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Gold is likely to continue trading above $900 an ounce and could perhaps even challenge $1,000 again as investors fret about the potential for inflation stemming from global economic-stimulus efforts and a softer U.S. dollar, many analysts say.
The interest in gold comes even as buying of the metal as a safe investment has lessened. Stocks are well up from March lows, and worries about the banking sector appear to have faded somewhat.
Still, "there are still plenty of problems out there, and I think you are going to continue to see flight to safety be an important factor," said Bill O'Neill, one of the principals with Logic Advisors. He suggested that by year-end, gold will again test $1,000, which it topped for the first time in 2008.
"Inflation seems to be an inevitable development," he said.
The interest in gold comes even as buying of the metal as a safe investment has lessened. Stocks are well up from March lows, and worries about the banking sector appear to have faded somewhat.
Still, "there are still plenty of problems out there, and I think you are going to continue to see flight to safety be an important factor," said Bill O'Neill, one of the principals with Logic Advisors. He suggested that by year-end, gold will again test $1,000, which it topped for the first time in 2008.
"Inflation seems to be an inevitable development," he said.
- Wall Street Journal
Oil prices may return to "significantly higher" levels because companies have cut investment in the new production needed to match demand from fast-growing China and India, the International Energy Agency's chief economist said Friday.
IEA chief economist Fatih Birol told The Associated Press that oil companies have canceled at least $170 billion of planned investments – including $100 billion this year – as they seek to save money amid the financial and economic crisis.
Oil companies are likely to announce even more cutbacks in oil and gas production investments in coming months, he said.
IEA chief economist Fatih Birol told The Associated Press that oil companies have canceled at least $170 billion of planned investments – including $100 billion this year – as they seek to save money amid the financial and economic crisis.
Oil companies are likely to announce even more cutbacks in oil and gas production investments in coming months, he said.
- Associated Press
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By Dr. Steve Sjuggerud Thursday, May 21, 2009 The Secret to India's Three-Month, 100% Gain -
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Up 800% on My Favorite Gold Stock... Hundreds More to Come
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How to Make 40% a Year in Boring Government Bonds
By Dr. Steve SjuggerudTuesday, May 26, 2009
Since 1917, the U.S. government has had a "triple-A" credit rating. Up until last week, its bonds were considered "risk free."
But the U.S. government's massive spending program will cause the U.S. to lose that credit rating, according to legendary investor Bill Gross.
Bill knows as much as anyone on the planet about government credit. He's one of the world's biggest investors, controlling three-quarters of a trillion dollars, much of which is invested in government debts. In short, he knows what he's talking about.
And the math is simple. The enormous government deficits in the next few years will cause the U.S. government debt to reach 100% of GDP. With debts that big, you don't deserve to be called risk free.
If you've never invested some of your cash outside of the U.S. dollar before, now may be the time...
Think about this, please...
Which country would you rather have your money in, the United States paying you 0% interest or Country X paying you more than 10% interest?
Don't answer yet...
Instead, take a look at the table here, and tell me which country looks like a safer place for you to earn a decent rate of interest on your money over the next two years:
Country X's financial status looks pretty good, doesn't it? Or said another way, U.S. finances look pretty bad, don't they? And these numbers are about to really move in favor of Country X... Its debt is expected to fall to 20% of GDP, while U.S. debts are expected to rise to 100% of GDP.
Yet, for some reason, we Americans have nearly all our money in the U.S.
I suggest you put at least some money into Country X for the next few years.
What is Country X? Is it Switzerland? No, interest rates aren't that high there. Just wait. I'll let you know what it is after I tell the story...
Country X is an incredible opportunity right now...
In the big U.S. crash in late 2008, interest rates in Country X soared. That's because big U.S. investors had to sell investments in Country X to pay off their U.S. debts, as their U.S. creditors called in their loans.
That stampede drove interest rates way up in Country X. It also drove the value of the currency way down. Country X's currency fell by an extraordinary 40% peak-to-trough when this happened... real carnage in a place that by many measures looks safer than the U.S.
Now the opposite is happening... The big leverage-based crashes are likely behind us. The bonds AND the currency of Country X are in a strong uptrend.
Government bonds in Country X now pay about 12% interest – and bond prices are rising. So in addition to 12% interest, you're getting big capital gains, too. Meanwhile, the currency is rising as well – dramatically.
So you can make double-digit returns in three separate ways here: interest, capital gains, and the currency.
Add up 12% interest, plus double-digit gains in the bonds, and the currency... and you're looking at the potential for 40% gains here annually. In boring government bonds!
Country X, you'll be surprised to learn, is Brazil. I know, I know, the old joke about Brazil among investors is: "Brazil is the next great country... and always will be." Brazil has incredible wealth – arable land, fresh water, timber, and oil. But for a long time, the government got in the way of its own success. Today, though, it's done some things right...
In the last few years, Brazil has done the opposite of the U.S. It's stockpiled cash for a rainy day. It transformed itself into a net creditor nation. And for the first time ever, it has an "investment grade" credit rating.
It also held interest rates high to prevent the economy from overheating in the commodity boom. Now that the world economy is slowing, those interest rates will be coming down fast. That's great news for anyone who buys bonds today.
