[Gary Leibowitz frequently raises hackles in the Rick’s Picks forum
with his mantra that business is great, stocks are underpriced, and --
at least for the time being -- the U.S. economy is going great guns.
Who knew that he is also expecting a global depression that will last
for more than a decade? In the guest commentary below, he explains why –
but also why, with two caveats, gold is likely to be one of the best
places for investors to be for at least the next six years. RA]
I must confess that I’d been a gold bear for many years. When I
reevaluated my position, I surprised myself when my conclusions made a
180-degree turn. On average gold has an 18-to-20-year life cycle, which
implies the bull run will run until 2018-20. The cycle doesn’t
necessarily mean a huge run-up, but it does mean there should be very
little downward pressure. The other factor that is encouraging is how
most gold cycles, when there are strong signs of upward movement,
terminate with an even larger and steeper rise near the end of the
cycle. If history is a guide, we should therefore expect the most
dramatic phase of the rally to occur six to eight years from now.
My longstanding macro view has been that as debt became unsustainable, a
severe deflation period would ensue. That argument still holds.
However, I did make some unsubstantiated assumptions that because of
the severity of this debt cycle, the deflation cycle would be deep and
long. As it turns out, that has never been the case. On average
deflation has an 18-month window. It is during times of strong
contraction that cash outshines all other investments. I also believe
that gold will experience a downturn as well, but not as steep as most
other assets, and that it should recover quickly as governments
re-inflate their economies. Continue Reading...
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