This below is NOT financial advice. I’m just sharing what I’m doing.
As mentioned in my post in another thread today:
Long-term (over five years), yes, gold is a winning bet. I believe short-term (next few years) gold will be a LOSING bet, probably in a big way.
I recently doubled-down my double-short position on gold, which I established a couple weeks ago. (“GLL” PROSHARES TR II PROSHARES ULTRASHORT GOLD) That position is now at 15% of my portfolio. When the gold bugs realize they have bought a commodity and are now facing strong winds of deflation, they will turn tail and dump gold.
My market call? Gold below $700 within the next 12 months. Yes, when I see that price I will switch my position to the other side (long) buying up truckloads of the yellow metal.
My track record? Damn good when it comes to gold. I’ve been swing trading in and out of gold for about five years, and I’ve made money on nearly every trade and I am way up when all the trades are netted.
One final comment. I track and follow about a dozen analysts / hedge fund managers who I consider “smart money” meaning those who have been making the most accurate predictions on financial markets for decades.
They are ALL recently critical of gold, warning it is currently overpriced in its hitting $1100 to $1200 range.
So what else to invest in? If you believe deflation is here, and getting worse, take a hint from people like Robert Prechter (and many others) who remind us that CASH IS KING when deflation hits. You hoard cash also for simple SURVIVAL through probably the worst economic conditions you’ll see in your life. You hoard cash, because deflation makes every dollar worth more. You sell now any capital asset you practically can (to raise more cash), because deflation will eat away capital asset value.
And a final important reason you hoard cash: to go shopping the fire sales at the dark, ugly bottom. Look to Las Vegas where homes are already selling for 80% off peak. That should give you an idea of the bargains that will be seen in many assets in many regions.
My wife and I together are banking about five grand a month, have been doing so now for a couple years. I canceled cable TV, Sat TV. We eat in. We’ve both kept our jobs (thank God). We don’t go to movies. Instead, we take our toddler to play the park (that’s free).
Think I’m crazy. We sold our 3BD 2BTH 1200 sq ft San Diego condo in mid-2005 for $405,000, slightly missing peak pricing of $415K
Hundreds of our friends scolded us then, that we were crazy to sell.
That condo is now worth about $260,000 based on recent sales. They were crazy not to sell.
So that shows how insane deflation (and bubbles) can be. Now, imagine that condo’s value falling to say $80K within the next five years.
That is very possible, IF we now are now facing a full-on deflationary depression.
When that baby hits $80K, I plan to have way more than $80K in cash in the bank so I can buy that sucker back. (and a lot of whatever else looks tasty at 80% and 90% discounted prices)
