Aden sisters think stocks still rule

Commentary: Blending apocalyptic gold view with tactical trends

By Peter Brimelow, MarketWatch

NEW YORK (MarketWatch) — The volcano vixens’ whiskers are twitching — but they are still salivating after stocks.

I named the Aden Forecast, edited by Pam and Mary Ann, Letter Of The Year in 2010 because of their combination of a powerful apocalyptic goldbug strategic vision with a ruthless determination to catch tactical trends. See Letter of the Year column.

This is their most recent summary:

“As you know, based on the historical record, we feel strongly that inflation will be the eventual outcome, and it’ll probably be a big one. That’s because the debts have been big, the spending has been big and so has the money that’s been created. This is the cause of inflation. It always has been, and it always will be.”

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But looking at the market rally from late 2011, the Adens write:

“Even though looking at the big scheme of things, this is likely a band aid on a festering terminal wound, we don’t want to spoil the party. Since it’s getting started, we’ll join in and have fun along with everyone else for as long as it lasts. At some point, however, the music will stop. But the party may not end too early. Since this is a U.S. election year, our guess is the music could continue for most of this year. In other words, the band aids will keep coming.”

Their assessment of the U.S. markets:

“As for the Dow Jones Industrial Average DJIA +0.64% , it broke above its 13000 resistance but it’s now below it. If it can again rise and stay above 13000, its next upside target will be near the 14000 level, which is also the major 2007 resistance. But since the leading NASDAQ Composite Index COMP -0.36% broke right through its resistance, the others may follow. For now though, stocks have risen far and fast, and a normal downward correction is taking place. Stocks are bullish and even if the Dow and Nasdaq were to decline to 12150 and 2730, they’d still be bullish.”

As for gold shares:

Mary Anne Aden (L) and Pamela Aden write “The Aden Forecast.”

“We’re also seeing signs that the lows are nearing. Be it the gold to gold share relationship, the leading indicators and the extreme moves...it all suggests that the downside for gold shares is limited. Overall, we don’t think gold shares are leading. We think it’s just a matter of time until they catch up to the gold price.

“Gold fell this month to the $1600 level. We hope you have been taking advantage of this weakness to add or buy new positions. Gold is giving us an opportunity to buy.”

Their letter also carries thoughts (which they don’t always agree with) from the great Harry Schultz, who recently closed his letter after triumphantly predicting the Crash of 2008. Read “Harry Schultz’s last testament.”

Schultz writes:

“For the last two years or so I have predicted we will not see an uncoordinated crash of the euro, but rather a coordinated fall of multiple currencies U.S. Dollar, Euro, Yuan, Pound, Yen. They all are/were in big trouble, but none of them could act on their own unless they wanted to expose themselves as bankrupt. If they default, the banking system collapses. If they inflate on their own, their holdings move away, so they had to find a way to inflate at the same time, so that the currency pairs don’t reveal the problem to the public & since people are convinced that inflation is about prices, it all needed to go in sync.

“Now, they‘ve done the first step to coordinate their printing presses. Essentially all the big currencies on the planet are increasing the money supply in a linked fashion, keeping the currency pairs stable, devaluing the savings, keeping the banks afloat, keeping the system running.

“If this is successful, the predictions of libertarians claiming the system will destroy itself by inflation will not come true. We shall see.”

I’m not sure what this means. But I think it might be significant.