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Consider Gold & Silver Now!
Our nation may be on the cusp of economic catastrophe — call it a panic, a meltdown, an implosion; I don't care what you call it. But it's bad. And it's coming straight at you like a runaway bus.
In times of crisis, people naturally gravitate toward gold, because it's the one investment that can hold its value when the fertilizer hits the fan.
As for silver, well, any trader will tell you that silver is gold on steroids. When gold jumps, silver can leap twice as far, percentage-wise.
And both gold and silver are easier to buy and store than barrels of oil (another good bet in these trying times). I've been recommending oil ETFs like USO and OIL for months now — they've been doing well. Now, I think it's the time to put some of your money in something else ... and that something else is gold and silver.
What if I'm wrong — what if there is no economic catastrophe? What if the government is able to stop the crises that are lining up from turning into full-blown disasters? Well, gold and silver are STILL good bets to ride the economic tides that are surging now.
Today, I want to explore five reasons why I think our country is in real trouble ... five crises that support the idea of buying gold and silver now ...
Crisis #1: Financial Markets on the Edge of Panic
I don't have to tell you the news in financial markets is bad ... the problem is it's going to get much, much worse.We are seeing financial institutions collapse like slow dominoes: Countrywide Financial and New Century Financial last year ... Bear Stearns earlier this year ... IndyMac last week.
Meanwhile, Fannie Mae and Freddie Mac are on federally mandated life support. Since Fannie and Freddie own or guarantee about half of the $12 trillion of U.S. mortgages, they might be too big to fail. But their shareholders are getting clobbered.
And big regional banks are small enough to fail ... which is why National City and Washington Mutual both saw their stocks get 25% haircuts last week as terrified investors stampeded for the exits.
Crisis #2: Fed Perpetuating Inflation
And now some history...you know how I like studying history. The last time we saw something this bad was during the Great Depression, and it has been burned into central bankers' brains that the Great Depression was caused because The Fed stood by twiddling its thumbs as banks failed and the money supply imploded. They aren't going to let that happen again. In fact, as Greenspan before him, Fed Chairman Ben Bernanke has vowed not to allow a repeat of the 1930s money supply collapse. By bailing out financial institutions — lending liquid assets against illiquid paper — the Fed is already pumping up the broad money supply
America is used to single-digit inflation, and in the low single digits at that. Is American prepared for double or even triple-digit inflation? Heck no! Better yet - Are YOU prepared?
Inflation makes the value of the U.S. dollar go down (since goods are priced in dollars, as prices go up, the value of the greenback goes lower). Conversely, as the dollar goes lower, the value of gold and silver usually go up. This process is picking up steam.
Solution? Consider gold and silver now!
Crisis #3: Massive U.S. Debt About to Balloon
Fannie and Freddie are among the largest financial companies in the world. Their liabilities — mortgage-backed securities and other debt — add up to some $5.3 trillion. Now, consider that total U.S. federal debt is about $9.6 trillion. About $5.4 trillion of that debt is held by the public (in the form of Treasury bonds, etc.), while $4.2 trillion is debt such as Social Security IOUs. This is the liability side of America's federal balance sheet, and its condition influences how much the government can borrow and at what rates.
The liabilities of Fannie and Freddie are currently NOT on this U.S. balance sheet. (In fact, the reason Fannie and Freddie went private, after being created as government entities in the 1930s, was to get their liabilities off the government's books).
But if there is a run on the debt of either company, that would put tremendous pressure on the Treasury and Federal Reserve to publicly guarantee that debt to prevent a systemic financial collapse. Indeed, that seems to be what is happening now.
The Fed said it would lend to the two companies "should such lending prove necessary." Secretary Paulson said his department is asking Congress for quick approval of a plan to expand its line of credit to the two companies and to buy their stock if necessary.
Overnight, what has long been an implicit taxpayer guarantee for both companies seems to be becoming explicit — committing American taxpayers to honoring as much as $5 trillion in new liabilities. Therefore, U.S. debt held by the public would more than double, and the national balance sheet would look very ugly.
And that should weigh on the U.S. dollar like a millstone. Indeed, the action in Treasuries last Friday shows this may already be happening.
What happened last Friday? Bonds got routed on Friday, with long bond futures falling and 2-year Treasury Note yields soaring. Every single time BEFORE this phase of the credit crisis, traders aggressively bought Treasuries as a safe haven when the stock market cracked. This time, they did not.
There are a lot of "ifs" here, but if this trend continues, I think the U.S. dollar could be heading for a breakdown — one for the history books.
Again, this argues for buying gold and silver now!
