Windfall Gains In 2008

The Sid Klein Comment

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Windfall Gains In 2008:
Esoteric Alternatives for Hedge Funds &
High Net Worth Individuals

The following is a brief excerpt of the yearend report. The 20-page report that was sent to subscribers contained a highly leveraged, specialized and differentiated vehicle created by me for eligible and sophisticated investors, as part of the narrow field of appropriate, yet highly lucrative opportunities during these times that demand greater caution, expertise and knowledge for surviving and thriving during a bear market, as we did at the beginning of this decade, and other times, over the past 25 years.

Technical (gold)
The previous report warned of a possible eruption to $1000 by yearend, since the forecasts made at the beginning of the year have been unfolding and thereby heading in that direction.

The song remains the same. While potential short term is to $750, it means nothing and the long-term risk is to the upside. As written for 6 years, this is a secular bull with only one direction. The first phase, I forecast, was to $500. Then, it would be critical to stop playing with it but stay long as a matter of permanent currency allocation, as the metal would advance against all major currencies. And it has.

The 3rd phase, I've explained (but not harped on), would be and is one of acceleration, and acceleration to the upside means the point at which silver takes on dominant importance in the currency complex. Yes, that's right. I now consider silver a currency and will now treat it as such.

Beware the yearend opportunities, as extremes are achieved in equity, currency, and metals markets, as fund managers are guided by business considerations, as opposed to purely market factors and considerations.

Readers were advised to go 200% long on a spike toward $11.00, which was perfectly achieved. Last month's report warned that a decline to $14.00 should be used to accumulate by those new readers who are not yet long, notwithstanding potential to $13.50 and $13.25.

I stated clearly that this move alone in one's holdings would create the year's desired portfolio returns, all else notwithstanding. Frankly, for 6 years, it has been as easy as taking candy from a cavity-ridden Western central banker.

Since the beginning of 2002, I do not believe that anyone in the world has enjoyed this track record of success with gold and silver and, now, the asset allocation is being modified to include silver. Heretofore, I advised including 10% silver at the expense of a 50% gold allocation, which would be reduced to 40%, but only at the discretion of the investor. However, the official asset allocation for all wealth now changes to reflect the turn in silver's fortunes versus gold itself (see "asset allocation", at report's conclusion).

After the Yen's initial 11% blast to the downside, there was a correction toward 118 that had tested the faithless. After warning to be unmoved by such a bounce, by recognizing it as such, the Yen resumed its new and only 5-month old bull market and it has now completed a near term low 13% from its bottom.

Our major currency asset allocation has been the best in the world on a risk and volatility adjusted basis for years, by combining the Swiss Franc, the Yen, Euro (until one point, this decade), gold and silver, in the way that I have.

I have been very clear this year that the Yen is where the big currency gains lie ahead now for global investors and that this is in keeping with a brand new cycle for domestic Japanese stocks powering upward in the face of global equity declines, much as what occurred at the beginning of this decade. In 2004, the Yen peaked and then the domestic equities did the same.

The lag between the currency and domestic non-multi-national equity turning points was the same in 2004 as it is now, as will be evident very soon, with 2008 upon us (see JAPAN above).

From the September report:
"This is a wonderful time to own the Yen, gold…and silver!"

LEGAL NOTICE: This market letter is the work product and intellectual property of Mr. Sidney Klein. It arises out of his training and profession as an international expert on financial equities. It is a private correspondence from Mr. Klein to his subscribers. Any person who copies or otherwise disseminates this letter becomes subject to international criminal and/or civil prosecution under the Universal Copyright Convention and the Berne Convention for the Protection of Literary and Artistic Works. Nearly all countries in the world have signed both of these Conventions and have pledged to enforce them through their own legal systems. In addition, Interpol may be called upon to assist in the international enforcement of these Conventions through its processes of arrest and extradition. If you are the recipient of a copy of this market letter, whether through the internet or by facsimile, you should immediately report to Mr. Klein the name of the person or entity who sent it to you. Send your email to sidklein@sidklein.com.

DISCLAIMER: This market letter is intended to assist in the dissemination of information to private subscribers. The information contained herein represents Mr. Klein's best efforts in good faith to advance knowledge to his clientele, but there can be no implied guarantee as to its accuracy or completeness. The information is given as of the date appearing on this market letter, and Mr. Klein assumes no obligation to update the information or advise on further developments relating to the information provided herein. No solicitation to buy or sell securities is intended, and none should be inferred. Investments are inherently risky, but investment risk itself is a function of individual preferences. Thus any opinions, recommendations, or judgments expressed in this market letter are of necessity abstract and general. They must be modified, accepted, or rejected by individual subscriber/investors whose risk averseness cannot be known to Mr. Klein.