You know that feeling you get when someone tells you something is about to happen - and then it does? It can be anything from freaked out to marvel to anger for not paying more attention. I got one of those feelings today when I read an article about Warren Buffett. It says he is bailing out of stocks.
Just a few short weeks ago I told you of a MarketWatch report I read that warns of a meltdown in stocks. When I first read the report, l felt it was interesting enough to comment on but wasn't too concerned that it was immediately imminent. It seemed a bit of a stretch in the midst of QE2 and a current budget that has as much room for stimulus built into it as did the 2009 budget. It was easy to believe all the stimulus could keep the economy and markets propped up for some time.
At the same time, reports were everywhere that gold was in a correction and prices were on their way down to $1275 an ounce - maybe even $1225. Expert after expert was paraded past us on the financial channel, saying gold was losing it's luster and that the Fed's QE policies were going to drive stocks to the moon.
Now the stock story has a little twist to it and gold has some surprises of its own. Warren Buffett is said to be selling stocks and gold did the opposite of what the geniuses said it would do. Not only did it not drop below $1300, but, today it rose above $1400. Let's not leave silver out of the conversation, either. Less than 30 days ago silver spot dropped as low as $26.50 an ounce. Today, it broke above $34 for a short time.
What's next? Winter in Australia and here at the same time?
No one has a crystal ball but indeed events of these last 30 days make no sense in many ways but perfect sense in others. You cannot cure debt with more debt and you cannot continue to hold out hope for endless stimulus to keep the economy and the markets afloat.
But to think the end-game is so close that Mr. Buffett is selling stocks in favor of cash, should cause anyone to step back and give serious thought - especially those who are not diversified into gold or precious metals.
Whether your retirement plans are 5, 10 or even 20 years into the future, it makes no difference. Current policies of print and bail have already set our course. It is one of very high inflation or one of default. We know our debt is unsustainable so it is just a matter of time. Time always tells and time never lies.
The only question that remains is how you will deal with the information that comes before you.