December 15, 2010 – Farrell’s scathing dress down of Wall Street gives more than sufficient reason to take a strong position in gold bullion investment, and his dire predictions for the stock market have strong analytical support.

One of the more successful investment newsletters, The Aden Forecast, bases its recommendations on decades of studying “megatrends” that evolve from close examination of moving averages and the underlying market fundamentals that cause them.

Because megatrends take so long to develop most forecasters restrict their vision to just a quarter or two into the future, relying on cursory observation of prominent current events. However, once a megatrend arrives it overpowers any such events, frequently driving the market in unexpected directions.

Most market analysts who do look to the long term try to fit their predictions to historical cycles that may or not have relevance due to the constant flux in market fundamentals. Megatrends, on the other hand, directly reflect the evolution of those fundamentals.

The stock market megatrend renders this warning from Aden, as quoted by Peter Brimelow in MarketWatch: “At some point, we suspect the rise will stall and it’s quite possible . . . that precedes a huge stock market decline . . . This is a scenario that cannot be ruled out considering the big picture fundamentals, like the debt load and its repercussions in the years ahead.”

According to Aden there is good news in gold’s megatrend as long as the price stays above the major trend line, which is well below $1,000. “The gold price is incredibly strong above $1340 and as long as it stays above this level, we could see higher prices . . . The point is, a 10-15% correction would actually be healthy.”

For everyone investing in gold bullion for the long haul, that’s some really good news.

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Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org