Thank goodness for the problems in Greece! Don’t accuse me of acting like Goldman Sachs (NYSE:GS) and capitalizing on other people’s problems, but we needed something to slap some sense into the market. For the last two months new highs were the order of the day. News reports talked about money sitting on the sideline. Talking Heads on TV made us feel sorry for money managers chasing the market, because they felt pressure to get in on the rising market. Would it leave them behind?
Why do most investors, and money managers lose money? Because they feel pressure to be fully invested. If I was in 100% cash, what do I care that stock prices are going up? I want them to come down, so I can buy. Do you go to the store because they just raised their prices? No, you go to the store because of a big sale. And it even becomes more important to go, if the sale is for a limited time!
Impatient subscribers to our long-term portfolio service fidgeted because we sold into the market over the last four months. We have been raising money! In the last two days, we have bought six companies, each AT A GREAT PRICE. This is where we earn our money, and where our subscribers make their money. We buy at the right price, and everything else seems to take care of itself! We have our eyes on five other recommendations, one of them will rise to the top (or bottom if you prefer), and allow us to buy it. This will make us 100% invested for the first time since Jan. 4, 2010.
Pull The Trigger!
Watch our “Trade of the Year.” On April 1st we advised to consider buying silver as our Trade of the Year.
When do you buy? The easy answer is now, but I believe there will be an opportunity before May 21 to buy SLV for less than $16.00 per share, that is less than it traded for on 12/31/09.
I didn’t anticipate the Greek credit problem dominating the headlines and traders actions the way it has. We watched Greece since February and reported on the march towards the precipice. The past three weeks have been a good test run of what gold and silver are going to do in the future. The exception will be when the problems grow bigger than the state of Ohio. Greeks may be protesting, and burning busses, but Greece is not big enough to throw the world into a crisis.
What happens when two or three Eurozone countries are spiraling out of control and France and Germany can’t rescue them. What about Great Britain under IMF watch? Who is going to force the U.S. to break union contracts, cut social programs, raise taxes, and bring the budget under control? Only one group has that power, investors.
When the U.S. Dollar is under assault and the ‘bond vigilantes’ demand higher interest rates to own Treasuries, the rise in precious metals will be dramatic.
They are backing off now. The selling pressure in the equities market causes the “baby” to get thrown out with the bathwater. The Greek problem will be solved because the other Eurozone countries will find it easier to backstop Greece than face the currency problems doing nothing will cause.
Our price prediction on SLV wasn’t hard to make. I worked on the article over the weekend, and SLV closed on Friday (3/26) at $16.61 Silver had been in a downtrend since the beginning of December. Equities were trading higher for over six weeks, and it was time for a correction. Throw the popular ‘Sell in May’ sentiment, and mix in option expirations, it seemed easy.
Now, I don’t know if we can get SLV for less than $16.00, but it bears watching. We also suggested you may want to invest in FCX as they mine gold and silver. While precious metals have run higher in the last month, FCX has fallen 18.5% off its highs. FCX is showing good support and is an excellent buy at the present price. Can the world run without copper?
Disclosure: Long: FCX