Fasten your seatbelts because if you jump on these trends quickly, smartly and with the right timing — you're about to get a whole lot richer. In this report — I will show you …
- Why record, out-of-control debts in this country signal a looming sharp decline in the value of the U.S. dollar, helping to boost natural resource prices higher as far as the eye can see.
- Why Asia's explosive economic growth — the enormous new demand pressures from 1.3 billion Chinese now entering the middle class — will continue to drive natural resource demand — and prices — sky-high around the world. And …
- How — if you understand these two simple forces — you'll be able to capture these mega-trends to ride them to full glory and truly enormous profit potential!
For over four years now, I have warned that Washington's record low interest rates and tax cuts, combined with wild federal spending and mounting deficits — would hammer the value of the U.S. dollar lower, and set off a massive wave up in natural resource prices.
And I wrote that Asia's economic growth was being underestimated by almost everyone, acting like a fuse lighting a rocket under the prices of natural resources.
Since I made those forecasts, natural resource stocks have skyrocketed — just as I said they would!
And since then, many of the natural resource stocks — stocks you can buy simply by calling your broker or jumping online — would have almost doubled, tripled, and even quintupled your money:
Peabody Energy is up 504% … Diamond Offshore is up 268% … Valero Energy is up 462% … Toreador Resources has risen 852% … Detrex Corp. is up 250%.
I created my Real Wealth Report with one and only one mission: To make you money. Gobs of it. And to me, gold and other natural resource investments are the best means to that end. After all — stock booms go bust. Bond rallies fizzle. Paper currencies turn to dust.
But demand for natural resources — food and water … oil and energy … raw manufacturing materials … and yes, precious metals — are enduring.
And for good reason: The Earth's 6.5 billion people simply can't live — nor can civilization advance — without them!
In my view, these are all assets that in today's world are more precious than ever. Look. The supply of natural resources has always been limited. Mother Nature produces only so much. Nor is soaring demand for natural resources anything new.
An exploding global population, combined with the discovery of even more ways to use them, has always pretty much guaranteed it.
But now, demand for these resources is accelerating at a pace never before seen during the history of planet Earth. Not only that, demand is destined to continue accelerating for two crucial reasons:
Reason #1: The Inherently Weak U.S. Dollar
A total of $75.2 billion in General Motors' and Ford's corporate bonds have been downgraded to “junk” status and are now vulnerable to eroding away to practically nothing, causing hundreds of billions of dollars in losses to investors worldwide.
The amount of bonds at stake is more than two times larger than WorldCom's bond default in 2002, when $30 billion in bonds went bad.
The implications are staggering. Think about it: $75.2 billion of IOUs from two of the largest, proudest, most prominent symbols of U.S. industry are now considered junk, not safe to invest in.
Unfortunately, this is neither a freak incident confined to two giant companies nor is it a disaster confined to a single industry, America's automotive sector.
Rather, it's symptomatic of the beginning of a tidal wave of debt about to go bad. From the corporate offices of Detroit … to the tech companies in Silicon Valley.
From municipal governments around the country … to Washington, DC.
From the heartland of America's Midwest … to John and Jane Doe on Main Street, Any Town, USA.
Indeed, massive debt loads are about to become a quagmire of losses for the entire nation …
Corporate debt loads have increased — to a staggering $5.6 trillion. Household debt levels jumped 12% in 2004 and 2005 and now consumer credit debt stands at all-time highs of 22% of personal income.
Credit card debt is also at record highs — with the average open balance on credit cards over $8,000.
And Washington's debt: Over $8 TRILLION dollars, and rising at the rate of $1.6 billion per day. That's the equivalent of $28,511 of debt for every man, woman, and child in this country.
Even worse, not one of the above figures includes the unfunded liabilities that exist at so many levels of our economy and in our society.
It does not include the unfunded corporate pensions … the potential liabilities in the trillions of dollars of derivatives traded daily … government employee pensions … nor the unfunded liabilities in Social Security or Medicare.
