*** South Africa... top dog...

*** Sell in May and go away...

*** Recommended: Check out the GOLD REPORT... and more...

From the dusty, new desk of Gary Booysen

Dear Investment Academy Reader,

So, the election went smoothly and with growing opposition party influence this budding democracy at the tip of Africa looks to be in good shape. Our currency’s strengthening and, as the Seacom cable lands, the internet revolution is set to explode (finally). Our backward exchange controls have actually managed to minimise contamination from the global crisis and our banks are sturdy. It even looks like Zuma’s cloud of suspicion has a silver lining.

What could go wrong?

Well plenty. Who'd have believed a few years ago that Britain would be looking at bankruptcy? Its public debt will be to the tune of 280% of GDP by 2010 – according to Numis Securities. But still, as the rest of the world’s been turned upside down, South Africa’s remained remarkably upright.

Whether this has anything to do with us being upright is another matter. When the rest of the world was desperately scrambling to prevent itself from tearing apart at the seams, we were sitting around arguing whether or not we were “technically” in a recession or not. And yet, somehow, we're sitting in a great position.

Still, there’s an old saying, “Sell in May and go away”, and with the rally the markets have been on since March, I find myself wondering if the good times really will really keep on rolling. Churchill said: “The further backward you look, the further forward you can see.” So, without further ado, I present Dr Prieur du Plessis, Plexus group chairman, who's done a little analysis on this time honoured axiom and revealed:

"Sell in May and go away" also holds true for the South African stock market. “Returns from the FTSE/JSE All Share Index during the ‘good’ periods – November to April – from 1960 to 2009 were 11.8% per annum, whereas those from the ‘bad’ periods – May to October – were 5.2% per annum. A sum of R10,000 invested during only the ‘good’ periods since January 1960 would've resulted in a return of R2,519,944 at 30 April 2009. In comparison, an investment during only the ‘bad’ periods, since January 1960 would've resulted in a return of R118,553. This is an astounding difference in proceeds.”

So, in contrarian spirit, when everything's beginning to look a little too rosy, here's how to lock down your funds in the safest, most secure, of all investments. Yes, of course, we're talking about gold. Gold has consistently outperformed the All Share Index.

"South Africa's top three gold producers are expected to report big jumps in earnings and cash flow in their respective quarters to March," says the Business Report.  Leon Esterhuizen, a precious metals analyst at RBC Capital Markets revealed, the price of gold in the quarter averaged $908 (R7,691) an ounce, up 14%. The strong gains in this sector, the end of what just about everyone has been calling a bear market rally and positive mining news set Goldfields, Harmony and New Gold up as serious profit makers, check out this special Gold Report to take advantage...

Until next week...

Gary Booysen
For the Investment Academy