Mr. Dines Issued an Interim Warning Bulletin

Written by James Dines
Posted July 11, 2020

Publisher's Note: Today we're bringing you an excerpt from an Interim Warning Bulletin from The Dines Letter.

Mr. Dines keeps his readers up-to-date between monthly issues with IWBs and, with gold topping $1,800 and extreme risk in the markets, it is good to hear from him.

Call it like you see it,

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Nick Hodge


 

Even though many stock market averages are near their all-time highs, our Mass Psychology Indicators reveal excessive optimism by investors, so we are uneasy about markets.

The economy is clearly in the “Second Great Depression” that we had warned about in our book The Invisible Crash, with its fantastic, far-forward prediction that its First Wave would begin “in 2008.” These days, in the second Downwave, with many businesses boarded up, and restaurants closed, stock markets have been shrugging off America’s latest leap in Wuhan virus infections.        

Stock averages have recovered much of their plunges in February and March, yet business is much worse. We are skeptical about the assumption that after the virus, the economy would be the way it was before. If only because workers worldwide have now experienced the gnawing menace of not having a paycheck, food on the table, or a roof over their heads. The wounded Mass psyche aside, a good chunk of the trillions of currencies saturating the world these days might be flowing into the stock market, boosting it, but that cannot be a valid reason for a sustainable bull market in stocks.

Confirming that Mass Psychology is too bullish for comfort, countertrend golds and silvers are strong. Even Bloomberg Business TV reported on 21 June 20 that, “Gold trounced the world’s currencies this year.” It has not escaped us that bitcoins are strong now as well. TDL remains concerned that a currency crisis is the real risk, but many in the Mass are not fully alarmed about this to buy into havens. Worse, for latecomers, there are also too few reasonably priced havens left — except for the best havens: precious metals. Low-priced gold and silver stocks are quiet, building Base Formations, as if waiting for Upside Breakouts — which we predict will come soon.

China’s communist leaders are expanding imperialistically, even having seized Hong Kong from its valiant protestors, evidently counting on the world being mired in the pandemic as an opportunity for China’s leaders to seize land from India, and invade fishing rights in the South China Sea — there’s plenty to be concerned about, yet stock averages remain blitheringly oblivious to the menacing geopolitical situation.

We normally flash IWBs when there are “meaningful changes between TDLs.” The purpose of this one is to add to our concern about the stock market. 

Hopefully, our caution will have been misplaced — no harm done. We are nonetheless more concerned about the possibility of a market drop. A stock market plunge might even be a severe and sudden surprise to carefree investors. That would not amaze us, although most Analysts are too bullish to follow our caution yet.

There are still plenty of overlooked gold and silver stocks. Personally, we like “The Secret Five Cheap Buys” recommended in the last TDL (12 Jun 20, page 7) as countertrend “Buys,” right now.

Oh yes, one more possibly little thing: Comex gold eked out a new high this week by topping $1,800; not everyone realizing its importance.

Let the market speak, and we will follow it humbly.

 


James Dines is legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community. He is the author of five highly regarded books, including "Goldbug!," in addition to his popular newsletter, The Dines Letter, and videotaped educational series. Dines' highly successful investment strategies have been praised by Barron's, Financial Times, Forbes, Moneyline, and The New York Times, among others.

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