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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