Add up all these debts and you're staring at a Tower of Babel of more than forty three trillion dollars of debt. All this means a falling dollar — and rising prices for gold, oil, and other natural resources — as far as the eye can see!
And it's one of the main reasons why I am a “real wealth” nut. I avoid paper assets like the plague. I want to own tangible assets that have value. I want you to do the same. Moreover …
Inflation Is Going To Continue To Accelerate Higher
The cost of just about every raw material under the sun is at or near record highs …
I don’t need to tell you about oil prices. The price of oil surged to new, all-time highs in 2006. Despite any corrections here and there, it’s headed much higher.
Aluminum prices are near 10-year highs … Copper is almost 400% more expensive than it was in 2003 … nickel, rhodium, zinc — you name it — the price of nearly every base metal is soaring.
And now, even food prices are starting to soar, with the price of wheat gaining 63% in the past two years, corn up 87%, soybeans up 25%!
But the overwhelming debts in this country coupled with the strong probability the U.S. dollar will fall is just one reason natural resource prices and inflation are headed higher.
Reason #2: Asia's Record-Shattering Economic Growth
More than 3 billion people in China and across Asia are coming out of the dark ages … joining Western society … building homes … installing modern plumbing … buying cars … tasting new foods … having their desires awakened … and consuming natural resources like never before!
Believe me: When almost half the total population of the entire world suddenly begins demanding a scarce natural resource, you can count on prices shooting for the moon!
And wow, is China booming. Consider these latest stats …
Personal consumption in China is exploding. Among the four most basic commodities — grains and meat, coal and steel — consumption has already eclipsed the United States'.
China's grain consumption hit a record 500 million tonnes in the 2005-2006 fiscal year.
China consumed 7,028 metric tonnes of meat in 2005 — that’s 20% higher in the past four years.
Steel use in China is also now more than double that of the United States!
Coal, which supplies nearly two-thirds of energy demand in China, has soared to 2.25 billion tonnes, easily exceeding U.S. consumption by more than 50%.
And China's demand for oil? Soaring! In fact, oil imports literally jumped off the charts in 2006 — up 21%!
Meanwhile, in India, after incubating and smoldering quietly for decades, equally explosive forces are now bursting at the seams …
Among India's one billion people, a rapidly growing segment is now modernizing, with a GDP growth rate of 8.9%.
India's GDP is now surging to $719 billion. And after adjusting for its lower purchasing power, India's once-backward economy now has the GDP equivalent of $3.6 trillion — surpassing the adjusted GDPs of Germany, the U.K. and France, and catapulting itself to the rank of the fourth largest in the world.
Retail sales are exploding, reaching an estimated $350 billion in 2006, and are expected to grow at a rate of 13%.
India's purchases of passenger vehicles last year grew 18% to 1.6 million vehicles, bringing it to the 11th largest car market in the world and the third largest in Asia behind Japan and China.
Bottom line: India's rapidly growing economy will drive energy demand to a projected annual growth rate of 4.6% through 2010 — the highest growth rate of any major country on the planet, even higher than China's!
Consequences: India and China are now scouring the world for supplies of oil and gas, forging strategic partnerships with Brazil, Kazakhstan, Russia, Iran, Indonesia, Australia and more. It's a mad dash to secure oil and gas supplies.
If you're a savvy investor, you'll recognize these forces and how they are unfolding in the natural resources markets. Virtually every time the price of these assets dip, they rebound ferociously. Ditto for the best managed companies who deal in them.
So if you're like me, you're chomping at the bit over all the profit opportunities you can go after. These markets are on fire, and will be for years.
Seize The Profit Opportunities
From Rising Natural Resource Prices — Now!
There are never any sure things in the markets. There are only major trends and minor trends. The difference: When you have a major trend in your favor — like you do now with inflation — your odds of winning and taking profits out of the market go up astronomically.
That's why professional analysts often say, “Make the trend your friend.” When you do that, you're putting major, compelling mega-forces on your side — unstoppable forces that can help you yank out the profits you're going after.Money and Markets
Weekend EditionSaturday, February 3, 2007
