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7 WEEKS OLD, BUT LOOK AT THESE PREDICTIONS!
The JSE will crash but gold shares will soar
For the past four months my professional analysis has explicitly detailed that the euphoric bull charge in share and index prices that began in January was falsely based.
Suddenly, the market events of the past few weeks have chillingly confirmed my prognostications. But players still cannot believe the 20-year capital-gains party is over. This time around there will be no short-term regmaker. Forget about a quick selloff and a resumption of the bull trend in a couple of months. The JSE has commenced its wipe-out "Killer C Wave". My projected 4 000-point collapse to a downside target level of 5 800 on the JSE industrial index is well and truly in motion.
The chart patterns that have clearly indicated this bear market scenario for some time are not limited to the emerging markets but apply equally to all major global indexes. Expect a worldwide tidal wave of bearish sentiment.
That's the gloomy news. Now for the silver, or rather golden, lining.
Our gold share market is about to explode. For the past six months the shares and the JSE gold index have been mapping out a classic base formation. The upside potential from this pattern leads me to look for a 50 percent profit in most gold shares by the end of the year.
This reviled yellow relic has begun to rise phoenix-like from the ashes of global negativity and will again save this country in its hour of need, but for the last time.
My portfolio recommendations are to ditch all those overvalued high-tech and financial shares and climb into this gold market. Amgold, Harmony, Randgold, Anglogold and Western Areas are the buys for the heavyweight investor. Medium portfolios need look no further than Avgold, which has produced a classic six-month sideways consolidation from which it has broken upwards during the past week. I believe this share will be one of the better performers. Its cousin, Avmin, has also given a significant buy signal. Kalgold is another potentially strong performer.
The clarion call has gone out to unit-trust investors to move into the global funds to profit from the rand's demise. Forget it, it's too late. Moreover, the stock markets of the world are not looking happy, so any involvement in global unit trusts must be regarded as a purely speculative play on our currency.
I believe a switch into Old Mutual's Gold fund will provide a far better return by year's end. For those who balk at moving into the more volatile mining arena, a look at the accompanying chart that shows the relative performance of Syfrets's Growth fund compared with its Income fund will give an overall analysis of the performance of interest-oriented unit trusts compared with equity funds.
The falling line shows that interest funds holding near cash and short-term debt instruments have dramatically underperformed the unit trusts holding JSE shares for the past 10 years. However, the pattern of the chart since 1996 indicates the trend is unlikely to continue. It shows that a performance swing away from equity funds into Interest or Gilt funds is under way.
A major switching of portfolio positions is called for. The days of "hold it for three to five years" are over. Investors, and their advisers, must now look to data of this type to show them where the market action is likely to be for the next cycle, and it certainly does not appear to be JSE equity-oriented.
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