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Greetings friends! This
month's newsletter features the Canadian Gold Maple Leaf and is
followed up with commentary on the current state of financial markets.
Canadian Gold
Maple Leaf
 The
Canadian Gold Maple Leaf is one of the highest quality gold bullion
coin series manufactured anywhere in the world. The Canadian Mint
produces gold coins that are so close to perfection in their weight
and purity that they consistently weigh to within 0.0001 grams of
their face value.
Admired throughout the
world, Canadian Maple Leaf gold bullion coins offer investors many
advantages over gold bars and most other gold bullion coins. Struck
with the distinctly Canadian "Maple Leaf" design these
gold coins are recognized around the world for their unsurpassed
quality.
The Canadian Maple Leaf
was the world's first gold investment coin to be manufactured to
the higher standard of 99.99% pure gold. By comparison, American
Eagles are 91.67% pure gold.
The Government of Canada
produces the Gold Maple Leaf and guarantees the gold content and
purity of each coin. The coins are "official legal tender"
in a country well-known for its stability, independence and freedom.
Many people also enjoy
collecting Canadian Maple Leaf gold bullion coins for their beautiful
designs. The reverse features the bust of Queen Elizabeth II.
Current Events
& Financial Markets
As securities markets
enter a fourth year of a general bear market the level of self-serving
optimism and hubris shown by the stock brokerage industry is truly
amazing. Warren Buffet stated in February report that he was pretty
much staying out of any new stock purchases for the near future.
Yet CNN Market Watch columnists continue to advise people trying
to protect their life savings to keep buying stocks and mutual funds
and to stay out of precious metals even though gold and silver have
dramatically outperformed all of the major market indices for the
three years now.
Paper pipe dreams
It appears that the securities
industry has built up such an unstoppable selling machine that even
though stocks have been a losing proposition for three straight
years with no end in sight the only thing they know how to do is
to tell investors to keep buying. Every time the market falls another
thousand points these investment columnists tell their clientele
that the bottom must surely be near. Now is the time to buy!
One starts to wonder
what it would take for investment advisors to recommend getting
out of stocks. Is there ever a time to sell the paper and trade
it for other financial assets such as land, cash, and precious metals?
Wouldn't these other kinds of financial assets be a prudent part
of any diversification plan?
Buy and hold: for
how long?
Over and over again stock
salesmen tell their clientele that even though markets have declined
in the short term, those who buy and hold stocks over the long term
have always come out with a profit if they hold on long enough.
There is one major problem
with that oft used cliché. A certain percentage of companies goes
out of business or goes bankrupt every year. If we count the stocks
of failed companies along with the ones in the current indices, the
long term picture for "buy and hold" evangelists is not
nearly as rosy.
Diversification does not protect investors from
bad companies, it only guarantees that the performance of a diversified
portfolio is no better than the market at large, and may still be
worse. When the market at large is in a secular bear trend, then
diversification doesn't help unless you diversify into other investment
classes than securities. In fact the majority of mutual funds under-performs
the market indices most of the time. In a bear market the majority
of mutual funds still underperforms the market. That means that mutual
funds are one of the best ways to lose money in a bear market.
We must conclude after
watching three years of horrible advice from the majority of investment
advisors on Wall Street and elsewhere that the stock brokerage
industry and its media outlets, known as "investment analysts"
are simply a giant selling machine. Their profits comes from sales
commissions, not success. The securities industry has a vested interest
in continuing to advise the general public to buy stocks even when
it is a losing proposition. Securities dealers don't sell gold,
so they don't advise people to buy gold and in fact will try to
talk their clients out of it. And so it goes on.
New species found:
"stock bugs"
In the mid 1980's, after
gold reached its peak and fell by over 50%, people who continued
to speculatively buy gold into the face of a bear market in gold
became known as "gold bugs" because of their unwavering
faith in their favorite investment. Today we are seeing a similar
phenomenon as "stock bugs" continue preach the gospel
of common stocks all the way to the bottom of a long-term bear market.
If they keep their faith and do not give up, then in fifteen or
twenty years they will eventually be right again. Just as the "gold
bugs" missed the massive bull market in common stocks of the
90's, the "securities bugs" are now missing a major bull
market in precious metals. If you need access to your savings sooner
than fifteen years from now you would be well advised to look somewhere
other than securities for a good investment.
Current events would
suggest that if ever there was a good time to get out of the stock
market, it is now. Actually, the best time to get out was January
2000. The next best time to get out was January 2002. And it appears
that January 2003 was the best time to get out this year. Like a
rubber ball bouncing down a long flight of stairs, the market keeps
bouncing back, but never as far as the previous bounce. Those with
a significant portion of their portfolio in stocks will only get
a limited number of second chances.
Get gold while it
is still available
The best time to buy
gold was yesterday, but the next best time to buy is now. There
is still a chance to protect some of your savings by parking it
in gold now while it is under $400 an ounce. This price situation
will probably not last past June.
Our previous newsletters
have looked at the long term market fundamentals with columns from
a number of different analysts. Even without a war, the precious
metals markets have demonstrated a consistent three year uptrend
and the supply and demand fundamentals are better now than when
the trend began.
The United States Government is openly planning
to run a $400 billion deficit this year along with a trade deficit
of similar magnitude. The US Treasury and Federal Reserve are pumping
new money into the economy at the fastest rate since 1970. This
can only cause the dollar to lose value against gold and other national
currencies.
The overall trend in
precious metals is up. Even with the recent sharp correction of
the gold rally, it is still higher than it was in December.
Look for a new upward phase in the gold bull market
to start by middle to late April.
read this month's
newsletter
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