Think about our investment alternatives now... We could put our money into stocks. But they sure have run up.
We could put our money into high-yielding corporate bonds ("junk" bonds). But why would we take on company risk, when we can make even more money buying boring government debt?
You could leave money in cash at the bank... But that "cash" is really held in U.S. Treasuries, earning next-to-no interest.
Brazil looks like a safer bet than the U.S. in the coming years. As an American, I'm sorry to have to say that. But it's true.
So check out Brazil... You could see 40% gains in boring government bonds over the next year.
Good investing,
Steve
Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
Sign up today to read more investment ideas from Steve Sjuggerud.
But the U.S. government's massive spending program will cause the U.S. to lose that credit rating, according to legendary investor Bill Gross.
Bill knows as much as anyone on the planet about government credit. He's one of the world's biggest investors, controlling three-quarters of a trillion dollars, much of which is invested in government debts. In short, he knows what he's talking about.
And the math is simple. The enormous government deficits in the next few years will cause the U.S. government debt to reach 100% of GDP. With debts that big, you don't deserve to be called risk free.
If you've never invested some of your cash outside of the U.S. dollar before, now may be the time...
Think about this, please...
Which country would you rather have your money in, the United States paying you 0% interest or Country X paying you more than 10% interest?
Don't answer yet...
Instead, take a look at the table here, and tell me which country looks like a safer place for you to earn a decent rate of interest on your money over the next two years:
| Country X | U.S.A. |
| Govt. Debt as a % of GDP | ||
| External Debt as a % of GDP | ||
| Reserves and Gold | ||
| Budget | ||
| Creditor or Debtor Nation? | ||
| Short-Term Interest Rates |
Country X's financial status looks pretty good, doesn't it? Or said another way, U.S. finances look pretty bad, don't they? And these numbers are about to really move in favor of Country X... Its debt is expected to fall to 20% of GDP, while U.S. debts are expected to rise to 100% of GDP.
Yet, for some reason, we Americans have nearly all our money in the U.S.
I suggest you put at least some money into Country X for the next few years.
What is Country X? Is it Switzerland? No, interest rates aren't that high there. Just wait. I'll let you know what it is after I tell the story...
Country X is an incredible opportunity right now...
In the big U.S. crash in late 2008, interest rates in Country X soared. That's because big U.S. investors had to sell investments in Country X to pay off their U.S. debts, as their U.S. creditors called in their loans.
That stampede drove interest rates way up in Country X. It also drove the value of the currency way down. Country X's currency fell by an extraordinary 40% peak-to-trough when this happened... real carnage in a place that by many measures looks safer than the U.S.
 |
Now the opposite is happening... The big leverage-based crashes are likely behind us. The bonds AND the currency of Country X are in a strong uptrend.
Government bonds in Country X now pay about 12% interest – and bond prices are rising. So in addition to 12% interest, you're getting big capital gains, too. Meanwhile, the currency is rising as well – dramatically.
So you can make double-digit returns in three separate ways here: interest, capital gains, and the currency.
Add up 12% interest, plus double-digit gains in the bonds, and the currency... and you're looking at the potential for 40% gains here annually. In boring government bonds!
Country X, you'll be surprised to learn, is Brazil. I know, I know, the old joke about Brazil among investors is: "Brazil is the next great country... and always will be." Brazil has incredible wealth – arable land, fresh water, timber, and oil. But for a long time, the government got in the way of its own success. Today, though, it's done some things right...
In the last few years, Brazil has done the opposite of the U.S. It's stockpiled cash for a rainy day. It transformed itself into a net creditor nation. And for the first time ever, it has an "investment grade" credit rating.
It also held interest rates high to prevent the economy from overheating in the commodity boom. Now that the world economy is slowing, those interest rates will be coming down fast. That's great news for anyone who buys bonds today.
Think about our investment alternatives now... We could put our money into stocks. But they sure have run up.
We could put our money into high-yielding corporate bonds ("junk" bonds). But why would we take on company risk, when we can make even more money buying boring government debt?
You could leave money in cash at the bank... But that "cash" is really held in U.S. Treasuries, earning next-to-no interest.
Brazil looks like a safer bet than the U.S. in the coming years. As an American, I'm sorry to have to say that. But it's true.
So check out Brazil... You could see 40% gains in boring government bonds over the next year.
Good investing,
Steve
Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
Sign up today to read more investment ideas from Steve Sjuggerud.
NEW HIGHS OF NOTE LAST WEEK
Seabridge Gold (SA)... gold
Randgold Resources (GOLD)... gold
Rubicon Minerals (RBY)... gold
DRDGOLD (DROOY)... gold
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Kirkland's (KIRK)... furniture
Cubic Corp (CUB)... defense
Orion Marine (ORN)... infrastructure
NuStar Energy (NS)... pipelines
Ardea Biosciences (RDEA)... biotech
BioDelivery Sciences (BDSI)... pharma
Nektar Therapeutics (NKTR)... biopharma
Cerner (CERN)... health care information
Quality Systems (QSII)... health care information
Central Garden & Pet (CENT)... garden & pet supplies
NEW LOWS OF NOTE LAST WEEK
Not many