Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Phase II of the Natural Resources Boom Is About to Burst onto the Scene

Commodities / Metals & Mining Aug 23, 2007 - 09:30 AM GMT

By: Money_and_Markets

Commodities Best Financial Markets Analysis Article

Larry Edelson writes : Is it ugly out there in the markets or what? Unfortunately, things are likely to get worse before they get any better.

The good news is that I also see a massive profit opportunity coming directly ahead. More on that in a moment.

First, you need to understand what's happening right now …


The Subprime Mortgage Meltdown Is Hitting the U.S. Economy Hard

Over $210 billion in mortgages are already delinquent. Foreclosures are at all-time record highs. So are late payments on mortgages. And U.S. property prices are almost sure to fall more.

But as I recently pointed out in the latest issue of my Real Wealth Report , there is a silver lining to the real estate crisis: Internationally, U.S. property prices are relatively cheap. The weak dollar will sooner, rather than later, attract foreign investors into our property markets, helping them to bottom out.

Delinquent loans and foreclosures are rising

Also, replacement costs on construction have more than doubled in the past five years. That, too, will help to soon put a floor under real estate prices.

So, a buying opportunity will soon come in U.S. real estate. But that doesn't mean the U.S. economy will stabilize. Far from it. The fallout of tens of billions of dollars in bad mortgages … busted hedge funds … and more … will take months, perhaps even a year or so to work through the markets.

Meanwhile, the Fed Is Pumping in Money and Credit, Trying to "Inflate Away" the Problems

They've even gone so far as symbolically trying to lower rates by slashing the discount rate (what the Fed charges for direct loans) by a full 1/2 point.

Make no mistake about it: That is inflationary, no matter how bad the contraction in the debt markets. It means more money is available, even if it's invested primarily in cash and not lent back out.

Ben Bernanke will continue inflating away the debt problems out there!

No matter how I look at it, the Fed is destined to continue inflating away the debt problems out there by creating more money and credit … sacrificing the value of the U.S. dollar in the process!

Please do not underestimate the significance of this. Without a gold standard, central banks today — especially our own Federal Reserve — have the ability to devalue paper currencies to fight their way out of debt problems.

That means the dollars in your wallet … in your money market and savings accounts … in your investments … will all purchase less and less over time. Unless you hedge against the decline in the value of the dollar, which I'll get to in a minute.

I Remain Convinced that U.S. Stock Markets Are Headed Much Lower

I hope you've been following my signals on the Dow. I nailed the top at 14,000, and warned you of an imminent collapse back in June.

Since then the Dow has fallen as much as 1,482 points, or just over 10%. And my systems have flashed no less than three weekly intermediate-term sell signals, indicating that the Dow is going to fall to the 11,000 level.

Will the recent actions by the Federal Reserve stop the Dow from falling? No.

What if they cut the Fed funds rate? No, that won't stop most stocks from falling, either.

There are many reasons, but the most important are:

  1. The aforementioned mortgage crisis is going to make consumers and investors batten down their hatches, negatively affecting confidence and spending.
  2. At price-to-earnings ratios of 20 plus, most stocks are overpriced, especially since they have already seen the peak of their earnings growth in the recent cycle.
  3. At this time, overseas investors are more concerned with the downside risk in the U.S. than they are with the purchasing power of their strengthening currencies.
  4. The U.S. government is in no better shape than the mortgage markets. Technically, the Federal Government is bankrupt, with debts of more than $55 TRILLION (counting all IOUs).

Up until now, that hasn't been much of a problem. But when investors are as frightened as they are now, the government's finances can suddenly become a very heavy psychological burden on the markets and for investors, especially overseas investors who have largely been financing our debts.

So where's the good news then? In my opinion,

1. Overseas economies are much stronger and more resilient than the U.S. Don't get me wrong. I was born and raised in the U.S. … am a U.S. citizen … and think the U.S. is the greatest country on the planet.

But right now, and for the foreseeable future, the U.S. economy is one of the weakest and most vulnerable in the world, for all the reasons and forces I've cited previously and above.

Throngs of Asians are marching from the 19th Century right into the 21st!

Meanwhile, Asian economies — especially China and India — are still pretty much firing away on eight cylinders. Never forget, there are more than 2.5 BILLION people in Asia — nearly 40% of the world's population — and for all intents and purposes they are now leapfrogging into the 21st century, but not from the 20th. They are rushing into the 21st century from the 19th, making giant strides never before seen in economic history.

That alone is unleashing unprecedented demand for goods and services. And in my opinion, it's enough to keep global economic growth cooking, despite occasional and normal setbacks.

2. Natural Resources! Tangible assets! Just think about the following two forces. Take …

Force #1: 2.5 billion people modernizing at the same time, leapfrogging from the 19th century to the 21st century and creating unprecedented demand for natural resources …

PLUS …

Force #2: Central bankers around the world pumping out money and credit — devaluing paper currencies. The U.S. dollar is losing its purchasing power more rapidly than ever before.

Since most natural resources are priced in terms of dollars, that means more money is chasing fewer available goods. That spells inflation. There's no two ways about it.

Phase II of the Natural Resources Boom Is About to Burst onto the Scene

Once the shocks from the mortgage meltdown and the new bear market in U.S. stocks start to pass, I expect that Phase II of the natural resource boom will unfold. This will be when the masses begin to recognize that inflation is what the central banks want.

I expect virtually all natural resources will climb to new record highs. Gold will take off to well above $1,000 an ounce … oil will climb to more than $100 a barrel … agricultural commodities and food prices will soar even more than they recently have … and yes, even real estate prices will start rising again.

So What Should You Be Doing Now?

First , understand what's happening, as I laid it out above, and keep the longer term picture in focus. That's how you'll make the biggest money.

Second , with the exception of select natural resource stocks and core gold positions, stay out of the U.S. stock markets.

Third , keep the rest of your powder dry for now, and wait for new opportunities to present themselves. If you're a Real Wealth Report subscriber, I'll tell you exactly what to buy when the time is right.

Best wishes,

By Larry Edelson

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in