Have no Fear: Come Hold my Hand

In spite of the economy and stock markets behaving almost exactly as I have been expecting them too for over a year now, I have received quite a few emails basically asking for a little hand holding.

Sure, why not!  Everyone can use some comfort and reassurance now and then. Most people subscribe to more than one advisory service and when they offer conflicting opinions, as they often do, who are you to listen to?

As I state at the bottom of every letter, YOU MUST DO YOUR HOMEWORK and go back and check their TRACK RECORDS. If they did not foresee the present situation that the economy and stock markets are in, and what is worse; that even with 20/20 hindsight they can’t explain why things happened the way that they did. why should you expect them to be able to either fix the problem or foresee the future now? Are you still asking the ones that were screaming Peak Oil and predicting $200/bbl before Xmas, what to do, especially  now that they are so shell shocked. Does it look like Paulson, Bernanks Congress, the President and all their economic advisers, have the slightest Clue as to what to do?

TAKE MY HAND

First of all, regain your confidence by going into my archives at gold-eagle.com  and re-read my past letters (especially “Why has “IT” not happened”,  “Denial” Kondratieff Winter, Recession 2008 – Depression 2010). My job is to teach and help you to make up your own mind. After all, it is your money and only you know your personal financial circumstances and risk tolerance. A bi-weekly letter is not to be confused with a day trading letter. If you do that, you will gain the confidence that hopefully I can help guide you through the ever increasing treacherous waters we are all sailing into.

RECESSION 2008 – DEPRESSION 2010

Even now, there are only a few economists who are willing to recognize that we are in a Recession. Most are afraid to even mention the word and none are calling for a Depression, while all were predicting a strong second half of 2008 while most have shifted that to 2009.. DON’T YOU BELIEVE IT.
Where are the numbers that justify my call that the Recession started in the 4th quarter of 2007 or  Jan 2008?  First of all, tell me what you think the real inflation numbers are; 7%, 10%, 12% 15% or is it 20%- take your choice but please do not tell me you believe the government’s numbers. For simplification purposes, let’s pick a modest 7% inflation and use the 2% or was it 3% government’s GDP growth rate for the 1st qtr. In real terms, that represents a negative GDP growth rates of 4%. Just recently they reported to everyone’s surprise, strong growth for the 2nd qtr. Surprise, surprise - the higher the real inflation rate really is, the higher will be the stated growth rate if we continue to use ridiculously low inflation rates in calculating growth. We have been in Recession for over 9 months now and its getting worse at an accelerating pace.. I have been warning you all along that the Bail-outs will not work for the simple reason that they are not addressing the problem. Mortgages are not the problem; they are the EFFECT of the REAL PROBLEM of a “Massive Oversupply of Overpriced homes” and everything they have been doing (such as attempting to prop up house prices) up to and including now is making matters worse because they are doing everything in their power to preserve the problem. Go back and re-read my past letters.

THE STOCK MARKET

The Trannies as well as the rest of the popular indices, finally broke down to  new lows on Friday, confirming that we are now in a DOW THEORY BEAR MARKET. This finally convinced the last holdouts, who refused to acknowledge that the last signal given by the DOW THEORY almost a year or so ago was that of a sell signal. Even though there were a number of non reconfirmations every time the DJII hit a new low and the DJTA did not, that did not constitute a buy signal or refute the existing Sell Signal that we were already on. Even when the Trannies made a new all time high it was not confirmed by the DJIA and was therefore not a new buy signal. WE ARE IN A SECULAR BEAR MARKET and no where near a major low and a resumption of the BULL MARKET!  Can I be any clearer than that? Will we have numerous 500 to 1000 point rallies? Of course we will. We just had a few last week but as I was advising you all along, they are opportunities to SELL into, build up your cash and SELL SHORT (Buy PUTS or the DOUBLE SHORT ETF’S.)

GOLD

I have to apologize to you all. I am sorry but I am also human. As should be very plain to all of you, I have a soft spot in my heart and maybe my head as well, when it comes to Gold. I got so caught up in GOLDS tremendously improving fundamentals, especially with the flood of new Fiat money pouring into the financial system from all Central banks around the world, that I neglected the lessons of history that I never cease reminding you all about.. In the 70’s bull market in Gold, the first major consolidation of the first major move from 1972 to 1975 was 50% and lasted 2 years dropping from a high of $200 all the way back down to $100.  In 2006 that first major pull back lasted only 3 weeks; but as I warned you back then, even though price wise the correction was enough and probably all that we were going to get, one month was far too short a time period to correct 5 years and $400 of Bull Markets. It would take at least a year before we were ready to explode into Wave 3. This time around, we completed a 5 Wave Elliott move that lasted 7 years and almost $800 And as in 2006, a few months of correction is not enough of a correction time-wise, even though, as in 2006, it may be enough price-wise.  Remember the first 5 wave move is never the end of the move it is always  just the beginning of either a 3 wave corrective larger Wave or a 5 Wave bull market.  

WHAT DO WE DO NOW?

Accumulate on weakness and sell out of the money (3 to 6 months) calls into 50 to 100 point rallies in gold and watch my letters for a change in strategy. There is still 8 years left in this GOLDEN BULL MARKET.

AS for the overall Markets all over the world, you are witnessing the Laws of Supply and Demand at work as even the “sure things are crashing” as consumers begin to curtail their spending habits.. TREES DO NOT GROW TO THE SKY and neither do stock markets.

PROTECT YOUR PROFITS by either using stops or better yet, buy Calls to protect your puts and let your profits run. Hopefully you all have been reading and heeding,. If not go back and re-read my letters, at least over the past year or so. Hopefully you will then be able to get back in gear.

SO  “DON’T WORRY BE HAPPY”

I also suggest that you renew your subscriptions now at the old price of only $199 for one year or a special $339 for two year. But whatever you do, don’t let you subscriptions lapse. On Jan 1, 2009 the one year subscription price goes up to $269 and $439 for 2 years.
https://www.gold-eagle.com/baltin_webpage/baltin.html

GOOD LUCK AND GOD BLESS

UNCOMMON COMMON SENSE                          
Aubie Baltin  CFA, CTA, CFP, PhD.                                             
2078 Bonisle Circle
Palm Beach Gardens FL.  33418
[email protected]
561-840-9767