My wife thinks Im crazy.
For weeks, Ive been waking up at 2 am or 3 am every morning to check 24-hour oil and gold markets, research the best opportunities for my subscribers and write you these e-mails.
But with all thats happening right now, I wouldnt trade my routine with anyone elses, and its paying off in aces and spades.
Consider, for example, these two recent headlines:
Time to Get Serious
about Alternative Energy!
… is the front-page headline in my January Real Wealth Report that was sent to subscribers on Jan. 23 … along with my new stock recommendation to profit from in the coming push to reduce our nations reliance on oil.
And, sure enough …
BUSH, RESETTING AGENDA,
SAYS U.S. MUST CUT RELIANCE ON OIL
… is yesterdays four-column headline on the front page of The New York Times.
The Presidents program does not contain a big new initiative for alternative energy. But it sets a very new tone, which is going to galvanize the entire sector. Thats the new energy surprise that few people were anticipating.
Result: The alternative energy investments I recommended in my latest issue of Real Wealth on Jan. 23 are now up 15.27%.
This is big. And its about to get a whole lot bigger.
Mark my words: The price of oil is soon going to hit $75 a barrel then $90 – $92 … then, soon after, over $100 a barrel. Im not talking about next year or 2008. Im talking THIS year.
And even if oil does nothing more than stay above the $60-per-barrel level, the explosion of interest in alternative energy sources is here. More on this in a moment.
Landmark Decision
in Vienna! Today!
Right at this very moment, Thursday morning in the U.S., the International Atomic Energy Agency (IAEA) is huddled in an emergency meeting in Vienna.
Theyre ready to slap Iran and slap them hard.
How do we know?
Because just two days ago, to set the stage for the meeting, the IAEA released a damning four-page report on Irans nuclear program.
Its message: Irans leaders are lying through their teeth.
You see, all along, Irans big pitch has been that its nuclear program is strictly for peaceful purposes. But this report, on Irans Green Salt Project directly links Irans military weapons programs to its nuclear research.
Touch!
Meanwhile, all five members of the UN Security Council the U.S., Britain and France PLUS Russia and China have now reached a landmark agreement to, in effect, put Iran on trial at the United Nations.
The obvious consequence: Iran will retaliate by shutting down its oil exports to the West. Oil prices will go ballistic. And the demand for oil alternatives will be off the charts!
Warning:
Watch out for
Irans FINANCIAL
Nuclear Bomb
Sometime in March, Iran is going to open the new Iranian Oil Bourse (IOE).
Its goal: To compete for oil trading with the New York Mercantile Exchange (NYMEX) and Londons International Petroleum Exchange (IPE).
Heres the problem: Iran plans to trade its oil in euros, not in dollars.
Why is that a problem? Because the U.S. monopolizes the oil trade and oil is traded internationally in dollars. This forces central banks around the world to maintain large dollar reserves (68% of all currency reserves in the world are in dollars) to pay for oil.
In turn, those dollar reserves help keep our economy trucking, supporting our lifestyle, financing our budget deficit, even helping Americans to buy new homes.
Should the Iranian Oil Bourse gain some traction in the oil trading business which I believe it could since Iran is the worlds fourth largest oil producer major economic powers such as India, Japan, China and even Europe will have no choice but to buy some of their oil in euros.
That means less demand for dollars, and fewer petrodollars likely to flow back to America.
But very few people are talking about this. They seem to underestimate its potential significance and how it ties into the current environment. But just think about it for a few minutes …
1. Iran is proceeding with nuclear enrichment.
2. Bin Laden has just issued a new tape, threatening more major attacks on American soil, something we must take with extreme seriousness.
3. Al Qaedas #2 henchman, Ayman al-Zawahri just issued a new tape yesterday, also blasting Bush and the U.S.
4. Bin Laden, Ayman al-Zawahri, Iran, and now, most of Gaza and the West Bank, are in alignment against the U.S.
5. The dollar is already on weak ground.
6. Iran is the world’s fourth-largest oil producer. Every day, it exports more than two million barrels of crude twice as much as Iraq.
7. If Iran insists on payment in euros, the dollar will plunge.
These are some of the key reasons why I think big trouble lies ahead with Iran. And one of the trigger points could be attempts by officials in the West to put the kibosh on the Iranian Oil Bourse now, before trading starts.
Gold Continuing to Make a
Beeline for My $618 Target
This week, gold has surged another $12.
And one major set of forces driving it higher is precisely the same one thats driving up oil spreading turmoil in the Middle East and the Persian Gulf.
Another major force is oil itself: Petrodollars going into gold … plus investors fleeing to gold because they see the inflation that the energy boom will inevitably bring in its wake.
But theres more to it than that. As I watch the gold markets each morning, I see pullbacks that lead traders to dump positions and run for the hills. Then, the next day, I see the yellow metal off to the races again, and on to still-higher 25-year highs.
This tells me that gold is not just being driven by fear or greed. Its going up mostly because of the powerful, long-term, supply-and-demand pressures Ive been telling you about for so long.
