After this segment, you
can see Jim's
Sudden:Death picks
here...
Jim:
In a market this
chaotic... this
uncertain... one that
got clobbered for 373
points... and was even
uglier if you owned a
tech stock or a
financial... you cannot
afford not to own gold!
Gold is the ultimate
hedge against
insanity... it's the
ultimate hedge against
inflation... I urge you
to sell into strength...
Remember, I told you to
sell on Thursday and
then on Friday... Yes,
yes... I hope you
listened to me...
So now I want you to
take some of those
proceeds... and very
specifically, I am
telling you to buy a
gold stock... something
I preach, when we play
'Am I Diversified' every
Wednesday...
I want you to buy a gold
stock like
Agnico-Eagle Mines Ltd. (AEM)
or
Barrick Gold Corp. (ABX)...
I'd like you wait down a
dollar tomorrow.
Obviously, these things
are just up huge, but
they're not done... or
you can buy an ETF... or
a stock that mimics the
price of gold... which
is what I did today for
my charitable trust... where I was
selling. I hope you
were.
But you must buy gold
because you need the
insurance... more than
any other time this
decade... You can buy
some gold here, and then
buy some on a retreat...
that's the plan I have
for my trust...
There are a lot of
reasons to think gold
will go higher, despite
the fact that it was up
huge last week... it had
its biggest one day
gain... but that is not
why I want you to own
it.
Right now, gold is
simply insurance for
your portfolio... and,
if you're investing
right now, oh doctor, do
you need insurance...
Oil prices are up
huge... putting an end,
at least temporarily, to
my
happier-days-are-here-again
thesis. Now I am not a
believer in this oil
surge... at one point,
it was up $25 bucks...
it was just a
contractual issue. I am
convinced that it was
just one big hedge fund
leading the way that
panicked... hedge funds
gone wild, part 2...
means that hedge funds
were caught short oil
today, not financials,
like last Friday...
But if it's right for
oil to be going up, then
gold should rally too...
and, if demand is
actually softer, because
of a recession, gold is
a better hedge against
the craziness than oil
will ever be, because we
will brim up with oil,
but we will not run out
of gold...
More on why I think it
will go up in a
moment... I don't want
to confuse things... I'm
saying that, if the
economy is slow, oil
will go down in price.
If the economy is slow,
it doesn't mean that
gold will go down in
price...
Beyond that, any market
where Goldman Sachs and
Morgan Stanley were
suddenly teetering is a
market that I can't
endorse, which is why,
again, I told you to
sell earlier, and which
is why one of the few
areas I am endorsing is
gold...
Alright, supposed for a
moment that the
(Treasury Secretary,
Hank) Paulson $700
billion bailout plan
doesn't pass Congress...
that the plan fails.
That's a real
possibility, given the
Bush administration's
lack of credibility, and
that the democrats
control Congress, not to
mention that this is an
election year, which
always leads to bad
policy.
What happens if we don't
pass the plan, or if we
just don't pass it fast
enough?...
What are we trying to do
here? What is the
government trying to
do?...
We're tying to put out a
chemical fire and, if we
wait too long, it's as
good as doing nothing...
No plan means a frozen
financial system... it
means a Depression... it
means you can't take
anything bad off the
table... If this doesn't
work, it means we're
going to have a
Depression, we're going
to have the Great
Depression 2...
In a situation where the
plan doesn't go through,
I really believe that
gold will be the only
trusted store of value,
especially if people
flee their money market
funds. That's why gold
had a record-breaking
day Wednesday, and
another big up day
Thursday, before pulling
back on Friday, when I
should have been in your
face to recommend it,
but I wanted you out of
it at that point...
People see the
uncertainty, and not
just investors, are
seeing the value of
gold. There was a great
article in The Wall
Street Journal on page
C2, about how central
banks the world over are
buying gold, because
they don't trust
dollars, and they know
that gold is the only
sure refuge. This is a
major turnabout. Gold
was kept low for a long
time because the central
banks were dumping.
So, if the plan fails,
that's good for gold...
But what if the plan
succeeds?...
Anytime you see the
government printing a
lot of paper, a lot of
currency, so they can
print large amounts of
money, like our $700
billion bank rescue
plan, you should be
thinking inflation...
This plan is definitely
inflationary if it
passes, and gold is also
the best hedge against
inflation...
Either way things go,
gold is going to work.
There is just too much
uncertainty in the
system right now for you
not to own gold. It's
really that simple.
As long as things remain
uncertain and unstable,
you want some gold in
your portfolio because,
if everything else goes
down, thanks to a very
possible financial
apocalypse... that's
what I called last year
in the famous rant... a
financial apocalypse...
you'll at least have one
position that makes you
money.
If stocks become
toxic... yes, even more
toxic than where the
bailout was announced...
then gold is where
everyone will flee...
which is why you buy it
now, before everything
potentially falls apart.
What's the worst that
can happen with this
idea of mine?...
Okay, the worst that can
happen is the plan
passes, the system is
saved, stocks go
higher... remember,
diversification has kept
people like me in the
game, from 1300 to Dow
14,000 and back down
again... and your
position in gold,
sadly... this is really
the tragedy, if I'm
wrong... your position
in gold underperforms...
And even that might not
be true because gold
also works as an
investment, not just as
insurance...
