Oct 13 2009 12:46PM

The stock market has had a spectacular short-term run, based on unjustified optimism. Most commentators are claiming the economy is beginning to recover. The stock market has been reflecting their optimism for several months. As the optimism has finally begun to be tinged with pessimism, the stock market has topped out.

You can now bet against the stock market. I don’t usually make “short-term” calls like this, but the stock market has made such a big, unsustainable rally, it will cave in big time.

If you carefully read the history of the Great Depression of the ‘30s, you will see that at least twice during the Depression the stock market had a rally equal to the one we just had in the last few months. If you are a short-term trader, which I am not, you could probably make a lot of money. But those rallies were transitory, and the Depression wasn’t over until WWII brought us out of it.

Gold and silver have been rallying, and gold seems to want to hold above 1,000 and silver above $17. They have performed at least as well as the stock market, even during this rally. Increase your bullion holdings.

Jim Raby, my stock broker, believes the bankers will try to hold gold below 1,000, and he makes a pretty good case for it. However, it doesn’t seem to be working that way, so I would increase my bet on the metals, especially silver, because a big new player has entered the game – China.

China is now a big buyer of gold and silver for their banks. Chinese TV has been recommending that everyone should go to the bank to buy gold and silver. That’s 1.3 billion people getting propagandized. This is a major bullish factor for gold. Perhaps the bankers have met their match.

Increase your holdings of gold and silver bullion or coins. Take a whirl at the mining stocks as outlined in The Ruff Times.

My New Book is About a Month Away

My new book How to Prosper in the Age of Obamanomics is in the final stages. It goes to print this week. We will feature it in our website (www.rufftimes.com) as a free gift for new subscribers.

If this book is widely distributed, it will put a target on my back. I have learned the hard way that Presidents will retaliate when under attack, and this book certainly attacks Obama.

When I published How to Prosper During Bad Years in the 21st Century three years ago, I thought it would last for a long time. The book is still accurate, but not current as so many things have happened in the past three years that events have overtaken it. To bring you current, I had to write a new book.

This new book deals with major current issues such as Obamanomics being synonymous with Socialism, Health Care, Ruffonomics (how to protect your family in the age of Obamanomics), and investments which are right for this moment.

By Howard Ruff
The Ruff Times

*****

Howard J. Ruff, the legendary author and financial advisor, has re-edited and re-issued his 1978 mega best seller, How to Prosper During the Coming Bad Years, still the biggest-selling financial book in history, with 2.6 million copies in print. He is founder and editor of The Ruff Times financial newsletter. This article is from a recent issue of The Ruff Times. The newsletter is much more comprehensive and deals with a broad spectrum of middle-class financial issues and includes an Investment Menu from which you can build your portfolio. (You can learn about it here). The Ruff Times has served more than 600,000 subscribers – more than any financial-advisory newsletter in the world. His updated and revised book, How to Prosper During the Coming Bad Years in the 21st Century. You can get it free when you subscribe to The Ruff Times (www.rufftimes.com), or if you buy the book at your favorite bookstore, you can deduct $10 from the subscription price.