It also tells me this gold market is not just for so-called sophisticated traders who think theyre smart when they jump in and jump out at the drop of a hat.
No. Its for average investors who want long-term protection against inflation and a sinking dollar … plus a way to build their wealth both steadily and rapidly over time.
Bottom line: Stand back from the trees and keep the long-term trend in focus. If so, you can ignore the swings, enjoy the ride, and make money like crazy.
Consider, for example,
Some of the Gold Positions
In My Real Wealth Report …
One of the gold stocks is up 59% since first recommended.
Another, Northgate Minerals (NGX), is up about 130%. (I recommended it in April and then again in May of last year).
My two recommended gold mutual funds are up 55% and 69% respectively.
And you know what? Im recommending subscribers sit tight with those positions. They are long-term core positions. Gold is going much higher. So why get distracted by the day-to-day?
You shouldnt. Thats my job. Your job: Sit back and enjoy the profits!
You can see golds bull market in this updated chart. Just look at how strong it is.
The price of gold has soared $53 just since January 1! Whats more, golds latest surge has sent it thrusting higher though the top of that triangle you see on the chart, another very bullish move that indicates much higher prices to come.
Short-term, gold is headed to my next target of $618 an ounce. After that, I expect well see $740 … and then, longer-term, well over $1,000 an ounce.
Crazy? I don’t think so. Take a look at another gold chart that Ive included, below: An inflation-adjusted chart of gold going back to 1860 …
For gold to reach its 1980 high in inflation-adjusted purchasing power, it would have to hit $2,159 an ounce.
Optimistic? Sure. Unrealistic? No way!
Another supporting tidbit: Suppose that in 1897 you purchased $100 worth of goods and services. Adjusted for inflation the declining purchasing power of the dollar what would that $100 worth of goods and services cost you today?
Answer: $2,215.56. And thats within a few dollars of what gold should cost today, adjusted for inflation.
When will gold get that high? Not for quite some time. But between now and then you can count on more rallies, and many more profits.
Now, let’s take a look at some of the other …
Forces affecting the gold market
1. Demand/Supply equation imbalance. Demand Surging. Up some 54% last year.
Supplies? Dwindling.
Major mining companies, like oil companies, failed to invest much in new exploration during golds bear market.
Now, it will take years to find new mines and reopen old mines. And even then, production is falling: For instance, Russias gold production fell 3.5% last year!
2. Central bankers creating fiat money. Their agenda: To pump up inflation and avoid deflation at all costs. There is not a central banker in the world that would prefer the risk of deflation over the risks of inflation.
3. We’re in a war economy. The so-called peace dividend of the years after the cold war are over. Gone.
4. The excitement of the gimmicky tech revolution is over.
Now come the real consequences of the tech revolution: 2.3 billion people in India and China that have been ushered into capitalism, and now want the good things in life.
5. Natural resource wars. And Im not just talking about the raging wars for oil and gas. Im also referring to spreading conflicts over copper, zinc, timber, aluminum, and lead even fresh potable water.
Entire nations and their governments are starting to experience panic anxiety attacks over natural resource supplies. And for good reason.
6. Terrorism not just Al Qaeda, but now North Korea, and Iran. Each represents a very serious and immediate threat. I have no doubt Iran is moving toward nuclear weapons. I have no doubt we will end up in conflict with Iran. But it may not be through the front door.
Israel, pushed along by the U.S., could make a preemptive strike at Iran’s nuclear facilities. If so, it will knock out the nukes, but it will also precipitate a major Middle East War.
If there were ever an environment to own gold, this is it. Please make sure you’re diversified into the gold market. See my Real Wealth Report for my latest recommendations.
What to do About it All
Unfortunately, were living in dangerous times. And sadly, its going to get very ugly as soon as this year.
Thats why I cannot overemphasize what Ive been telling you over the last few weeks
Keep the bulk of your money sweet, warm and safe in money market funds.
As good as the stock market looks, stay away from the majority of stocks.
The primary exceptions: Gold, natural resources, and of course, oil and gas shares.
Some major oil shares are so cheap right now, its unbelievable. Theyre trading at price-to-earnings multiples that youd normally see in a bear market, or a depression in the oil industry. Im talking P/Es of less than 10 times earnings.
With oil set to rise much higher, imagine the profits these oil companies are going to make. ExxonMobil just announced record-breaking profits for any company, anywhere, any time in history: $10 billion in profits in its last quarter.
Theres oodles of money to be made in the energy markets. (Check here to download the latest issue of Real Wealth Report with my new alternative energy recommendation.)
And for some of the most incredible leverage youve ever seen, or will ever see in the energy markets, consider Long-Term Equity AnticiPation Securities (LEAPS) on energy stocks. They offer you several advantages, including potential profits of up to 1,614% starting with modest investments and where your risk is strictly limited to the amount you invest.
Best wishes,
Larry Edelson
Editor, Real Wealth Report
Energy Options Alert
About MONEY AND MARKETS
MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Marie Albin, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.
2006 by Weiss Research, Inc. All rights reserved.
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