![]() ![]() Only, next time, the fear that the Fed will be ineffective will likely send the markets down harder and faster than anything we've witnessed yet.Īnd once the dollars start flying, there'll be no stopping them.īut what of the U.S. It is just a matter of days, and maybe even hours, before the next delivery of bad news arrives: CODs and the stock markets move again into crash mode. We say that because nothing the Fed and other central banks have done to date will have anything more than a transient effect on this crisis. When will the engines of those helicopters fire up? The engines are warming up now.How might they do that? Ah, now we recall the words of Fed Chairman Bernanke when he said that, should the occasion warrant it, he would not hesitate to drop dollar bills from a helicopter. With the clear and present danger of a deflation now sweeping the globe, the Fed can, and soon will, shift its focus to heading off a recession or worse. Up until this point, the Fed has remained focused on fighting inflation.We have looked hard at this issue and come to a couple of conclusions. There has been a lot of talk about the current credit crisis being deflationary, and that will be bad for gold. Which raises the question of whether one should try to sell any junior gold share at this point? Especially considering that many are already off sharply, and volume for most stocks has largely dried up.Īnswering requires stepping back for a further look at the big picture. On that front, we are going to be increasingly focused on those with the best management teams, cash in the bank and which are clearly on to a significant deposit. Now our attention turns to the junior precious metals stocks. We are happy we recommended lightening up on the stocks of our greatly appreciated junior base metals companies ahead of the recent crisis. If you own them, you have two choices: hold through what's next, or take advantage of their liquidity to step aside for a while. The stocks of the larger gold producers, which have already taken a hit on deflationary fears, remain at near-term risk. Rather, it is because of the fact that it can be liquidated quickly and easily.Ģ. The weakness in gold in recent weeks, modest by contrast to other sectors, is not due to a sudden breakdown in its historic role as a store of value in periods of crisis. That means even the assets that shouldn't be sold - precious metals and stocks, for instance. Unfortunately, when it comes to a rush for liquidity, investors will sell anything they can get a bid on. Global stock and bond markets are in for some very bad days. Now that it is up close and personal, we are beginning to get a better sense of the nature of the beast and can make strategic adjustments to our outlook, and our portfolios.Īfter reviewing reams of data and engaging in long and intense dialogue, here is the briefest of summaries as to our current position.ġ. In a minute, I'll share a summary of our current thinking, but first want to stress that, given the scope and the complexity of the situation, divining the future from this point on is no easy task.ĭoug Casey has often said the crisis could be deflationary or inflationary, he wasn't sure which, but he was pretty sure about the crisis part. Over the last week, the Casey Research team has continued doing a forensic analysis of where this all might lead, and especially how it will affect our collective investments. In all our publications, we have recently taken a good, hard look at several facets of the unfolding crisis. A 3-month risk-free trial to the letter is available for interested investors. The Continuing Crisis David Galland 321goldĭavid Galland is Managing Director of Casey Research, LLC., publishers of Doug Casey's International Speculator, a monthly newsletter focused on identifying high quality natural resource stocks with the potential for a double or better over the next 12 months. ![]()
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