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After the past five days in New Orleans , I am still suffering from information overload. Personally listening to
almost forty presentations from some pretty smart people with differing
opinions can be confusing. Although many speakers seemed to have common
threads that ran through most of their talks, many speakers felt that:
- Bonds are finished;
- All investors need some type of exposure to Chinese growth;
- A down turn in the U.S. economy is probable in 2007 (No agreement
concerning the severity);
- Get out of U.S. dollars to some degree;
- Think global.
And to a lesser extent, many felt:
- Copper is going to turn down;
- The U.S. stock market will experience a down turn. Keep stop losses close;
- Go long on grains;
- Buy gold bullion and gold stocks.
There were also a few memorable comments from several speakers such as:
Larry Abraham's (multinatl@aol.com) enlightening description of
how the Chinese intend to spend their 1 trillion dollar surplus in the third
world was fascinating. China intends to loan Chinese contractors money to
build infrastructure (using Chinese built equipment) such as toll bridges,
toll roads, ports and water systems. The Chinese contractors will own and
operate these assets for profit so they can pay back the loans. The third
world will get their infrastructure built and the Chinese will make many new
friends. They will then buy raw materials from their new friends whom they
will extract over the new bridges, along the new roads and out of the new
ports. The 3rd world will benefit selling their agricultural and minerals
exports to China. China will benefit by creating new export markets for their
consumer goods.
Curtis Hesler (www.protiming.com) said that 85% of the
investment return is a result of investing in the right asset class. Only 15%
of the return is a result of investing in the right individual asset.
Dennis Gartman (www.thegartmanletter.com) reminded us to:
take profits every now and then, buy things that are going up and sell things
that are going down. (Sounds simple but how many of us hold a losing position
too long.) He also said he does not trust U.S. GDP numbers because
bureaucrats count goods and services poorly. He does however, believe in
income tax numbers. He has more faith in yr/yr increases in income tax
revenue as opposed to yr/yr increases in GDP as a way to gauge growth in the U.S. economy. He also believes that in the future Japan is going to become a small
unimportant country due to its demographic problems. Long on ag commodities
and high tech - short on copper.
Frank Veneroso (www.venerosoassociates.net) feels that the run
up in base metals is a result of hedge fund buying. He feels that this is not
a result of demand but a result of speculation in the market. This is causing
imbalances that will result in surpluses that will have to be worked off over
a period of years pushing base metal prices back down. He is definitely short
copper and other base metals for years to come.
Jon Nadler (www.kitco.com) said there is an
infinite supply of paper dollars chasing a finite supply of gold. Most of the
gold purchases are going into the people's pockets and not the vaults of
central banks. The new central bank of the people is the gold ETF.
Pam Aden (www.adenforcast.com) confirmed that we are in the
sixth year of a gold bull market. Copper is a bubble, but gold is not. Since
2005, Gold is rising in all currencies. Invest with this gold trend and stay
with it until the general trend changes. Corrections for a few months mean
nothing. The gold bull will probably run 10 to 15 more years.
Robert Meier (RMB Group 800.345.7026) said we are in trouble in
Iraq. We must travel to the other side of the world and have terrible
logistics working against us. We also have terrible economic forces against
us. A $1,000 RPG can take out a $7,000,000 tank. The 21st century will be
full of wars for natural resources.
Jim Rogers (www.jimrogers.com) said diversification was
something invented by stock brokers to protect themselves. He said the best
way to get rich is to put all you eggs in one basket and then watch the
basket. Invest in commodities such as: grains, metals and oil. China is the future, expect setbacks there but the long term trend in China is up. He even hired a
Chinese nanny for his little daughter so she could learn the language. Forget
investing in Russia and India for now. Buy his new book "Hot
Commodities" to find out more.
Doug Casey (www.caseyresearch.com) was frank, honest and
forthcoming with his refreshing libertarian ideas. Doug says you should
"internationalize yourself". You should buy a lot of gold and
silver coins, speculate in mining stocks and sell it all when Time and
Newsweek say gold is the best investment of the year on their front covers. He
also said we are living in an awkward time in our history, it is too late to
change things but too early to line up all the politicians and shoot them for
the mess they have made.
Bob Prechter (www.elliottwave.com) said the markets have done
terrible when looked at priced in oz of gold instead of US dollars. Oil
priced in terms of gold has been relatively flat over the last 35 years. Predicts
buyers will simply leave the stock market and both stocks and bonds will drop
hard.
Dr. Marc Faber (www.gloomboomdoom.com) was my favorite of the
conference. He says the third world is financing the developed world - a
condition that has never existed before. Debt in the U.S. is growing much faster than GDP, which is unsustainable. The five major world
currencies are the U.S. dollar, euro, yen, renmimbi and gold. Diversify into
all of them. Oil demand in emerging markets is growing very fast. Mr. Putin,
who now controls the production of Russia's 10 million bpd of oil (more than Saudi Arabia ) is the world's largest oil producer and the most powerful man in the world
today - not Mr. Bush. Watch the Dow index priced in terms of gold. Go long
grains.
Paul Van Eeden (www.paulvaneeden.com) however, seemed to
tie it all together in my mind. He said that hedge funds did indeed purchase
large positions base metals starting in mid 2005. He says they did so at the
same time the Japanese central bank announced the end of the yen carry trade.
The hedge funds had such large positions that they could not quickly unwind
in the yen carry trade that they became worried about gigantic losses as a
result of a declining dollar against the yen if the Japanese central bank
stopped supporting the dollar. As a hedge against a declining dollar, they
purchased metals. Since this very large demand was not coming from true
industrial demand it is artificial and may cause misallocations and
imbalances in the metals markets. As a result, base metals may indeed be in a
bubble and fall as the hedge funds unravel their positions. However, gold is
money! Another chart showed computations in the rise in gold stocks through
yearly mine production figures vs. the rise in the U.S. dollar supply. There
is a surprising correlation with the exception of 1979/1980 and the last few
years. According to his chart, gold is currently $200+ dollars undervalued
right now. It appears I now have a valid reason to be short copper (and other
overbought base metals) and long gold.
In closing, I would like to thank all the speakers, including those not
mentioned, simply for brevity's sake, for their input this year. I apologize
in advance for any misstatement of anyone's work. The meager few words that I
have written above are only a tiny fraction of the wealth of topics covered
by some of the brightest minds in the world. Most of these speakers have
newsletters that are available on a subscription basis for more detailed
analysis of political and market conditions. To get individual stock picks,
you will just have to attend the conference next year. The New Orleans
Investment Conference was the best investment in my time and money that I
spent this entire year. In addition to the speakers, I was able to visit and
exchange ideas with investors from all over the world. I highly recommend
everyone to take control of their investments and educate themselves. The New
Orleans Conference is one of the best ways to do just that.
Larry Laborde
Silver Trading
Company
www.silvertrading.net
Larry lives in the occupied South with his wife Puddy and sells
precious metals at the Silver Trading Company. Larry can be contacted
at llabord@aol.com. You can view
his web site at www.silvertrading.net.
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