Not much action in the markets yesterday…but we don’t have any time to reckon with it anyway.
Gold plunged all the way down to $806. Now analysts are starting to talk about oil below $100 and gold below $750.
Meanwhile, Goldman Sacks predicts that oil will go all the way back to $149 before the end of the year.
We don’t know. The markets can do what they want, as far as we’re concerned.
But what if you have money you have to do something with it. What do you do?
Avoid U.S. stocks. The U.S. market is in relative decline. And it’s just going to get worse from here…
Avoid U.S. bonds and the U.S. dollar too – they’re both too dangerous. Besides there’s no margin of safety. If everything goes right, you won’t earn very much. If it goes wrong, you’ll be wiped out.
Buy gold. We don’t know what direction it is going, but it isn’t going away. And if the world’s monetary system is troubled – either by inflation or deflation – gold will be good protection. Consider it an insurance policy. You pay for fire insurance on your house. If your house doesn’t burn down you still don’t regret having paid for fire insurance. If everything goes right in the world economy, gold will probably go down further. But if anything goes wrong – and our guess is that something will go wrong – you’ll be happy to have some Krugerrands in your pocket.
And buy Indian stocks. (More about this tomorrow…now, we’ve got to get back to our conference…)
for The Daily Reckoning Australia