Friday, December 4, 2009

I'm out.

Today, I sold all my stocks including my gold stocks at the market open. Although the gold stocks were down at the open thankfully the bulk of gold's decline occurred later in the day. In fact, it accelerated.

Meanwhile, my DIA and SPY positions all opened up and then lost ground most of the day so I was able to exit them on a high note before they turned negative.

By the close, however, the Transports ended at a new high for the rally - 4101.76. The Dow did not confirm this action, however, closing at 10,388.90 - about 90 points below its recent high. So, another Dow Theory non-confirmation is in effect for now.

Last night, I decided the short-term correction in gold is here and took the opportunity to exit the markets entirely except for my holdings in GLD, NEM, and SLV. Otherwise, I'm out.

I do not trust this rally in general and gold itself has been greatly overbought for weeks. So, it was a good time to take profits, offset some losses, and consolidate. In the coming months I think gold will at least test the $1500 level.

My plan is to remain cash heavy until GLD gives a new buy signal. I am also considering a few utility companies right now. Some are paying 5% annual yields - far better than I can do at any bank and, frankly, I think these companies are safer than our faltering banking industry.

I do not believe the Great Recession is over. I think 2010 will not be a good year for the housing industry, nor for unemployment (despite today's report), and certainly we will see greater levels of federal debt with more fiat "paper money" being thrown at this bear.

Gold should play out well in this scenario. The problem with gold stocks is that they will not necessarily follow the price of gold or an exchange traded fund like GLD. If the stock market tanks, the gold stocks are susceptible to general market forces, not purely gold forces. I want to be positioned more directly into the price of gold going forward. So, I will take the profits and my original cash and buy more gold (bullion and/or ETFs) on corrections in the on-going gold bull market.

That's the plan anyway.

Back on July 23 I posted that I planned on being out by October. I just missed my estimate by a couple of very lucrative months.

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