prechter on gold, page-5

re: prechter on gold (for orchard & dub) Hi Orchard and Dub

Below are excerpts from Prechter's latest book as reviewed by Cath Davey, respected TA from Investorweb. I haven't read Prechter's book but it would seem from the extracts quoted (see below) that Prechter sees precious metals (i.e. gold and silver bullion) as a safety rope when equities plunge off the precipice. Gold and silver STOCKS however seem to be damned with faint praise.... Here are some of Prechter's views:

6. Commodity prices along with share price will eventually fall in an environment of deflation and depression. (Prechter argues the recent rally in commodity prices has tracked stocks higher and this reflects the general expansion in liquidity.)

7. Gold and silver are an exception because unlike other commodities they can [be] physically controlled by the purchaser. Secondly gold and silver have monetary value. "Precious metals are likely one day to become the most important asset class to own," says Prechter.

8. In the past gold mining stocks have gone down more often than up in a common-stock bear market. From the top of the stockmarket in 1929 to the bottom in 1932 gold mining shares rose slightly.

(I have read on Mineweb though that some major international gold stocks rose 5-fold from 1932 onwards, after initially declining along with equities in the '29 crash.)

Don't know whether this helps. Personally, I have kept a few core biotechs (NRT and GTG) but shifted everything else into gold and commodity stocks around 15 months ago. I'm very concerned that if we have a crash of the magnitude the bears are predicting, NO sector will be safe except cash - and even then we could see some very big foreign banks go to the wall due to derivatives. I agree with Buffet completely on this point (and many others).

R/Gupper