Cramer's 'Mad Money' Recap: Why the Gold Rally Is Good (Final)

Cramer says higher gold prices will help the economy by driving up exports, reducing deflation risks and reflating prices. <A HREF=""target="blank">Click for news from Jim Cramer.</A>
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) -- "Stop fearing high gold prices," was Jim Cramer's lesson to the viewers of his "Mad Money" TV show Wednesday.

He said that gold is no longer the barometer of global chaos, and the rally in gold, is actually a good thing.

Cramer said the bears, of course, always spin the rally in gold as a sign of pending doom for equities. But that's simply not the case, he said. Investors need to stop worrying about the rally in gold, and in fact, should embrace it. Cramer cited reasons why he believes a rally in gold is good for stocks.

Reason No. 1: A rally in gold means a falling dollar. Cramer said a falling dollar is fantastic for any company that exports its products. He said a weak dollar benefits construction equipment companies, aerospace firms and drug makers.

Reason No. 2: High gold prices means no deflation. Cramer said it was deflation that derailed the economy in the Great Depression, but that's just not possible now with gold continuing to rally.

Reason No. 3: High gold prices means reflation. Cramer said there's a big difference between reflation and inflation. While inflation is bad, reflation means companies are growing their earnings, which is exactly what Wall Street wants to see.

Of the many whys to invest in gold, Cramer again gave the nod to the

SPDR Gold Trust

(GLD) - Get Report


He also added the

Market Vectors Junior Gold Miners

(GDXJ) - Get Report

, a new gold ETF that focuses on the small to medium gold miners. He the new ETF gives investors a new opportunity to invest in the miners that still some room to grow.

Too Big to Fail

Cramer welcomed

New York Times

columnist and author Andrew Ross Sorkin to the show to discuss Sorkin's new book,

Too Big To Fail,

which provides an in-depth look of the financial crisis.

Sorkin said he found it difficult to pick out just one hero or villain from the book, saying that if he were a prosecutor, he'd have to either indict everyone in the book, or no one at all. He said that many of the heads at our largest banks made bad decisions, but also a few good ones, as the crisis unfolded.

When asked about the government's role in the crisis, Sorkin said that his book helps to explain why the government lent so much money to the banks with so few requirements. He said the thinking at the time seemed to be that if there were too many strings attached to the government's bailout money, the banks wouldn't take it, and given the dire conditions of the banks, they needed to have it.

Sorkin said there are many unresolved issues in his book, such as why Lehman Brothers was the only large firm allowed to fail. He said that after Lehman and Morgan Stanley, the next domino to fall would have been

Goldman Sachs

(GS) - Get Report

, a fact that few people realize.

Finally, when asked about

Wells Fargo

(WFC) - Get Report

, a stock which Cramer owns for his charitable trust,

Action Alerts PLUS, Sorkin said that this particular bank seems to take its time and doesn't just jump into deals without first knowing the facts. This was welcome news for Cramer.

Big Comeback

Investors looking for one of the greatest comeback stories of all time need to look at the forgotten stock of

JDS Uniphase


, which Cramer has panned for almost a decade.

Many will remember the dot-com boom, when between 1997 and 2000 JDS Uniphase rose a stunning 7000%, only to then lose 99% of its value in the free fall that followed. But Cramer said JDS Uniphase is deserving of redemption, thanks in part to his mobile Internet tsunami thesis.

JDS derives 47% of its sales from test and measurement equipment for broadband and wireless carriers. It's the kind of equipment needed to build out wireless networks and fix issues with dropped calls and slow network performance.

With companies like


(VZ) - Get Report



(T) - Get Report

both expanding their wireless networks to deliver more services, this means JDS Uniphase's equipment is in demand.

JDS's other businesses are also doing well, including its optical communications, laser products and even its 3D movie glasses. Cramer said this is a case where the sum is worth less than its parts. He sees JDS Uniphase being worth as much as $11.30 a share, 36% higher than where it trades today.

With only two analysts rating the stock a buy and five rating it a hold, Cramer said there's a lot of room for upgrades in JDS Uniphase, and he'd get in ahead of the action.

Am I Diversified?

Cramer played "Am I Diversified" with callers to see if their portfolios have what it takes. The first caller's portfolio included


(AAPL) - Get Report


Union Pacific

(UNP) - Get Report



(NUE) - Get Report


EV Energy Partners



Bristol-Myers Squibb

(BMY) - Get Report


Cramer said this caller has perfected the concept of diversification.

The second caller's top holdings included


(AAPL) - Get Report



(V) - Get Report



(ETN) - Get Report


BHP Billiton

(BHP) - Get Report


Noble Energy

(NE) - Get Report


Cramer said this portfolio was about as perfect as you can get.

The third caller had


(BP) - Get Report


Kinder Morgan



Bank of America

(BAC) - Get Report


Bristol-Myers Squibb

(BMY) - Get Report


Flowers Foods

(FLO) - Get Report


Cramer said Kinder Morgan is not the same as BP and no changes need to be made to this great portfolio.

Lightning Round

Cramer was bullish on


(CL) - Get Report


Ford Motor

(F) - Get Report


ADC Telecommunications

(ADCT) - Get Report


Wynn Resorts

(WYNN) - Get Report


Foster Wheeler



He was bearish on

Silver Wheaton



Toyota Motor

(TM) - Get Report


Melco PBL Entertainment



To watch replays of Cramer's video segments, visit the Mad Moneypage on CNBC


Want more Cramer? Check out Jim's rules and commandments forinvesting from his latest book by

clicking here.

For more of Cramer's insights during the Lightning Round, clickhere


At the time of publication, Cramer was long Wells Fargo, Bristol-Myers Squibb, Visa, BP, Bank of America.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.