September 09, 2011

S&P Bottoming at 500, Bullish On Gold

Even during the 1970s and early 1980s, the last major secular lows in the stock market, we were trading slightly below book value at maybe 90% of book value or something like that. I did expect the stock market to decline into a secular low to around a book value of slightly below that. Book value is roughly 500 or a little bit over 500, depending on how you define it.
The next 2 or 3 years, I think authorities will do everything necessary to extend the recovery attempt in the economy, and from time to time, come up with stimulus, and that will limit the downside, and I said maybe the downside is around 1000 in the S&P, or between 1000 and 1100.

I think we are in for some very frustrating years where we trade in a range, maybe between 1000 and 1500 or so on the S&P, and lots of traps and mine fields, and at the end of this period, I would say 1400-1600, we have a major disaster coming, and then they cannot support it, and the dam breaks, and then we get another washout. - in McAlvany Weekly Commentary

Felix Zulauf is an asset manager and hedge fund adviser.