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Friday, September 23, 2011

Gold and Equities VS the U.S. Dollar - US Treasuries are not a safe place to be!

NEW YORK - JUNE 24:  A trader works on the flo...Image by Getty Images via @daylifeI know that, when everyone starts to panic, most investors see the U.S. dollar as a safe haven. This week investors are piling into U.S. Treasuries as they have in the past during past times of fear and uncertainty. The problems in Europe have shaken confidence and the market plumeted yesterday on those fears. It would appear that, what the market has not done, is price in any hopeful sign that the European Union might actually come up with a plan similiar to the U.S. T.A.R.P. plan, which, in hindsight, was very positive for U.S. stocks, and which did not lose any money for taxpayers in the long run.  If the E.U. comes up with such a plan in the near term, there could be a dramatic pop in markets that are currently ruled by fear. There seems to be no pricing in of any good news that may eminate from Europe in the coming week(s).

In the mean time, the best "safe haven" of recent years, gold bullion, and by proxy, gold miners, have taken a beating this week. They have taken a beating only if you consider the price of gold over the course of the past month where bullion prices spiked as high as $1900. Compared to the rest of 2011, gold is still up a healthy 20% or more. It is only back to mid July prices.  That, my friends, is a healthy pullback, not This is not 2008 all over again. The fear is overblown. It may well be 2009 all over again as equities test those "generational lows" once again. I know this may be a contrary view, when compared with many market followers, but if I am right, this is the time to take the advice of Warren Buffett who famously said "buy when all others are fearful".

I am a buyer right now. A buyer of select equities in tech and pharma. A buyer of gold miners. A buyer of top Lithium miners. A buyer of select Canadian banks. If things go lower, I will buy more. Today I doubled down on small and mid tier gold miners like San Gold, and Brigus Gold. I even bought speculative stocks like TNR Gold and Nautilus Minerals. I bought more Talison Lithium. I bought more Rodinia Lithium.

I like Cenovus Energy and Suncor in the oil sector, TD Bank, RBC and BMO in banking.
I even like Manulife Financial as they are trading at an all time low this week. I like solid Techs like Intel, Microsoft, Apple and Google. I am watching HP since they announced thier new CEO today, Meg Whitman. I think there are great buys out there, and I am taking advantage of the irrational fear as everyone runs to the not so safe haven of the U.S. dollar.

I do not like the prospects for the American dollar, the Euro or, for that matter, most fiat currencies. Gold is bought and sold by central banks around the world, and it would not surprise me to hear in the coming weeks that countries like Italy have sold some of their gold stocks to pay down debt. Certainly that would account for the current weakness in bullion prices, which will rebound as fiat currencies, including the USD once again, lose favor with investors.

No one has a crystal ball, least of all this writer. However, it is those investors who seize the moment, who most often come out ahead of the herd. I hope you are one of those.

Happy investing.HP
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