Harry Schultz: The last word
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!
Written by aurick
16/01/2011 at 11:31 pm
Tagged with Australian dollars, Brazilian reals, Canadian dollars, Chinese Yuan, currency debasement, debt, depression, economic collapse, economic crisis, Financial Disaster, Gold, Great Depression, Harry Schultz, International Harry Schultz Letter, iShares, Quantitative easing, Singapore dollars, Swiss Francs
Subscribe to comments with RSS.