No, it's not too late to buy into the commodity super-cycle!
By David Bradshaw
Editor, Real Money Perspectives
Feb. 21, 2008
After two decades of diligently studying the financial markets one learns to listen carefully for new rumblings and watch closely for smoke signals to confirm what will erupt next. But today, even a blind man can see that commodities will outperform stocks again in 2008.
Rising inflation here and abroad could be the next economic volcano to erupt as the Fed desperately attempts to engineer a "soft-landing", pushing precious metals to lofty new heights.
Over four dozen experts now agree that gold and silver prices will easily double again over the next few years just to reach their previous inflation-adjusted 1980 highs.
Oil prices are now cresting their 1980 inflation-adjusted peak. $100 a barrel oil today equates to $36 a barrel back in 1980.
Investors today want opportunity with limited risk. They want investments that are trustworthy in a world filled with financial scandal. In short, they want a shiny alternative to the Wall Street hype which, like most politicians, usually lacks substance.
Today the world's confidence in paper promises from governments is in decline. With every passing day gold is viewed worldwide as "real" money and the U.S. dollar is viewed as "confidence" money.
Precious metals create investor confidence because they're not dependent upon Wall St., the Fed, nor any outside source to establish real value. The result is a continued flight to precious metals as the world's ultimate safe haven from economic uncertainty.
Economic uncertainty ahead
"The U.S. faces an unwelcome combination of looming recession and persistent inflation that is reviving angst about stagflation, a condition not seen since the 1970s," The Wall St. Journal reports today.
"Defaults in the US housing market are spreading from sub-prime to the much larger stock of top-grade housing debt, threatening to set off a wave of even bigger losses for banks and investment funds," reports The London Telegraph.
"The freewheeling days of credit and risk may have run their course — at least for a while and perhaps much longer — as a period of involuntary thrift unfolds in many households. Credit counselors are now swamped by calls not just from people of modest means, but from professionals earning six-figure incomes," reports The NY Times.
"Just as the U.S. dollar has farther to fall, so do the commodities have farther to rise. On that point, JP Morgan forecasts that of all the commodities, they expect precious metals to be the strongest in 2008, followed by agricultural products, base metals and energy," reports Goldseek.com.
"Now that the inflation arm of stagflation is appearing through the political camouflage, gold is in strong demand and people are jumping aboard the golden coach. Gold provides an insurance policy against catastrophy. Therefore, stay with a high asset allocation to gold and buy on dips," reports Moneynews.com.
Gold's new investment-driven phase
"We believe gold has entered a new investment-driven phase. Catalysts are rotating from safe-haven demand, to currencies, to the re-flation trade, as new buyers enter the market," John Hill, director, metals research, at Citigroup in San Francisco," reports Reuters.
"The big lure to gold continues to be its tendency to hold value when the rest of the investment picture turns septic. As it's done of late, with U.S. inflation measures hitting multi-decade highs, U.S. stocks starting off the year with their biggest drop in 30 years and the global outlook looking both inflationary and at risk of a slowdown," reports MarketWatch.
"I’m convinced that in 2008 the world will witness a gold price explosion, propelling the shiny yellow metal into the next and perhaps most exciting stage of this bull market," said Swiss America CEO Craig R. Smith.
"If you have not yet taken action in acquiring a position in gold, you now have a golden opportunity to buy high quality U.S. gold coins at a historically low collectible (or extrinsic) premium, relative to gold's melt (or intrinsic) value," reports Dr. Fred Goldstein, Sr. Broker at Swiss America.
Here are 24 reasons why precious metal prices must rise extracted from some of the best financial minds and featured in Swiss America's 26th Anniversary Real Money Perspectives, "GOLD: THE NEXT STAGE".
24 Reasons to Own Precious Metals Now!
1. Commodities 2008: an asset class for the first time in history
2. The most powerful factor affecting gold: monetary inflation
3. 2008 gold supply/demand dynamics: irreversible shortfalls
4. The shortest commodity bull market in history: 15 years
5. Likely ruptures in stability of global money-credit system
6. Gold gaining strength: ETFs, corporate and pension funds
7. Central banks buying gold: diversify reserves out of dollars
8. Savvy investors allocating assets into gold as wealth insurance
9. Gold's downside risk: paltry compared to the upside potential
10. Portfolios designed to hedge inflation must be bedrocked in gold
11. $950 gold prices will eventually peak over $2,200 an ounce
12. Gold now accepted as fourth global currency (with $, Eu, Y.)
13. Bullish: gold is still in a 'stealth' bull market from the public
14. Investors should worry less about good/bad gold entry points
15. Geopolitical events can send metals/oil prices through the roof
16. Gold is coming out of the closet and the press is taking notice
17. Price corrections are a sign of a healthy bull market, buy dips
18. Hard currencies (gold) boom as public notices dollar decline
19. Gold market knows inflation is rising, explaining 2007 surge
20. Gold you hold in your hand: Numismatic coins or bullion best
21. Some insiders see gold saving the dollar as reserve currency
22. The era of big bank gold price control is over thanks to GATA
23. A gold spike 5-7 years out could launch gold above $5,000/oz.
24. Equity-based IRAs stagnant while precious metal IRAs boom
Boil it all down to this: today gold offers investors unparalleled safety and profit potential, just as Swiss America has said for a quarter century.
As for my conservative projection for precious metals; I believe gold and silver prices will both rise at least 20% in 2008, taking gold above $1,000/oz. and silver near $20/oz.
Read more about GOLD'S NEXT STAGE. Free Offer: Our 2008 "GOLD 101" dvd will help you learn before earning.