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Is this exciting or what? Gold has blasted above the important $1,035 level … the price of copper has almost doubled since April … platinum and palladium prices are soaring … and the price of oil has now reached back above $80 a barrel, up more than 77% since February.
This is the next phase of the natural resource price boom that I’ve been telling you about. It’s here. It’s happening NOW. And despite the occasional pullback, like the one that’s occurring now, the rally is going to last for years.
And unlike past bull markets in natural resources, this one has two powerful forces converging behind it, the combined strength of which I have never seen before in my 32 years in the markets …
Force #1: The Dollar’s Worst Bear Market, Ever.
We’ve had bear markets in the dollar before, but none as wicked as the current one. The dollar has now lost more than 40% of its value since 2001 — and is likely to lose as much as another 50%, before it’s ultimately replaced as the world’s reserve currency.
Make no mistake about it. No one ever thought it would happen. But it’s happening now and you can hear it in the cries of central banks all over the world: From Russia, India, Japan, the Arab Gulf States — and even from a slew of Latin American countries that are now banding together to devise a new Latin American trade currency.
All you have to do is take a look at the action in the U.S. Dollar Index … the most accurate way to gauge the dollar’s international value. The index has plunged from its high of 126.67 in 2001 to as low as 75.56 last week, where it lay a meager 4 points away — merely 5% — from plunging to a new record low.
As a result, savvy investors — including sovereign wealth funds from all over the world — are now seeking refuge in virtually any asset, and any country, that offers a hedge against the plunging value of the dollar … a better balance sheet … and assets, like gold and oil, that have tangible and real value.
But as powerful and as entrenched as the dollar’s bear market is, it’s only half the story, because of …
Force #2: The Greatest Demand for Natural Resources, Ever.
Think demand for natural resources slumped since the financial crisis took hold?
Yes, it did. For about eight months. But it was nothing more than a knee-jerk reaction to the worst financial crisis of all time.
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| Global resources are being consumed at an unsustainable pace. |
Meanwhile, the rise of Asia … fully 50% of the world’s population … more than 3 billion new souls — continues, with more than 90 million new middle-class consumers joining the 21st century every year, and more than 2 billion new middle-class consumers expected by the year 2030, a short 20 years from now.
How will the world cope with such demand for natural resources, even if the dollar were stable, or rising in value?
The fact of the matter is, sadly, Mother Nature most likely won’t be able to cope with the demand.
Indeed, according to a recent, international study by The Living Planet, the world is now heading for an “ecological credit crunch” far worse than the current financial crisis.
Why? It’s simple: The world is now consuming nearly 30% more resources than the Earth can replenish each year, resulting in an “ecological debt” of at least $4 trillion EVERY YEAR — double the estimated losses made by the world’s financial institutions as a result of the credit crisis.
End result: If nothing changes, by 2030, mankind will need two planet Earths to sustain the world’s lifestyle.
If that’s not enough to get your attention, then consider these cold, hard facts …
1. Fully three-quarters of the world’s population now lives in countries which consume more than they can replenish.
2. By 2025, three billion people may not have access to clean potable water for bathing and drinking.
3. Malnutrition now affects 2 billion people today.
4. Consumption of raw materials from base metals to agriculture is expected to rise to 170% of the Earth’s capacity by the year 2040 — leading to the end-life of some of the world’s most important base resources needed to sustain economic growth.
Put another way, the world is running out of copper, tin, aluminum, lead, zinc, uranium, and more.
In as little as 13 years, we will be out of rare earth metals such as indium, antimony, hafnium, and tantalum.
Perhaps worst of all …
5. The International Energy Agency (IEA) now officially acknowledges that oil production is likely to peak in about 10 years — at least a decade earlier than previously estimated.
According to the IEA, even if demand for oil remained steady — instead of climbing — the world would have to find the equivalent of four Saudi Arabias to maintain production.
Add in conservative projections for increased oil demand, and the
IEA has stated the world could reach a major “oil crunch” within the next five years.
Mark my words: The next major crisis will not be in real estate … banking … the stock markets … or even in the plunging dollar.
It will be where the above two forces manifest themselves — in natural resources, whose prices are inversely related to the value of the dollar and directly related to the demand that is now being put on them, and Mother Earth.
Two MANDATORY steps you should be taking NOW …
From an environmental and social perspective, naturally, you should become acutely aware of the problems Mother Earth faces in the years ahead. That means being more respectful to the environment, more green, conserving and recycling what you can.
Each of us has to do our part. Not only to help Mother Earth, but to help those less fortunate than us and in desperate need of resources we take for granted.
From a financial standpoint, to protect the purchasing power of your wealth, there are two steps I consider absolutely mandatory for today and the years ahead …
1. Seek out “contra-dollar” investments that do well as the dollar falls.
That includes putting some of your dollars directly into strengthening foreign currencies such as Australian, New Zealand, Canadian and Singapore dollars … or indirectly by purchasing inverse dollar investments such as the PowerShares DB U.S. Dollar Bearish Fund (UDN), an ETF that gains in value as the dollar falls.
2. Allocate a substantial portion of your portfolio to tangible assets, natural resources — that are in FINITE supply.
That means buying gold. It means investing in oil … copper … tin … aluminum … zinc … nickel … rare earth metals, and more.
In investments such as the SPDR Gold Trust ETF (GLD) … or the ELEMENTS Rogers Intl Commodity ETN (RJI), an Exchange Traded Note that is similar to an ETF and which tracks the commodity sector — and other natural resource-based ETFs and mutual funds.
Best wishes,
Larry
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{ 3 comments… read them below or add one }
I see GG hit the STOP you recommended ($39.89) as did IAG ($12.47)
Should I buy back in (GG & IAG) if price goes up…and at what price do you recommend ?
Also STO is nearing the stop ($22.48)
SAME QUESTION..BUY BACK IN ?
What happened suddenly? Things are turning around to the worse!
None of indium, antimony, hafnium, or tantalum are rare earth metals.
The 15 rare earth elements are: lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium.