Dear Gold Bug,

Diversification is the most important part of any portfolio, second only to rebalancing. You are right to think that you should take profits on any industry that is trading near its high and buy back into undervalued assets in another industry. Always make sure that you are doing this according to that carefully laid out plan of diversification, however, so that you are never over-extended in any one asset class. For instance, if you're 50 and you already have 50% or more of your assets in stocks, then it might be more appropriate to take some gold profits and buy some Treasury bills or international bonds. Certainly, if you don't have any large cap stocks, and Google, Microsoft, General Electric, and more are trading at multi-year lows, that should be a consideration.
However, with stocks, remember that you must keep a percent equal to your age safe -- i.e. NOT in the stock market. In bear market years, such as we are experiencing currently, many professionals overweight to liquidity. Do not be in a hurry to buy anything when cash is king. Cash will afford you the option to buy even lower next year on many different assets, especially if we are close to or entering a recession.
As for the exact point that is the highest for gold prices, no one has a crystal ball. There is a big difference between all and nothing, however. If you're happy with the price you're receiving and feel that money can be redeployed elsewhere to mark up gains again, that's as great as it gets. I've listed the annual gains of various assets directly below. Anytime you perform above the general marketplace, you are assuring that your wealth increases more robustly than your peers, and that is a great, steady, calm, easy way to increase your prosperity and abundance. Trying to "get rich quick" or wait too long for the top price is often a money-losing proposition. In volatile markets like today, many professionals take profits early and often (which is one of the main reasons we are experiencing such dramatic volatility).

Investment Portfolio
Average Annual Gains 1968-2007

Asset Annual Gains
Small Cap Stocks 12.22%
Large Cap Stocks 10.52%
Corporate Bonds 8.47%
Gold 7.97%
Real Estate 6.4%

Source: Morningstar and Realtor.org © 2008

You can probably find a site that tracks gold prices by "Googling" gold prices! Good luck!
Additionally, below are links to two interviews that Natalie did with gold specialist, CEO and Chairman Rob McEwen (U.S. Gold). Rob has been in the gold industry for two decades, and he shares his wisdom candidly in these interviews. He notes that gold prices are tied to consumer confidence in the financial markets. When people have less faith in banks, they move to gold. If the financial sector continues to experience so many problems, then the interest in gold could continue to increase, even if it seems high right now. There are a lot of if's in that sentence, however.

Sitting on a Gold Mine. by Natalie Pace. Exclusive Q&A with Celebrated (Former) Goldcorp CEO, Rob McEwen. Vol. 3, iss. 2.
Activate link:

http://www.nataliepace.com/newsletters/members/news.php?np=yes&issue=302/302&article=04

Nuggets Of Wisdom
(320 sec.) Gold industry veteran Rob McEwan on investing and exploring.
2006-08-22 on the Forbes.com Video Network
Activate link:

http://www.forbes.com/video/?video_url=http://www.forbes.com/video/fvn/business/np_gold082206&id=np_gold082206&title=Video%3A+Nuggets+Of+Wisdom

(If you have trouble finding the Forbes.com VN interview, just go to Forbes.com, enter Natalie Pace in the search box, and you'll see the interview listed there.)

Do you have a question for Natalie? Just email Heather@NataliePace.com.

Track Record of our Reporting
The Hot News and Cooling Off lists below have a winning track record - in bear and bull market years. 15 companies listed below have performed well this volatile year, versus just five that went in the opposite direction of the reporting. Even during the flat year of 2007, our featured companies had outstanding performance between Oct. 2006 and June 2007! 4 out of 9 companies - almost half - doubled or more. 48% of the companies featured in my stock newsletter between 2002 and 2005 - 25 out of 52 companies -- DOUBLED from the time we listed them in our feature article to the time when I took the company off of the Hot News on Cool Stocks list, and the majority of the remaining 52% well outperformed the marketplace. (See the chart in the article, "25 of Our Companies Have Doubled," from volume 4, issue 4, the April 2007 ezine, for a listing of companies.)

3 out of 5 Company of the Year selections more than doubled. My 2003, 2004 and 2007 Companies of the Year have posted up to 9000% gains (Taser), up to 690% gains (Opsware) and up to 215% gains (Suntech Power Holdings), respectively. MySpace, my 2006 Company of the Year, has been a large part of News Corp's success with shareholders. Only OSI Pharmaceuticals, my 2005 Company of the Year, has lost money. So three out of five are superperformers, one is performing well above the market and one is down. That's the kind of record that puts you on top on Wall Street. (I launched my first publication on 11.15.02, and featured the first Company of the Year on 1.1.03.)

Additionally, the market performance of the companies that are featured in my Hot News on Cool Stocks list has kept me at the top of over 830 A-list pundits on TipsTraders.com. I've repeatedly occupied the #1 position. TipsTraders.com listed me as a Highly Recommended Stock Picker, in 2006 and 2007. Some of our best picks include: Bioteq Environmental (BQE) +144%, Blockbuster Video (BBI) +82.5%, Genentech (DNA) +415%, Google (GOOG) +545%, Las Vegas Sands (LVS) +139%, LifeCell (LIFC) +180%, Macerich (MAC) +150%, Opsware (OPSW) +690%, Rio Tinto (RTP) +145%, Sohu (SOHU) +150%, Suntech Power Holdings (STP) +107%, Taser (TASR) up to 9000% gains and World Water & Solar (WWAT) +181%.

