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I’m buried monitoring the markets virtually 24/7 … checking every piece of news I can get my hands on … watching almost every tick up and down in the markets.
I’m running my cycle studies daily, studying the rhythms in each major market, and plotting them almost hourly to monitor them for any changes.
But most of all, I am very happy indeed with how my forecasts have panned out for my readers — and even more so with the profits they should have been able to reap over the last seven months, especially since the low in the stock market back in March.
Since mid-March …
- The Dow industrials have exploded as much as 53% higher.
- Asian stock markets are up 45% on average.
- Gold shares are up an amazing 79% on average!
And here’s how just some of my more specific recommendations have panned out …
- The Dow Jones Diamonds (DIA) is up 38%.
- The Energy Select SPDR (XLE) is up 37%.
- The PowerShares DB U.S. Dollar Bearish Fund (UDN) is up 13%.
- Korea Electric Power (KEP) is up 47%.
- Goldcorp Inc. (GG) is up 48%.
Heck, even the ProShares Ultra Real Estate ETF (URE), which I recommended just over three months ago at the end of June, is already up an amazing 75%!
And this isn’t even a complete list. And it doesn’t include the recommendations I told readers to close out earlier this year and bag gains of more than 27% … 39% … and 68%.
Plus, the Dow has now moved back above the 10,000 level, a forecast I made months ago when the Dow was barely a peep above 7,000 — and for which almost everyone called me crazy.
Not to be overlooked, the U.S. dollar has continued to slide — just as I said it would — and is now in danger of going into freefall mode. And gold has screamed higher to new all-time highs!
So, the questions on everyone’s minds are “What’s next for the major markets, Larry?” And “Where are the next big profits?”
Having said that, here’s a quick update on what I’m seeing …
First, the dollar: The intermediate- and long-term trends for the dollar remain very much in force. I fully expect the dollar to lose as much as 50% of its value over the next two years in a very steep decline that eventually sees it replaced as the world’s reserve currency.
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| Over the next two years, I expect the U.S. dollar will lose as much as 50% of its value. |
Naturally, there will be sharp, short-term rallies in the dollar along the way that seemingly come out of nowhere. But don’t be fooled by them. There is simply no way the buck will escape the onslaught of negative fundamental forces that are grinding it lower.
In fact, I believe the worst period for the dollar is still ahead of us. According to data just released, central banks are now putting less of their reserves into dollars than ever before.
Moreover, as we have seen recently, the G-20 is now calling the shots on the world economic front … the United Nations and the World Bank have officially called for the end of the dollar’s supremacy as a reserve currency … and the Arab Gulf States have been meeting behind closed doors with central bankers from Russia, Japan, Europe, and China to reprice oil in euros.
Make no mistake about it: The seriously negative fundamentals impacting the dollar are real, and are why the dollar can barely lift its head off the mat.
Bottom line: I would treat any dollar rally you see as an opportunity to diversify out of the dollar by largely purchasing gold and select investments that rise when the dollar falls. I especially like the PowerShares DB U.S. Dollar Bearish Fund (UDN), an ETF that rises as the dollar loses value against other currencies.
For additional ways to protect the purchasing power of your money, be sure to see the October issue of my Real Wealth Report, which published last Friday.
Second, gold: For the record, and for those of you who are not Real Wealth subscribers and did not see my flash alert last week — I believe the next leg up in gold is now officially underway.
It’s part and parcel of the bear market in the dollar. And just as the dollar has much more to go on the downside, gold has much more to go on the upside.
Indeed, I expect this new phase in gold’s bull market to eventually bring it to at least its inflation-adjusted price, around $2,300 per ounce.
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| Gold’s next leg up is now under way, and could reach at least $2,300 an ounce. |
But that’s my minimum target. Gold could easily reach $3,000 … and even $5,000 an ounce over the next few years as a new monetary system is introduced and the dollar loses its reserve status.
Naturally, there will be pullbacks in gold. But they should be treated now as buying opportunities. Do not get shaken out of your gold positions.
Solid technical (chart) support in gold is now forming at the previous record high of $1,035 … followed by $1,000 … and the $975 level.
I repeat: Any pullbacks you see in gold should be treated now as buying opportunities to prepare for an eventual move to at least $2,300 an ounce!
The best ways to play gold for the next big potential profits: The SPDR Gold Trust ETF (GLD) and the select gold funds and gold shares I recommend as core positions in my Real Wealth Report.
Third, the broad stock market: Specifically, the Dow Jones Industrials. Cycles point higher into mid-January of next year before any major setback occurs.
How high can the Dow go? I believe it can get to at least 11,100, and quite possibly to 11,600.
Long term, as I’ve noted in previous columns, there is a very high probability the markets have already made a major bottom. And long term, I have absolutely no doubt in my mind that a currency devaluation will recalibrate the Dow, sending it substantially higher, even to 35,000 to 44,000 by 2016.
Yes, you read that right. And I haven’t lost my mind. But that forecast doesn’t mean the economy in the U.S. will be growing by leaps and bounds.
The fact of the matter is that during extreme currency devaluations, stocks can, and often do, take on the aspects of a hedge against depreciating money, adjusting themselves higher, and inflating.
That’s what’s happened in nearly every third-world and emerging country on the planet. It’s happened in Argentina, Brazil, Russia, Indonesia, Malaysia and more. And it could very well happen here.
But it won’t include all stocks. Indeed, I expect any further rally in the markets both short term and longer term to be largely confined to the bluest of the blue chips in the Industrials, in select technology stocks and in natural resources.
Fourth, Asian markets, especially China and India: They will continue to outperform most other stock markets. Period. So if you’re long Asia, not only are you very happy indeed with the performance of those stock markets this year, but also you should continue to reap very nice rewards going forward.
For a general position to capitalize on Asia, I especially like long-term core holdings of the iShares FTSE/Xinhua China 25 ETF (FXI) and the U.S. Global Investors China Region Fund (USCOX).
Stay tuned!
Best wishes, as always …
Larry
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{ 2 comments… read them below or add one }
Dear Larry,
Thanks for your wise recos and market analysis that I read carrefully since March and have helped substantially to offset the losses posted on the MDCP.
I’m puzzled with your reco on UDN .
Indeed as a Euro investor, I was much concerned with your projection on the FOREX USD/Eur and I have bought for 10% of my portfolio in UDN to hedge the money. Nevertheless, during the time period when UDN shares have gained abt 6% the USD has lost abt 20% agst the Euro.
This suggests that as a foreign investor I should have 3 times my US shares’portfolio invested in UDN to get a better hedge agst the falling dollar.
Or do you have a better alternative on your shelves?
please advise again
thanks in advance
best regards,
Herve
Unfortunately other cycles I follow say this is the height of the broader market and will be in a down trend until Feb-Mar of next year. Things aren’t cut and dry.