Prognosticators see 'huge' stock market decline on horizon

Sometimes, the hardest part of investing is sticking to macrotrends when the rest of the world is focused on the microtrends. It's one of the few ways you can actually make money by investing in the stock market. Warren Buffet, of course, is the undisputed Master of the Universe when it comes to going against the herd. It's also turned him into one of the world's richest men; a king atop a throne of cash.

Let us assume we're in the midst of a microtrend right now. Here's my stab at defining it: The Fed's printing off cash, and investors are turning that cash into more cash by buying up stocks, bonds, and foreign currency. That means we're likely to see some ongoing growth in GDP, employment, housing and retail numbers. It is, in essence, a form of economic growth that we're putting on our charge cards.

The macrotrend is always more important than the microtrend, though, and it's not pretty. Here's what we've got: a government that's overextending its debt obligations, and an economy that's investing in global markets at the expense of U.S. markets and U.S. industry.

For most investors, it's clear that this could result in a dramatic rise in interest rates that will have smart money fleeing the dollar and moving into tangible assets. Peter Brimelow's latest column at Marketwatch.com, points to a hard-money newsletter (the Aden Forecast), which seems to agree.

"We expect gold to continue higher in the years ahead as its mega rise evolves, [but] stocks probably won't," sisters Pamela and Mary Anne Aden write in their newsletter. "At some point, we suspect the rise will stall and it's quite possible that the sideways action since 2000 could end up being a big top that precedes a huge stock market decline.

“Time will tell. But this is a scenario that cannot be ruled out considering the big picture fundamentals, like the debt load and its repercussions in the years ahead."

If there really is a "huge" decline in stocks, where will be the best spot to park your cash? For the Adens, it's gold. For me, it's just about any commodity: gold, silver, coal, copper, uranium, hydroelectric power, sugar, wheat, real estate, etc.

When paper money tumbles, the only things that will store value will be tangible assets a society needs to keep operating. As scary as that future is, we should all prepare for it; even as we hope it never comes.