General Stock Market Performance

Gains 2-year 1-year 3 mo.
Dow: +14% -1% -6%
Nasdaq: + 2% -6% -12%
S&P: + 5% -6% -8%

Commentary: Trading Tips for Turbulent Time
We issued a 911 UPDATE ON THE HOT NEWS ON COOL STOCKS LIST on March 11, 2008, the morning after the markets dropped to their lowest point in years. This update is still available online at the Sharing Wisdom bulletin board in the topic of the same name.

As we indicated in the Hot News List this month, there is so much volatility in the marketplace that we may be providing updates to the list between the updates! So, even though most of the news on the individual companies remained the same (outside of the financial sector, which continues to be under extreme pressure daily), on March 11, 2008 the markets dropped to their lowest point since the beginning of 2006. Oil was over $100 per barrel and the financial markets were reeling.

March 2008 was your chance to own companies like Google for prices that haven't been seen for years. Imagine, if you bought Google for $411 on 3.11.08, you were buying at a discount of 45% from the high of $747.

So, read the Hot News updates on any of the companies listed below that you are interested in adding to your portfolio. What this note is intended to do is to alert you to the prices that these stocks are trading at today, so that you can decide if they should jump into your Stock Shopping Cart or stay on your Stock Shopping List. Remember that in your long term portfolio, you're looking for a multi-year low price, so that you can hang onto the company for years to come (at an ever-increasing profit). In your short term trading portfolio (which should be a very small percent of your investment portfolio), it is important to take profits early and often when the markets are swinging 200 points in opposite directions day to day.

Some of the companies listed on the Hot News list are more appropriate to add to your long term portfolio, and others are more appropriate for you if you're interested in short term trading. How can you tell the difference? If the company has a market capitalization that is under $1 billion then it is a "small cap" company with a higher risk of volatility in the share price.

In a market that swings as wildly as this market has in the past few months, that means that the share price is having dramatic fluctuations (something options traders love). If you don't want the stomach ache or to monitor the position daily, and if you aren't prepared to take your profits early and often, it's best to avoid individual small cap companies. On the other hand, when you see companies that are valued at over $50 billion trading at multi-year lows, like Google, Johnson & Johnson and General Electric were in the first part of March, that might be a good time to add them to your long term portfolio. The markets can shake the price around, but over the long term - many years -- if you can buy for a 40-50% discount, that should pay off.

Note that the general market trends continue to be down-trending with very high volatility.

So, why did I think that share prices might go up again, when March 10th felt so awful? Because the Feds were expected to come riding to the rescue again with another dramatic rate slash. According to a report from Reuters on March 11, 2008, Goldman Sachs analysts were expecting the Fed Fund rate to fall to two by April. As you can see, the rate was slashed as they predicted and currently stands at 2 ¼ percent. There has been a very high correlation between these rate slashes and the markets getting stronger again.

Also, please note that some of our top performers are on the Cooling Off list. If you don't know options trading, you should consider coming to my May Retreat. This is where most of the money is being made in today's marketplace -- in puts. And because the downtrend has been so strong and dramatic, you can make quite a lot in a short period of time, even buying into options that don't expire until 2009. Of course, the commitment you MUST make when trading options is to keep the amount limited to a VERY small portion of your stock portfolio and equal to your experience. In other words, if you have never traded options before, do it in a fictitious portfolio for a year before putting your hard-earned cash on the line. And, because the market mood swings are daily, you have to commit to a daily awareness of whether your puts and calls are "in the money."

Options are very high risk and are only for the experienced trader. AND YOU SHOULD NEVER BE TRADING YOUR NEST EGG (not in options or individual stocks). Taking a long term view and letting the magic of compounding and religious investing each month (where you participate in various buy and sell moments) really does work over time. The average gains for the last 25 years were still 12.4% as of January 2008, and that includes 9.11.01, the Asian Crash of 1997, Black Monday 1987...

To learn "Trading Tips for Turbulent Times" and how to "Recession-Proof Your Portfolio," read the articles in the February 1, 2008 ezine, which is archived at NataliePace.com in the online magazines section.

However, most people are more worried about tomorrow. Will the markets continue to drop? My sources say that the Feds will keep cutting rates until we hit 3, and that should start stimulating the economy again around June. Not much to love in between, but I've got a few stocks that I'm going to test. Additionally, I wouldn't underestimate the fever of the 2008 Beijing Olympics, particularly with regard to Chinese stocks and alternative energy. The Chinese are focuses quite heavily on green energy for the event, which could very well wow the world. Since clean energy was the top performer in 2007, and Suntech (STP), the solar manufacturer sponsor for the Beijing Olympics, was an absolute rocket ship in the stock market, I'll be watching anything related to that sector after tax season.

Gold until then?