Marc Faber on interest rates, gold and silver

JIm Rogers on CNBC

The Trend is your friend

Alfonso Colombano

While technical analysis is a great tool to time the markets, trying to get market timing right is no easy task.

In my opinion, the best way for most investors to make sustainable gains is to simply invest with the bigger cycle. As we have spoke before about cycles, basically the most important cycle is the long-term bull or short market for whatever asset class you are evaluating. By studying cycles, most investors that do not want to divert their time away from their main profession or business, can comfortably and safely invest in several asset classes.

We know that equities cycle tend to run from anywhere to 18-24 years. The last US bull market we had lasted from 1982-2000. Commodities cycles also last about the same range of time, but their performance is opposite of that of stocks.

My main point is that for the vast majority of investors, rather than trying to time the market, the best solution is to do what’s called dollar cost averaging in the current bull market, which is mainly commodities. Dollar cost averaging, as defined by Wikipedia, is simply  “form of investing equal monetary amounts regularly and periodically over specific time periods (such as $100 monthly) in a particular investment or portfolio.”

For example, an investor that had accumulated precious metals and resource stocks in the past 10 years, would have probably outperformed all of the of the major “diversified” funds. Another advantage of investing in commodities directly is that there’s a lot less evaluation to be done. Even though we recommend investing in commodities producers, there are always extra risks such as management, financial reporting and others that you do not get with the physical commodity. Oil has gone from roughly $10 in 1999 to $107 currently, an increase of roughly 10 times. In about the same time, ExxonMobil, the largest private integrated Oil & Gas Company in the world (before 1999, Exxon), has increased from $33 to $84 currently, (an increase of 2.5-3 times).  The same holds for many other resource producers. Of course, it is always advisable to own these stocks in a commodity cycle since they have outperformed other sectors’ stocks.

Political Prisoner Bernard von Nothaus

Bernard von Nothaus, creator of the Liberty Dollar medallion, has been found guilty of numerous counts including counterfeit and now potentially faces 15 years in prison (he hasn't been sentenced yet) because his company minted one ounce silver and gold medallions. The US government now considers him a domestic terrorist. Von Nothaus created a product that is currently in high demand. His product competed directly with US fiat currency that has lost 96% of its value since its inception and is losing value at an exponentially faster rate. The issue is simply that Von Nothaus has threatened the government’s monopoly on counterfeiting.

While the dollar, according to the Bureau of Labor Statistics, has declined in value by over 20% in the last decade, one of von Nothaus’ Liberty gold and silver one ounce medallions have increased in value by over 425% and 585%, respectively. Why would anyone ever prefer use of dollars when comparing them to medallions? There is no wonder why the feds shut down von Nothaus’ operation. The government has set an example of what they will do to those who challenge them. Mr. Nothaus will become another of the many political prisoners in the US.

Von Nothaus is accused of counterfeit but counterfeiting, as von Nothaus has said, is “using something of no value to get something for value.” His company was doing the opposite of what the government is doing. The fact that the government is targeting those who choose to protect themselves from a devaluing fiat currency is Orwellian. Unfortunately, this is a trend that I fear will escalate.