Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Where the G20 Told Me to Invest |
Published:
April 10, 2008
Central banks around
the world have been stirring together all the right
ingredients for a big batch of inflation -- and this week's
G-20 summit was just icing on the cake.
Despite some policy wrangling among the participants,
the heads of state came together and reached near unanimous
agreement on a framework to tackle the global economic
crisis and prevent a repeat performance. It seems world
leaders finally understand they'll need to work harmoniously
if we're to escape from this recessionary quicksand.
Even though it was only a one-day meeting, the G-20
participants agreed to several reforms, including increased
regulation on tax havens and hedge funds. All good things,
in my opinion.
They also dropped a bombshell that dominated the news
and sent the markets through the roof -- pledging $1.1
trillion in lending to help struggling countries through the
crisis.
This is just one more example of how the U.S., and now
the world, is willing to do just about anything and
everything to get us out of the economic quagmire. Of
course, these unprecedented measures will certainly have
consequences down the road. There's little doubt we are
sowing the seeds for future inflation.
That's why I'm currently looking to the shiny yellow
metal... gold.
I'm expecting a solid rally in gold prices over the
next year or two. Clearly, the government's spending binge
(which has a 14-digit price tag) and loose monetary policy
come at a cost, but those fears have simply been cast aside
because the danger of not spending seems even greater. It
doesn't take much to see the end result is going to be a big
dose of inflation.
Right now, painful economic contraction is keeping
things under wraps. But with oil creeping higher... interest
rates at zero... massive spending on the way... and
yesterday's summit agreement, inflation is looking more and
more like a ticking time bomb.
In fact, the $1.1 trillion pledged during the G-20
summit is comparatively small potatoes. The U.S. government
alone has spent, lent or committed $12.8 trillion to combat
this crisis, according to Bloomberg. Just last November that
amount was "only" $7.4 trillion.
Once this spending takes hold, I suspect it will
slowly but surely help pull us out of this slump.
And once that happens -- watch out! Inflation won't
be far behind.
But what if I'm wrong about that? Well, either way gold
seems to be a winning bet.
Gold is highly sought during times of turmoil as
a reliable store of wealth and hedge against the
unknown. That's why purchases of gold coins and bars
in Europe have skyrocketed +1,170% year-over-year.
So if this massive spending doesn't work, investors
are likely to flock to gold. But if everything goes
according to plan and these measures do lead us out
of the dark, then inflation is going to rear its
head... in which case investors would still turn to
gold. |
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Selected
Federal Spending to Combat Recession |
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Recipient |
Amount |
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TARP |
$700B |
|
Stimulus I |
$168B |
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Stimulus II |
$787B |
|
Fannie/Freddie |
$400B |
|
Line of Credit FDIC |
$500B |
|
TALF |
$900B |
|
Support to AIG |
$170B |
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Commitment to Buy Treasuries |
$300B |
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*Source: Bloomberg |
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Right now the
precious metal has dipped below $900 an ounce as people have
piled into equities instead. Why not? Stocks have been
rallying hard in recent weeks -- and I've been glad to see
it. But the market is running at a pace that is simply
unsustainable. Given the major averages are up about +25% in
less than a month, we're probably overdue for a pullback.
And don't let this powerful run-up give you a false
sense of security -- the economy is still far from mended.
Look no further than today's grim employment report, which
showed the loss of 660,000 jobs last month and unemployment
rising to a 26-year high of 8.5%.
So while other investors may be patting themselves on
the back with their gains over the last few weeks, I am more
interested in the bigger picture that is unfolding. And the
more pieces that fall into place, the better gold is
looking.
Good Investing!
Nathan Slaughter
Chief Investment Strategist --
Half-Priced Stocks
P.S.
In my April issue of
Half-Priced Stocks,
I dug up a
well-positioned gold miner
that looks to be hands down the single best way to play
rising gold prices. The company has one of the lowest
extraction costs in the business and rakes in a profit of
about $560 for every ounce of gold sold. More importantly, a
recent discovery in Mexico (which contains over 17 million
ounces of gold) could boost production dramatically over the
next few years.
If
gold rises like I think it will, then this company will be
swimming in cash and investors are going to be flooding into
these shares.
Learn more...
Disclosure: None.
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