Dow Jones and FTSE Climb to New Highs

Or so goes the BBC headline today.

And so great eh, the world is saved?  Hmm I very much doubt that it is.  What has fundamentally changed?  Nothing, except the worldwide currency creation continues.  That more than anything else - oh and some money probably exiting the bond market early before it crashes too.

I'll be the first to admit that I actually took advantage of some favourable investment trust discounts during December, especially for my pension (for disclosure, some of those trusts and their prevailing discounts when bought : JP Morgan UK Smaller 25%, Japanese Smaller 18%, European Smaller 18%, Henderson Opportunities 25%).  So, yes, I am counting the paper gains too.  Nice.  Or it will be if I find the right time to exit.  I don't think it's quite yet, as the aforementioned trusts are all now on 15% discounts, so still feels to me like there is some gain up to May.

Sell in May and Go Away

If the stock market hasn't tanked by then and the trust discounts have narrowed to sub-10%, I will definitely cash out of a lot of these.  I really feel this rise is unexpected (to me, but there again I don't go to Davos or Devil's island).

What to Buy Instead?

Obviously, top up on your gold and silver holdings.  I will start buying gold again soon after a 3 year pause.  Especially to minimise my exposure to the British Pound.  I figure I can convert back later now and make a profit on that too.

Golden Prospect Investment Trust is my favourite.  This invests in gold and silver miners and has plummeted from a premium to a 14% discount in about 2-3 months.  What amazing value!

Fidelity Japanese Investment trust also sits on a 16% discount.  Yes, that's quite a way out there, but in a world of such financial uncertainty, it might make weird sense to have the most stock market exposure to the very market that has least participated in the rallies.  especially when the Yen is still, weirdly considered a sound currency.

Precious Metal Mining Shares to Watch

Fresnillo is the world's largest silver producer and has two things going for it as far as I can see (1) It is in Mexico, the only country left in the world that still uses silver in it's currency and (2) It's next to the USA, which is still a huge consumer of silver and where a lot of the world's silver, both paper and the real stuff is transacted, through COMEX.

Fleet Street Letter Review

Read the Fleet Street Letter Review here.

Gold is a Risky Investment

I have not updated this blog in a while, but thought it was worth reminding people of something that has not been true for many years - Gold is a Risky Investment. Now, this might seem ridiculous, especially considering I will further quantify it by saying I believe in the long-term fundamentals, international inflation prospects of Western nations and the will of government to do all it can to save it’s own skin at the expense of your life savings. Given that last factor, especially, nothing will do as well in the next 10 years as gold…except maybe silver…and food…but that is for another day.

However, look at where the price of gold is now. No-one should be surprised to invest and see it fall, even short term, by 40-50% back to the 900$ level. What am I basing this on? It is exactly what happened in 1976, when it fell from 200$ to 100$, even as the long term trend was for gold to move another 5 times higher in 4 years. 1976 must have been a very hard year to sit there and talk to your friends about gold and reconcile the long term belief with what was really happening in the market.

The point I want to make is that anything is a risk, but gold is much more of a risk at 1800$ than it was at 400$, when it really could not have fallen much further at all.

What can you do about it, even if you want to invest in gold or silver now? Invest monthly in small amounts, via physical bullion ETFs or the internet gold sites such as BullionVault or Goldmoney and promise within yourself to keep those monthly savings going, after all, falling prices mean you actually buy more ounces each month!

lulu.com Discount Code for this book or one on gold and silver investing

SUCCESSFUL TAX-FREE ISA INVESTING / HOW TO INVEST IN GOLD AND SILVER
Purchase SUCCESSFUL TAX-FREE ISA INVESTING or HOW TO INVEST IN GOLD AND SILVER with 30% off with coupon code FEBRUARYCART305GBP.
Valid until 19th Feb 2012. Great offer from a great website.

QE III

No no, not some new luxury cruise liner, just observing that something weird is going on when the day the Bank of England announces it is going to devalue all existing money in circulation by creating £50bn out of thin air, the financial markets celebrate by increasing the value of the pound against every other currency.

So why is that exactly? Was £50bn less than the markets expected to be created out of nothing, or is the UK creating less new money than every other nation? I have no idea.

Think I will go and buy some silver.

Selftrade ISA Offering - £175 ISA bonus act before 30th April

Selftrade are offering a pretty impressive ISA deal this year, whereby if you invest the full £10,500 in their ISA account by 30th April 2010, you get 10 free trades worth a total of £125 to use during May.

Not only that, but you can boost that by a further £50 by getting me to recommend you. Obviously, I'm more than happy to do this. You can do that by emailing me at alan@doityourselfisa.co.uk using the mail address matching that you want to apply for the account in.

All I can say is, if you're interested act as soon possible. This great offer dies on 1st May 2010. Best ISA offer I've seen so far this new tax year, for sure. In the interests of disclosure I'm happy to reveal that this is where my new ISA money is headed this year, for sure.