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We
believe precious metal investments currently represent great value in
comparison to other investment opportunities. It is important to look at
investing from as broad an overview as possible. Looking at a few months of a
stock chart is like reading only a few sentences in an entire book. You only
get part of the story. We believe it is much easier to make a profit
investing in a very slow moving, long term monthly chart, than a short term
intra day chart. When an investor backs up and reads the full story, the
picture and strategy to make money becomes clearer. In our opinion
commodities in general and precious metals specifically are currently
available at a sale price.
So
what does the story of investing look like today? We know that as individuals
people can be very unique. However, group behaviour is much more predictable.
On average, a large group of people will react in a similar fashion under
certain circumstances. For example, people tend to "rubber neck" at
a traffic accident. Even though some drivers remain focused on their driving
the majority will be compelled to slow down and look. As a whole the drivers
behave in a predictable manner and traffic slows. We recognize the
predictability of group behaviour as it influences the markets. As a result
we have developed a set of time tested rules intended to take advantage of
this phenomenon.
Based on history we believe:
1)
All markets are cyclical. No
investment is constantly a good or a bad investment. Where a particular
investment is in its cycle is what is critical.
2)
All major macro market trends will not end until an extreme is reached in the
direction traveled. Once that extreme is met, like a pendulum swinging,
the new trend will start and will not end until the extreme is met in the
other direction.
3) Major investment markets have relationships to
one another that do not change over time. For example, Real-estate, Bonds and Stocks tend to
move in the opposite direction to Commodities.
Once
our basic rules to investing are established, we look at the overview of our
current investing story.
1)
1970 - 1980 were times of
extremely high inflation. Interest rates were rising from an extreme low to
an extreme high that peaked around 1980. As a general rule the cost of
everything was rising during this time period. As an investment, commodities
did fantastic, while stocks, bonds and real-estate did not do well. Silver
and Gold reached true bubble status as gold peaked around 2300% higher than
its low and silver peaked around 2700% higher than its low.
2)
1980 - 2003 were times of
steady but much slower inflation. As a general rule interest rates were
falling from their high in 1980. During these times consumer prices did not
increase very rapidly. Stocks, bonds and later real-estate flourished.
Commodities had flown so high during the 1970's it took two decades of
falling prices to re-balance the previous bubble, and as commodities fell,
stocks, bonds and real-estate hit bubbles of their own. The Dow Jones
increased from about 800 to 12,500. Major stock indexes, bonds, and
real-estate hit key extremes to the upside. They became very expensive and
their relentless two decade rise could not continue at such a pace.
Homeowners experienced the effects of an appreciating asset at a dizzying
pace. On the other hand commodities had been neglected and vilified as an
investment class. After a two decade bear market precious metals became the
most hated asset class around. But the astute investor knows this is likely
the type of set-up where fortunes are made. Starting in 2000 commodities
started to head higher as stocks started to head lower. Stocks were coming
from an extreme high and commodities were coming from an extreme low.
3) 2004 - 2007. We know that over the last handful of years a few
market movement extremes were hit. If our time tested rules hold true we hope
to predict what will happen regarding investments over the next several
years. In our opinion in 2004 interest rates hit an extreme low. Therefore it
is logical to expect they will continue to increase until they hit an extreme
high. This is similar to the market conditions of the 1970's.
Not long ago commodities in general hit an extreme
low and it is now reasonable to assume they will continue to rise until they
hit an extreme in the opposite direction. Based on history we expect Gold and
Silver's price appreciation to finish extremely high. In a major bull market
we expect massive moves such as the Dow Jones from 1980 to 2000 or Gold and
Silver from 1970 to 1980. We believe the majority of investors today do not
know about the commodities bull market while other investors claim the bull
market in commodities and precious metals is over. In our opinion this is an
invalid conclusion to draw because according to our analysis and
understanding of the markets, the pendulum will not change direction in mid
swing.
In
2007 we do not think commodities are a poor investment. Contrarily, we
believe that even though they have been a poor
investment in the past, they are a fantastic investment now. After more than
two decades of a major bear market we do not expect the following bull market
to be over in a handful of years.
We
have created a long term major macro custom scored chart that monitors the
precious metals movements relative to other investment markets. Our unique
scoring system compares six different markets to illustrate the precious
metals trend.
For Example:
 
*
This information is only valid for the date shown on the chart.
You
will notice the score peaks at ten at the top of the commodities bull market
in 1980 relative to these other markets. It then bottoms in 2000 against
these same markets before heading higher again. You will also notice the
recent breakout from the long term downtrend. In our opinion this confirms
that the new bull market will not end until the gauge reaches the upper
portions of the chart.
As
illustrated above, we believe the long term story of investing is still in
the early stages of developing the characters. According to the big picture
in the chart above we can see the commodities bull market is just getting
started, and based on history we know the final stages of a major bull market
are the most exciting and most profitable of all. In our opinion this asset
class is where fortunes will be made for those who understand the current
mega trend underway. In short, we expect commodities and silver in particular
to be a major asset bubble such as tech stocks in the 1990's, real estate in
the 2000's and commodities in the 1970's. As always, the trick will be knowing when to sell out of the future bubble to
preserve ones profits.
Our
subscribers have access to an updated long term trend chart such as the one
illustrated above. Understanding the long term commodities bull market
through the use of Our Charts gives us what we think is unparalleled
focus and clarity in our investment strategy.
Please
note: All charts and statements on these pages are applicable only on January
1, 2007. Markets are continually moving and as a result these charts may not reflect
the same investment opportunity as they did when they were created. However,
we believe markets are cyclical and therefore think there is always a bull
market just starting or maturing somewhere. In our opinion, when the precious
metals bull market is nearing an end, a new bull market with a new low risk,
high reward opportunity will be just getting started. At that time our charts
will be used to direct us to the next investment opportunity. Based on our
analysis, our current investment of choice is silver. This will change when
the markets and Our Charts signal that a potential major change is
coming. Our Privacy Policy and a Full Disclaimer is available
through a link at the bottom of the page.
Michael Kilbach
Editor
Investmentscore.com
Michel Kilbach is the
President and Editor or www.investmentscore.com, an online publication designed to
show investors how to make profitable entry and exit trading decisions in
high growth potential investments. Investmentscore
uses a unique scoring system as a visual guide to assist investors in making
lower risk / higher reward trades.
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Investment Score Inc. information constitutes a recommendation that any
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of the content published as part of the Investment Score Inc. information may
be deemed to be investment advice, such information is impersonal and not
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and/or exact. Investment Score Inc. its officers, directors, employees,
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advisers. It is recommended investors conduct their own due diligence on any
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supplied by sources believed to be reliable, that the calculations herein are
made using such data, and that such calculations are not guaranteed by these
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not be complete. From time to time, reference may be made in our information
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may be selective, may reference only a portion of an article or
recommendation, and are likely not to be current. As markets change continuously,
previously provided information and data may no be current and should not be
relied upon.
Copyright © 2006-2007 Michael Kilbach
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