The choices ahead are — the Fed will continue QE, or at some juncture ahead, all the smart boys will all rush for the exits at the same time. How this will all work out is a mystery to me. I’m just as happy to be out of common stocks and in the precious metals. (Richard Russell, King World News)
Since 2001, that I’m aware of, Richard Russell has been slowly and steadily increasing his recommended exposure to physical gold and silver. Apparently, he’s now 100% in metals and completely out of the stock market except, I assume, some exposure to mining shares.
Chart of gold below. As I write an hour before the close, gold is up $41. Referring to the chart you can see this puts gold above its 50-day and 200-day moving averages. This should start squeezing the gold shorts. The bear market in gold is over, and gold again is in a bull market.
The stock market is now excessively overheating, especially in comparison to the underlying fundamentals. Even companies with reported net income growth are showing flat to down revenues. Aside from the Fed intervention, stock prices are being fueled by corporate share buybacks. In Q1, S&P 500 companies spent 93% of their net income on share buybacks and dividends. Corporate insiders are dumping their shares in record amounts into their own companies’ buybacks – especially the homebuilders.
It’s time to get out of most stock and bond sectors and into physical gold/silver (NOT GLD or SLV) and junior mining shares. As this bull market in gold advances, there will be a flurry of M&A activity at much higher price levels.
I have what I consider three superb risk/return junior mining plays in my research section: LINK. I’m currently getting ready to write up what I think is one of the best risk/return plays in the junior mining sector that I’ve seen in over 13 years of my involvement in this sector.