Crisis #4: Energy Markets Going Ballistic
Oil pulled back nearly $9 last week — but that pullback is probably short-term only; nothing goes up in a straight line. The longer-term forces driving oil higher are still in place and getting stronger.
I've explained to you week after week after week about the influence of supply and demand, geopolitics and geology in the oil markets — problems that are combining to send oil prices to $150 a barrel, $200 a barrel and beyond. So I won't go over old news. But here is the latest ...
Brazilian Oil Strike Begins. Last week, Brazil's Oil Workers Confederation began a five-day strike against Petroleo Brasileiro SA, an action that could cut the country's daily crude production by more than 50%. Yes, it's short-term, but if labor troubles worsen in Brazil's oil fields and the strike extends, it could really squeeze global supply. The last time Brazil's oil workers went on a protracted strike, Brazil ended up importing oil!
Russia bids for Libyan oil. While the U.S. ponders on whether to drill offshore or whether to buy oil from "bad" countries, Russian oil companies such as OAO Gazprom, the world's largest natural gas producer, are buying up energy assets in Africa. In the latest twist, state-run Gazprom offered to buy ALL of Libya's spare oil and gas exports. You can see why Russia is doing it — three of Russia's major new oil projects failed to achieve oil production targets in 2007. But this also limits future sources of crude for the U.S.
IEA Raises 2008 World Oil Demand Forecast by 80,000 bpd. The International Energy Agency raised its forecast for world demand for oil for 2008 for the first time in several months, and anticipates demand in 2009 to increase by 1.1% to 87.7 million barrels per day (bpd), driven by emerging countries. The IEA, which had cut its forecast for world demand for 2008 for five months running, in its June report raised its forecast for the 2008 demand to 86.9 million barrels per day, an increase of around 80,000 bpd.
This is happening even as U.S. demand drops by over 400,000 barrels per day. And it's happening while U.S. exports are increasing. My point is that if global oil demand and U.S. exports are increasing even as U.S. oil use and our economy are shrinking, that means other countries (I'll spot you a "Ch" and an "In") are NOT experiencing a recession.
And THAT means oil prices will probably keep going higher even as Americans use less of it.
If you think gasoline at $4.50 a gallon is expensive, just wait until it gets to $6 a gallon. What do you think that will do to the U.S. economy? Just as importantly, what do you think that will do to the U.S. dollar?
Crisis #5: We Are at the Brink of War with Iran
The U.S., including the Presidential candidates, are talking tough on Iran. What's more, the Jerusalem Post reported on July 11 that Israeli warplanes held maneuvers over Iraq, possibly preparing for a strike against Iran.
For its part, Iran is threatening Israel and America's Middle East bases with its missiles ... and saying it could cut off the Straits of Hormuz, through which a high proportion of the world's oil flows.
Of course, if Iran thinks the U.S. is too stretched in Iraq to attack Tehran, it's sorely mistaken. Military experts say the U.S. is quite capable of mounting a days- or even weeks-long bombing campaign against Iranian targets.
I sure hope that the U.S., Israel and Iran all back away from the brink ... from this dark path that leads to catastrophe. If it comes to war with Iran, forget $150 oil ... forget $200 oil ... try $300 or $400 per barrel oil!
Again, what do you think that will do to the U.S. economy and the U.S. dollar?
You can see why I think buying gold and silver makes perfect sense right now. All five of the scenarios I just outlined support higher gold and silver prices.
On Thursday's Conferece Call, you'll learn how you could:
• Safely build a gold & silver safety net – by purchasing US Mint Gold & Silver Eagle coins at a 20-30% discount already propelling you to a double digit return on your investment.
• Target gains of 341% or more in the precious metals sector as the U.S. Dollar and other leading currencies are cut down by inflation.
• Buy the right precious metal stocks or ETFs at the right prices
• And much more!
Only you can look at your "Economy" and make the decision whether you want your portfolio to go north or head south. Make sure to pass this on to all those you know who have a need or interest for this information. Time is a precious commodity and I'm ONLY interested in helping those who want help. Go to G&G Associates website for future calls or visit the "audio" library to listen to past calls.
Thursday, July 24, 2008
9:00p-10:00p est.
Tax & Financial Training Call
July is "Economic Crisis Management" month
" Step #2 Diversification "
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712-451-6100 pin 974124#
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Thanks
Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
877-817-6031 toll-free
866-361-3872 toll free fax
www.gngassociates.net
"The greatest advantage that the people have is the truth"
Mein Kampf
LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. G&G Associates expressly forbids from having a financial interest in any security that is recommended to our subscribers
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