting to come to grips with the notion that we are going to experience a recession. What I don't see yet is despair. I see too many analysts trying to pick the bottom or the old "invest for the long term" crap being bandied about. We had a semi panic day on Tuesday but the Fed jumped in and saved the day. Actually they just made it worse. They are now guaranteeing that inflation is going to be spiking at the same time we are heading into an economic recession. What a wonderful combination! I'll be watching the COT's as usual for signs that the big money is buying. That will be our cue that it's time to jump back in the pool. In the meantime we need to be making plans for what we want to be buying when that bottom arrives. Well let's step back and look at what's going on. The Fed is now in panic mode just like I said they would be. The economy is slipping into recession and the politicians are freaking out. Incredible pressure is being brought on Ben to do something dammit. Well the only thing Ben can do is the wrong thing. Of course that doesn't matter to the politicians as long as it looks like something is being done. We need to be ready to take advantage of the Fed's actions. What's the one sector that is defying the bear? Precious metals of course. Gold and silver. Heck the precious metals are just about the only thing that's up so far this year. Now if they can hold up and actually rally while the rest of the market is failing can you imagine whats going to happen when this market bottoms and turns up?
I see quite a few analysts including Cramer beating the table on energy. I do think energy is going to perform well during the next bull but it's not going to be the leader anymore. Energy was the leader during the first phase of the commodity bull. We are now into the second phase. It's time for the laggards to catch up. Liquidity is going to flow into the undervalued sectors. That would be precious metals and agriculture. We are going to get the buying opportunity of a lifetime soon and you know what? Most investors are going to miss it. Not because they are afraid the bear isn't finished. No they are going to miss it because they will think that gold is too expensive or it's too overbought. Many will rationalize that they will be able to get in at a later date at better prices. I've got news for you in a raging bull market (make no mistake that is what's happening in the precious metals sector) the bull makes it very hard for investors to get back in if they lose their position. Anybody here lose their position in the Nasdaq in 99? This bull will end up going much farther than almost anyone can imagine including me.
Gold Miners - What next?
6 months ago