Quantum Pranx


Harry Schultz: The last word

with 3 comments

by Peter Brimelow
MarketWatch, posted originally Jan 12, 2011

NEW YORK (MarketWatch) — After 45 years, Harry Schultz has just published the last issue of his International Harry Schultz Letter. He’s superbearish but opportunistic.

Schultz, now 87, is one of the legendary characters of the investment letter industry: a hard-driving promoter who specialized in bold, radical high-concept stands. In his last issue, Schultz does not attempt a grand summing-up. But he does observe this:

“Roughly speaking, the mess we are in is the worst since the 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage & political will to recognize the mess and act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched and where the rot is by far the deepest.”

He writes favorably of investment advice given in a recent interview by former Reagan Office of Management and Budget Director David Stockman:

“Stockman replied (to my huge surprise, coming from a former top government official) ‘Get some gold, beans, water, anything that Bernanke can’t destroy. Ron Paul is right. We’re entering a global monetary conflagration. If a sell-off of U.S. bonds starts, it will be an Armageddon.’”

About gold, Schultz retains his long-term bullishness. He quotes the respected Seeking Alpha service:

“For gold to match the growth in US M1, M2, public debt & budget deficit, gold will have to reach $1,800, $2,400, $7,800 & $13,200, respectively. While I can’t imagine gold going to $13k, these numbers tell me that calling gold a bubble is a bit premature. In my view, money supply, public debt & the budget deficit are in a bubble, not gold, not yet.”

Schultz’s comment: “Wake me up at $2,400 gold.” But Schultz also retains short-term flexibility. Looking at a chart of iShares MSCI EAFE Index ETF (EFA 57.66, +0.39, +0.68%) , he notes:

“It’s a stock market index for Europe, Australasia and the Far East. Chart shows massive bullish base. If it breaks upside, these areas are where we should buy some new investments. Some modest pre-emptive buying in stocks there, having good chart patterns, is justified.”

Schultz’s final investment allocation recommendation:
• 5-10% Stocks (non-golds).
• 15-20% Commodities: via futures, commodity stocks &/or physical assets.
• 50% gold stocks & bullion: 15% blue chips, 5% junior, 5% bullion via futures, 25-35% in physical bullion.
• 0% currencies (“Close out ALL fiduciary time/call deposits, money market funds & municipal bonds, pension funds…”)
• 1-5% Cash in hand. (“Stored privately.”)
• 0-5% bear stock market protection via ETFs like ProShares UltraShort Dow30 (DXD 20.18, -0.20, -0.98%) .
• 15-20% Government notes/bills/bonds (“In 3-6 month T-Bills/bonds only — buy these only in Swiss Francs, Australian dollars, Canadian dollars, Brazilian reals, Singapore dollars, Chinese Yuan only).”

Harry Schultz’s final words: “Good luck to us all.”

N.B.: Quantum Pranx does not offer investment advice. But you knew that already!



3 Responses

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  1. This is slightly off topic, but I can’t hold back any longer…

    I’ve been an email subscriber to the Quantum Pranx blog for the past few months, and the posted articles always seem to deliver the information I am looking for, and more.

    What I don’t understand is why I have NOT ONCE seen comments by readers to these articles. I take pride in having an open mind, and being able to see a situation from multiple points of view, and thus reading people’s commentaries are critical to fully understanding the issues presented.

    Am I your only subscriber? Am I the only person reading about these eye-opening events happening all around us? Or perhaps I am just part of an extremely small minority that sees these generally negative articles (lately) as warnings of a grim future, and is able to accept these facts for what they are?

    Where the hell is everyone??


    17/01/2011 at 7:06 pm

    • Thanks for your comment and questions around the issue of “where are the others? Am I the only one?”
      I had to laugh at that, it brings up the vision of levitating alone in some far-off (but near) dimensional Void, on a long spiritual journey and recognising (perhaps) that there is only ONE entity here, and that entity is ALL of us, and there is only ONE, which is Pure Consciousness, etc. You know what I mean, I’m sure.

      But seriously, I have no idea why I do not get too many comments, except that it may be that I only post articles by other writers (as you know) and perhaps people feel that a re-posting doesn’t deserve a comment. I really don’t know, I didn’t expect many comments anyway. I don’t care, either. I’m not concerned about the numbers. They are sufficient, I’m not trying to break records. But no, you are not the only subscriber! Most of the people who come to this site are def. not subscribers, they are googling some topic perhaps, and they find QP. Just passing…


      17/01/2011 at 11:38 pm

  2. In his book “Bear Markets” Harry Schultz reminded “the DJIA is in a bear market one thiird of the time” for over a hundred years. He was referring to the 4 1/2 year business cycle wave, not the 54 year Long Wave.
    Since the bottom of the Dow in 1932 to the present, the trend of the Long Wave was straight up – pausing at 1968 for many years. We have forgotten that these same cycles occurred before the 1929 crash.
    The Russian economist Kondratieff traced these (quantum events) bottoms. The last 2 were in 1932 and 1973. The 52 year or 54 year Kondratieff Cycle.pundits call it THE LONG WAVE. View the chart here http://docs.google.com/viewer?a=v&q=cache:iKHSNtEXuS4J:www.kwaves.com/200210KondraWithCRB4.pdf+long+wave+chart&hl=en&pid=bl&srcid=ADGEESg8WqyMDqHPBaiEZ-pOS_Ej-mjMCP1fOSl1j9HhGdyiw-qOhKrbRd5IMd9WvO_PYi01e65C7mmLP2ns53QaztqLHEBaEjVozEwFVZ-W6ZZG7Z2gXw4LxAYHRzK72QKLKwO6KZ6t&sig=AHIEtbTIR7awTQBlYi49aqStFBuGglq8zQ&pli=1

    Has the current August 2011 meltdown panic marked the peak of the DJIA for decades? Not necessarily because the events per period of the quantum events of The Kondratieff cycle are accurate, but only as a moving average (when averaged as a series). But measure 52 years from the last Long Wave bottom in 1975 and you get 2027 as the idealized bottom reversal point, and could happen as early as 2002. Historically the Long Wave top occurs about one to three years before the Long Wave bottom, so plan for the next Depession crash to begin any time after 1999. …(JG written Aug. 9, 2011.)

    John Gilbert

    09/08/2011 at 6:00 pm

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