New Year’s Resolutions and Predictions

The New Year invites guesses about the year ahead. I thought I wouldn’t bother this year, but then I found myself scribbling out some investment resolutions and predictions on a napkin over breakfast. Here are some of them:

1. Ignore the “gold is in a bubble crowd.� The mainstream press doesn’t understand gold. They look at the price and think it’s expensive. Instead, they should turn it around and question the value of the dollar. Gold is best thought of as a play on the creditworthiness of paper money. When people worry about the printing presses, gold does well. As most governments have huge deficits to finance, gold shouldn’t collapse.

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America’s Leading Export: Inflation

“Depending on how bad a crisis gets, gold ranges from being between the best answer and the only answer.�

Inflation is on everyone’s lips these days…everyone in Asia, that is. Because Fed Chairman, Ben Bernanke is so busy pumping up the US money supply to battle a perceived deflationary threat here at home, he is putting pressure on overseas economies to print money at the same pace, in order to prevent their currencies from appreciating against the dollar and, thereby, become less “competitive.â€� The mechanics of all this are a bit complicated, but suffice it to say that the US is “exporting inflation.â€�

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Opportunities in Mining’s Takeover Game

“The tide of globalization will continue to rise. The movement and restructuring of assets – mergers, acquisitions, and divestitures – are currents in this evolutionary whirlpool. Front-page news and trends are inexorably reflected in a deal.�

– Bruce Wasserstein, Big Deal: Mergers and Acquisitions in the Digital Age

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Why Commodities are Rallying as Currencies Decline

Cotton…silver…palladium…nickel…corn.

What do these things have in common?

Answer: They are not a dollar bill. And neither are they a euro (EUR) or a renminbi (CNY) or a rupee (INR)…or any of the other currencies that central bankers around the world are aggressively debasing.

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Commodities Rally With Everything Else

The room was humming harder
as the ceiling flew away
When we called out for another drink
the waiter brought a tray

– From “A Whiter Shade of Pale� by Procol Harum

Everything up; dollar down. That’s been the trend of late, in anticipation of what the pundits are calling QEII – the Federal Reserve’s earnest promise to further debase the currency through the purchasing of government bonds…and assorted other shenanigans and high jinks to be announced in due course.

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Another Chinese Resource Grab

The stakes just got higher in the 3-D chess game China’s playing for natural resources. On one dimension, the Middle Kingdom is on the offensive. But on another, it’s playing strictly defense…

Beijing is ordering state-owned businesses to explore a bid for PotashCorp (POT), the Canadian fertilizer giant that’s already fending off a hostile bid from BHP Billiton, the Anglo-Australian mining giant.

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Sweet Profits in Sugar?

August, the eighth month of the year, is the last month before the traditional harvest time in the Northern Hemisphere. Thus, the old saying was “If the 24th of August be fair and clear, then hope for a prosperous Autumn that year.�

So far, the month of August has been very fair and clear for the stock market…and for the commodities markets. These buoyant trading days of early August continue last month’s bullish action in both the stock and commodities markets.

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Appetite for Commodities

I am always worried that I am not ready for something, like “Do I have enough ammo to hold off a horde of desperate people storming the Excellent Mogambo Bunker (EMB)?� which I soon realized was a stupid question since there is no “correct� answer; it all depends on when the crowd of angry, starving people, destroyed by the Federal Reserve creating so much money and the government borrowing it and spending it, decides, “We better not rush the bunker and try to get all his gold and silver because The Fabulous Mogambo (TFM) will shoot us and kill us, and then shoot at the people who come to take our bullet-riddled bodies away, and then kill them, too!�

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Following the Copper Trends

Today’s a good day for a checkup from “Dr. Copper.” The useful metal has “a Ph.D. in economics,” the kitschy saying goes. If the world starts using less — in their homes, their electronics, etc. — a fall in copper demand should precede a global slowdown. It’s used in damn near everything, after all. So if prices are down, that has to mean something… right?

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Investing in Fertilizer: One Good Way to Grow Your Portfolio

Fertilizer stocks are well off their highs and are down about 10% from the start of the year.

What’s happened here is that the global harvest of wheat, corn and soybeans looks like it is going to be a record. As improbable as it seemed only six months ago, this is what is happening. Plus, US corn stocks are starting to creep back up to 1980s levels.

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