When the Bough Breaks the Cradle Will Fall

We're sitting on high profits from our gold stock sales. This can be a trip to Dullsville watching our bulging cash account accrue a measly four percent while we await the next buy signal for the gold stocks. I don't know about you, but I like action, I like the trade, I like the volatility. I need something I can WATCH, and hone my technical analysis acumen. So, I look to the general equities market for action. What do I see? Aside from little islands of hope like Cisco and some other beaten-down techs, very little opportunity is to be uncovered - in the BROAD scheme of things - just like the HUI has now turned down there are a few junior laggards that have yet to follow...yet. The SPX, and NASDAQ are also throwing off signs of imminent corrections. Even the Dow Jones World Index has turned over. The gold and oil/gas stocks just got a head start.

Not knowing how far and deep these indexes will go down, it's probably best to have some semi-permanent contra-cyclical components in one's investment portfolio. I've had lousy results with put options. My timing may be good, but the implied volatility timelines chop me up. I've always had some Prudent Bear (BEARX), but feel RYVNX can give us more upside leverage to a drop in the NASDAQ. Mutual funds aren't as glamorous as individual stock oscillations, but as general equities are still in a long term downtrend I feel my time is better spent on selecting a gold & gas stock portfolio for the next run.

I've come to believe the RYVNX can give us a nice ride on the downward wings of the general equities markets. Let them do the options and futures thing for us. I admit that watching cash grow is a bit like watching paint dry, but in the case of RYVNX there can be some satisfaction derived from watching the NASDAQ fall and knowing you're making money while it occurs. It's performance during this past NASDAQ bear market rally has been horrible. Look instead though to what it did when the NASDAQ bubble burst in 2000 - - it went from $24.01 to $117.36 before the recent rally brought it back to earth! Sure beats a cash account in T-Bills.

One downside I see is its redemption fee if cancelled out within 6 months. That being so, be sure any money that goes into RYVNX is from non-tradable funds within your portfolio.

Fundamentally speaking, if you are of the opinion that the Fed and its sycophantic foreign central bankers will go too far in ratcheting-up interest rates - as they must - to break the back of the commodities bull, then stock markets around the world will comply by eroding in value. Safe havens will be spotty, and probably discovered too late to do any of us any good.

This is all done with the congressional elections of 2006 but ten months away. Contrary to what we're told the Fed's main mission is to see that the status quo of who rules America is maintained. That can't happen if commodity inflation is raging and there is widespread voter discovery that their paychecks are rapidly buying them less. The banking cartel can still see to it that the US$'s value declines - just not at a rate that becomes alarming to voters. So, what we must have now is an asset correction, and then a resumption of appreciation just in time for the polls to open. All will be well, incumbents or replacements just like them will be re-elected, and the stranglehold of debt will be preserved - and a rising gold price will once again be flashing red.

Only this time more will notice.

- - CV


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