Advice from the Adens

05/21/2004 12:00 am EST

Focus:

Mary Anne & Pamela Aden

Co-Editors, The Aden Forecast

After two decades of reading her work, I finally had a chance to meet  Mary Anne Aden, a brilliant woman, who covers the full scope of financial markets. Here, she, and her sister Pamela, discuss the outlook for stocks, bonds, currencies, and precious metals.

"The stock market is starting to break down and it's now confirming a bear market signal for the first time in over a year. With the exception of our recommended metals shares, we do not advise buying or holding stocks at this time. If you're still in the market, be very cautious and quick to sell if the Dow Industrials, Transportations, and NASDAQ stay below 10000, 2875, and 1950, respectively, as it would reinforce that a renewed bear market decline is underway. Even if the Dow rises to 10300, it's still weak in a topping process. Continue to avoid US stocks as well as the international stock markets. They are falling or rolling over and the tide is turning down. Stay out.

"The bear market in bonds is intensifying and bonds are poised to decline further this year. That is, long-term rates are rising and it's just a matter of time before short-term rates follow. We continue to recommend staying out of the bond market. If you're planning to hold bonds to maturity and rely on the income bonds provide, it's okay to hold but if the 30-year yield rises and stays above 5.52%, we recommend all bond holders sell because the 23-year mega-trend would then be turning up and bond prices would likely fall sharply. Two funds we now recommend that rise along with higher interest rates are the Rydex Juno (RYJUX) and Pro Funds Rising Rates Opportunity (RRPIX) funds.

"The major trend for the US dollar is down and once this current strength is over, the dollar is poised to resume its bear market. We continue to recommend buying and keeping a 50% position in the euro, British pound, and Swiss franc. Keep your yen, Canadian, Australian and New Zealand dollars, but don't buy new positions. You can buy currencies at everbank.com. Investors can also hold the Franklin-Templeton Hard Currency Fund (ICPHX).

"Gold, silver, palladium, and gold shares have remained weak, but the battered shares in these markets appear to be more likely at or near an intermediate bottom than at the start of a bear market. The major uptrend is being seriously tested, but it's not over. If gold were to close decisively below $376 for several days, it would then turn bearish, but it's more likely to stabilize because it's oversold. Once gold rises and stays above $390, the worst will be over. Silver is holding above its major support at $5.45. If it can hold there and close above $6.25, weakness will be over. Palladium has major support at $212 as does platinum at $745. Keep your gold, silver, palladium, and their shares. We continue to recommend buying and keeping a 50% position in gold, silver, palladium, and the shares that follow:

Agnico Eagle (AEM NYSE)
Barrick Gold (
ABX NYSE)
Bema (
BGO NYSE)
Cambior (
CBJ ASE)
Central Fund of Canada (
CEF ASE)

Coeur d'Alene (CDE NYSE)
Co de Min Buenaventura (
BVN NYSE)
Glamis Gold (
GLG NYSE)
Golden Star Resources (
GSS ASE)
Newmont Mining (
NEM NYSE)
North American Palladium (
PAL ASE)
PanAmerican Silver (
PAAS NASDAQ)
Placer Dome (
PDG NYSE)
Silver Standard (
SSRI NASDAQ)
US Global Resources (
PSPFX)
US Global World Minerals (
UNWPX)
Wheaton River (
WHT ASE)

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