There are anecdotal
reports of merchants in
Dubai not being able to
keep gold in stock, in a
great note by Citibank.
There is still very
strong demand for gold
as jewelry coming from
the developing world,
but especially from
India. Remember, we had
the
Agnico-Eagle (AEM)
CEO on. He said that the
end of September is the
best seasonal moment for
gold. We're entering the
wedding season right
now, which is also very
good for gold.
So, what did you learn
about the world, just by
doing your homework is
that this is the right
time... We are at a very
uncertain moment... a
coin toss moment...
Heads, the plan
passes... we get
inflation... Tails,
Congress kills the
financial plan. Our
financial system grinds
to a halt. Gold wins by
becoming the only safe
refuge for your cash.
I know this is sobering,
but you know I tell the
truth on this show every
night, as I see it...
. . . .
.
The Bottom Line!:
I could see gold going to $1000 an
ounce in this chaos. So buy a decent
gold stock. Remember, I like the
Agnico-Eagle Mines Ltd. (AEM)
or
Barrick Gold Corp. (ABX),
or an ETF that mimics the price of gold
(i.e.,
SPDR Gold ETF
(GLD*),
like
my charitable trust... because
it's just about the only thing that
thrives on the current... it might
change... but the current insanity of
this market. Gold makes sense when
nothing makes sense and, believe me,
right now, nothing makes sense.
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Second
Segment
Opening
Segment 2
Title:
'Plan of Action'
. . . .
.
Featured
Stock(s):
General comments about the government
intervention and bailout.
No specific stock picks.
After this segment, you
can see Jim's Lightning
Round picks
here...
Jim: We
have a fire burning on Wall
Street..... and it has to be put
out... whatever we can do to
stop it, including the Treasury
Department's shocking rescue
plan, before it gets to Main
Street... before it gets to you.
Ultimately, it's more important
to get this thing passed
quickly, than it is to get all
the details right... although
people seem buried in the
details... because we're trying
to avert a second Great
Depression...
Whatever form the plan finally
takes, it's vital that we have a
plan that gets the bad mortgages
off the books. Otherwise, we're
going to have a string of bank
failures, as house prices
continue to fall, crushing the
value of both mortgages and the
collections of mortgages that
were bundled into different
bonds.
That said, in my opinion, the
best solution is to split every
bank into a good bank -
consisting of deposit bases and
good loans - and a bad bank,
made of bad mortgages. That's
what Bob Steel told us, CEO of
Wachovia Corp. (WB).
I believe there are many people
in the private sector who would
love to have a stake in these
bad banks, because so many of
them can come back, if we can
get housing prices to stop
falling. And remember, I believe
that they will stop falling in a
bottom in June of next year.
That's something that the
housing index has already
forecast.
Once the banks are split into
separate good and bad components
- if the government buys a stake
and the private sector buys a
stake - then the good bank won't
have capital problems, and the
bad bank will represent a great
capitalist opportunity to bet on
the housing recovery I'm
betting.
That's one reason I'm hoping
that the government will demand
equity from both banks so it can
help you profit.
The Feds can value the bad bank
using scales involving vintage,
the year the mortgages were
issued... credit scores of the
borrowers... geography, so we
pay less for the worst stuff
from California and Florida...
and more for higher-quality
mortgages. That way, we both
rescue the good banks and
taxpayers make a profit.
But I'm not one of the people
who gets to decide... which is
why I want to Senator Kit Bond
(R), of Missouri, a friend of
the show, whose called for
bi-partisan cooperation so we
can get a plan passed.
Kit Bond, welcome to Mad Money,
and thank you for trying to save
the financial system...
. . . .
.
The Bottom Line!:
I think we've got a chance. You know
that I said, buy gold because I don't...
Not everybody believes Kit Bond. Not
everybody believes me. There are enough
people that are trying to trap us in the
details that, if this gets delayed,
again, it's going to be an ATM issue,
it's going to be a mattress issue...
It's going to be a freezing of the stock
market and the bond market and the
banks, and there's no reason for that to
happen. You've got to throw everything
at this problem. This is 1932, and those
who don't do enough will be doomed to be
Hoover, not FDR.
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
na
na
na
General comments about the government
intervention and bailout.
No specific stock picks.
Go to the LIGHTNING ROUND from
tonight's show
here >>
See current quotes on Yahoo!
Finance from
tonight's show stocks
here >>
Symbol keys:
A Charitable Trust stock.
- An asterisk next to a
stock symbol indicates that
Jim mentioned it is a stock
that he manages within
his
charitable trust portfolio.
You can see the complete
portfolio
of stocks
here >>
Thumbs up - indicates
he would buy the stock or,
at the very least, not sell
the stock. We do our
best to interpret Jim's
opinion on stocks, as we
think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself.
Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
comments to decide for
yourself.
Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
here >>
Helpful Websites:
See the stocks currently
known to be in Jim Cramer's
Charitable Trust at:
Stock Homework 101:
This is an excellent
upcoming site that provides
resources and links to help
you do that homework that
Jim Cramer recommends after
hearing his suggestions...
FastMoneyRecap:
This site will be a quick
summary of recommendations
made by the great Fast Money
TV show crew, that will
offer you a unique service,
to compare their picks to
Jim Cramer's past comments
about those stocks.
