Patience – sit tight – gold and diversified cash

Short summer update.

Patience. The July 13 to present rally will end spectacularly. Deleveraging is the name of the game for now. Corporate profits will not live up to expectations, and the monetary expansion will take considerable time to transfer into inflation and higher stock prices (this is nowhere in sight). So stock prices will come down good and hard.
We urge you to sit tight in gold, gold stocks and diversified cash.
As a Farmann reader you have not participated in the spectacular rally from March until now, and especially not the second leg, the July 13 til today rally. The first and the second legs of the rally is the markets way to test our patience, new suckers are falling into the trap for every day the rally goes on. Farmann has also missed both of the rally legs, we do not worry about this. Have we missed out on a 30-50% rally? Only if we would be able to buy it at the bottom and sell it at the top – something no one will be able to do. (Also remember we told you to get out of stocks in November 2007 and we are still way off those highs.)
Will there be a third leg of the rally? We do not know. We are however confident that this rally will end spectacularly soon enough. If you are in the market you will then see a haircut of 10-20 % perhaps 1/3 off your portfolio in what will seem like the blink of an eye.

We have still not shorted the market, the time WILL however now come for shorting (the rally has been so spectacular that shorting opportunities will arrive) – we will let you know.
We have still not gone into a heavily leveraged position in gold, the time for this MAY come – we will let you know.

Oslo June 30. 2009
Hans J Lysglimt

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5 Comments

  1. Ric
    Posted 1 August, 2009 at 4:13 pm | Permalink

    I beg you all……watch the dollar next 5 business days beginning in Asia.

  2. Alex
    Posted 4 August, 2009 at 1:55 am | Permalink

    “Have we missed out on a 30-50% rally?”
    -No, more like a 50-90% rally (EM!)

    “Only if we would be able to buy it at the bottom and sell it at the top – something no one will be able to do.”
    -You don’t have to hit the pivot points; follow the trend, use trailer stops, then who cares if you’re a few points off?

    Remember “Do not get sucked into this suckers rally [...] Get ready to go short instead” (Farmann, march 20.)? Let’s hope none of your readers took up on your advice…

    Oh, and by the way, when the markets do crash, so will gold stocks. For the downride, buy volatility funds…

  3. Posted 7 August, 2009 at 4:53 pm | Permalink

    I dont know about this, the stocks are rising and it seems it will not dramactically fall again. Im sry to say but i should of hold my stocks instead of selling it early or bought more stocks when it was down.. Lost alot of money..

  4. Ric
    Posted 9 August, 2009 at 11:20 am | Permalink

    Again, hold on to your hats gentlemen: “U.S. Treasury Secretary Timothy Geithner formally requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October.” – reuters
    Bank of England increases Qunatitative Easing program to L 175 Billion. What does all this mean? Major attack on “quantitative easing currencies” coming soon.
    China warns:
    “China’s central bank warned that monetary easing by developed nations threatens to cause “severe” inflation and currency volatility.” – Bloomberg
    There is no escape from this mess. Fools are believing again in soaring stock markets propelled by bogus fiat currencies raining down from ‘Central Bank Heaven like manna falling in the desert. It will rot in the sun. Stocks supported by rotting currencies, collapse imminent and necessary.

  5. Posted 18 August, 2009 at 10:33 am | Permalink