May 10, 2022
Investors want to see the market and their investments go up day after day and never go down. Alas, markets go up and markets go down. We are in one of those periods where all markets are going to go down.
Including resource stocks.
You can lie down and go to sleep for six months or so and you will probably be ok when you wake. The market will recover just as fast as it crashes. But watching your shares drop by big numbers can be terrifying. Cash is king right now and that is not a recommendation from me to sell everything you have. Just figure out for yourself what YOU should do. It is your money. I am not a GURU any more than anyone else is. I just get it right a lot.
In February of 2008 I spoke at the Vancouver gold show. It was President’s day as I recall. Joe Martin insisted that everyone speaking title what they were going to talk about. I called mine “The Crash of 2008” even though I never make a canned speech on any subject. I am far more interested in what my viewers want to discuss.
I started and explained that I didn’t do canned speeches. If everyone else doing them was boring, why would I be any different? And I explained that if I needed a title for speaking, that would be as good as any and if they didn’t believe I was right, they could go home and turn on their idiot box and watch the crash start. And it crashed that day. And continued for many months.
Then in Chicago on March 17th of 2008 I was on a panel at another conference talking about where we all saw silver. The best-known silver guru at the time bragged about how he was buying silver with both hands. I predicted silver would decline with the general market. It did. From about $21 or so an ounce to a low of about $9 in October. The silver guru blew up. I survived.
Here is one of the best charts I have seen lately. I think we are going to see an instant replay in resources this year.
(Click on image to enlarge)
Many other forecasters including a few a lot smarter than I am are calling for a market crash for a variety of reasons. Since 95% of brokers today have never seen a real market crash, it will go on longer and lower than most people believe.
Tom McClellan is one of the best chart guys I know and he posted this a few days ago. I think it is spot on.
Others feel the same way. Here is another good view of the near future.
You have two choices as I see things. Sit on your hands and ignore share prices.
While the market declined 89% from September of 1929 until July of 1932, it also climbed 150% from July of 1932 to June of 1933. I see something similar happening again. And remember I spent much of last year predicting a major crash beginning in October of 2021. It wasn’t obvious in the Nifty Fifty and the DOW/S&P but the internals of the market began crashing in October and most investors missed it.
Alternatively, get cashed up and sit on your hands until a hundred resource stocks are selling for less than the cash they have on hand and no one ever wants to own resource stocks or gold ever again. The DSI for gold will be 7 or 8 and the DSI for silver will be 5 or 6. That does not mean sell everything. It means keep a good solid cash position. Be prepared to put in absurdly cheap low-ball offers for great stocks and be surprised when they get filled.
While it’s perfectly true that markets do go down, eventually they will go up and the next big up move in resources will make fortunes for those wise enough to heed good advice.