During my trip to France to visit with associates this past weekend, I heard many opinions on investments. They centered on select investments in the emerging world, deep value investments in the first world, very long-term investments in the first world and the preservation of wealth for later.
The first three items required quite a bit of research and a bit of common sense, as well as, a little grey hair. The last item was easier for me to wrap my head around.
When nothing looks too appealing, then the best advise is to do nothing. There is no hard investing rule that states that you must be fully invested at all times. As a matter of fact, if you think that we are in a bear market and there will be better opportunities to choose from at a later date, then it is paramount that you have available capital to take advantage of these future opportunities, when they do present themselves. Maybe the old investing saying of, "sell in May and go away" makes sense right now.
So, where to park your available investing funds while you wait? For many who feared the US dollar last year, the euro seemed like a good place. These days that trade has become a disaster. The euro is just another fiat currency like the dollar. The US dollar itself is looking better for now, but that is only temporary, as inflation is baked into the cake with a trillion dollar deficit and promises of more to come for many years into the future. US bonds are at very low yields with very little chance of going lower (and some chance of going higher which would depreciate your present low yield bonds). This leaves precious metals, which for 5,000 years have been trusted as money. Gold is simply THE superior form of cash. Holding your cash in gold makes perfect sense in today's market. While gold also serves as a hedge against declining currencies it also serves as cash itself.
There will be low hanging fruit later in the future. At the conference, Rick Rule, Global Research Investments, LTD, compared cash to bullets. "If you want a close shot at one of those fat, slow moving deer then you better have bullets. View cash as bullets."
So, if you are searching for a good investment and having trouble finding one right now, just wait. Keep those funds in cash and gold for now. Don't buy something just because you feel you should be fully invested. If your gut is telling you to be careful, then perhaps you should listen. Gold IS careful in this economic market. Physical gold that you hold yourself will even improve your sleep. (They don't sell anything better at a pharmacy.)
Keep your powder dry for now. You do not want to miss the easy bargains that will present themselves in the future.
IN CONCLUSION:
1. Nothing says you have to be in the market.
2. Gold is the superior form of cash.
3. You must have available cash to shop for bargains when sale day arrives.
Even though times may seem a bit down, keep your chin up and remember what Auntie Mame said to her secretary:
"Live! Life's a banquet and most poor suckers are starving to death!"
Prepare your portfolio for the bear. Then dive in and don't let life pass you by.
Larry LaBorde,
Silver Trading Company
May 25, 2010
