February 4, 2008
Grant's News Letter
So far 2008 has proven itself to be a record breaker. Gold hit all time highs, the Fed has slashed interest rates to near all time low’s silver has surged to a new price plateau unseen in decades and we are just getting started.
First let us talk rate cuts. The Federal Reserve has slashed the fed funds rate .5 basis points and the overnight discount rate .75 basis points. Both the moves are inflationary, they are artificially lowering the interest rates that holders of US treasuries will receive, and as a consequence this move will further erode the already falling value of the US dollar over the next 6 months. The US dollar was already falling; the fed just managed to give it a little extra push as it spirals downward towards insolvency.
But the financial woes do not stop there. Other major countries hold US dollars as their reserve currency. All these other countries are now faced with the unattractive prospects of either holding on to their dollars as they continue to grow increasingly worthless, or they can dump their dollars for other currencies and or assets. This is why the dollar rich Arab’s have been buying up companies, stock index’s and media corporations in the US, they have to trade in their dollars now while they still can buy something of value with them. China has a different problem, they hold so much US debt they can not allow our currency to crash without taking the plunge with us, at least not until they can reduce their dollar exposure significantly.
Many experts are predicting gold to raise above $1,000 an ounce by the summer. I believe it will happen much sooner. In the past month the Russians learned that the western central banks (mostly US and UK) have been playing a shell game with their stored gold. These central banks were leasing out their gold to private interests. These private interests then used the leased gold for various purposes, in many cases the leased gold has been sold to industry. So while the gold is no longer in the central banks vault, these central banks are still listing the leased out gold as an asset on their balance sheets. Upwards of 60% of the gold these banks allegedly posses has admittedly been leased out and then sold to industry. This gold will NOT be returned. This means the physical supply of available gold is far less then the tones of gold listed on the asset sheets of the central banks. Depending on just how extensive the leased gold scam is the price of gold is just begging to explode upwards.
As the price of gold soars to lofty new heights silver remains in the bargain bin. Adjusted for inflation gold must hit somewhere in the neighborhood of $1,600 an ounce to surpass its former high in 1980. Silver has yet to hit $20. Adjusted for inflation silver would have to hit $100 an ounce to beat its record high, so as you can see silver has plenty of upside left to climb to. Many of the experts are predicting $30 silver this year. The bull markets in metals have plenty of room left to stampede.
As Chinese New Year’s rolls around copper is well…doing a lot less then I thought it would be doing. Oh it is up slightly from its X-mass low, but the upswing I thought we would see leading up to February 7th and Chinese New Years is a lot smaller then I expected. The fundamentals are all still solid for copper as well as all commodities’s to rise.
Growing numbers of farm related thefts are cropping up (pun quite intended). From almonds to wheat and many things in-between, large scale agricultural thefts are in the news. This is because food prices are increasing. Last spring bee populations declined 70-90% in the US and Europe. This year we have reduced harvests from drought conditions and less pollination. Many food banks are at critical levels. Suppliers are turning increasingly to imported and genetically modified foods. Safe guard your food supply today before contaminated and genetically poisoned foods are the only ones left, buy heirloom seeds and a plot of land if you can, I fear the food situation will be getting far worse far too soon. During the last great depression 80% of the people were rural and able to feed themselves, in the looming dollar collapse depression 5% of the population are in a position whereby they can supply their own food, 95% of us will be at the mercy of the breadline if the total collapse of the US Dollar does occur, and given today’s financial climate a dollar collapse is not farfetched.
Stocks of note, these are stock’s that I think are a good buy recommendation at the current time. GM, not only is this car maker poised to weather out the falling dollar prices with a substantial global infrastructure but GM has partnered with BMW and Mercedes Benz to produce Hybrids for these European luxury brands. Not only is GM stock at a low but GM has historically also paid out a handsome dividend.
With the election looming in November the effect of politics on the market this year will be telling. If Ron Paul somehow manages to get elected the dollar will stabilize and rise and I doubt we will see the total collapse of the dollar I have forecasted. If anyone other then Ron Paul is elected then figure that the dollar will continue to plunge and a rabid bull market in medals will be the norm for the next 5 years. It’s a shame that we as a country refuse to vote for the candidate who will do the most to reverse the trend toward dollar insolvency, and even eliminate the IRS while he is at it.
On that note I urge you to vote Ron Paul and prepare for an explosive 2008.