This Trade Is Better Than Gold
By Jeff Clark
This year will be the year of precious metals. I'm certain of it.
The U.S. government is printing trillions of new dollars to bail out everyone from Wall Street bankers to Detroit automakers to Miami housing speculators to Las Vegas gamblers. That will lead to inflation.
It won't be the kind of inflation we're already used to – the kind that happens over decades as the price of milk goes from $0.79 per gallon to $3.98 or a first-class postage stamp climbs from $0.22 to $0.43. It'll happen overnight.
One day, we'll all wake up and notice 99¢ Only Stores has changed its name to $99 Stores. McDonald's Value Menu won't have anything under $5. And those little gumball machines that your kids love dropping dimes into will have a slot for dollar bills.
How do you protect yourself? You need to own precious metals.
Gold is a terrific hedge against inflation. It has run up a bit lately, and it's probably due for a pullback. If gold drops down anywhere close to $800 per ounce, that's a great time to buy.
Silver works well, too. In fact, I like silver more than gold at current prices. Historically, it takes about 35 ounces of silver to buy one ounce of gold. Today, that ratio is 75. So silver is cheap relative to gold. There's plenty of upside and only modest downside to buying silver right now.
But if you can only buy one precious metal in 2009, then buy platinum.
Relative to gold, platinum is cheaper now than it has been at any time during the past 10 years. Here, take a look...
Normally, it takes between 1.7 and 2.2 ounces of gold to buy one ounce of platinum. Today, they're trading for almost the same price.
So if you like gold, then you absolutely have to love platinum. The percentage gains in this shiny white metal are likely to be far and above anything seen by gold and silver investors in 2009.
You can trade platinum by buying shares of a platinum mining company. But there is only a handful to choose from, and many of the stocks have already spiked higher. In fact, a trade I recommended for S&A Short Report subscribers last Tuesday is up more than 50% in just one week.
Alternatively, you can invest in platinum by buying shares of the E-Tracs UBS Long Platinum ETN (PTM). This exchange-traded fund tracks the performance of platinum futures contracts.
If platinum rises or falls 10%, then PTM will rally or decline a similar amount.
This year is going to be a great year for precious metals. Gold and silver should both do well. But the biggest returns are likely to come from platinum.
Best regards and good trading,
Jeff Clark
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Oil Set for Huge Rally
The steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide.
The so-called forward curve of futures contracts traded on the New York Mercantile Exchange suggests oil will rise 28 percent to $60.10 a barrel by December. The curve looks almost the same as 10 years ago, after Russia's default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns that a global economic slowdown would reduce energy demand. Crude prices fell 25 percent in the final quarter of 1998, the steepest drop in seven years. Read on...
Zero U.S. Stock Mutual Funds Gained in 2008
Kenneth Heebner's CGM Focus Fund, the industry's top performer in 2007, dropped 48 percent last year as the worst market for stocks in seven decades humbled the best-known managers.
Harry Lange's Fidelity Magellan Fund dropped 49 percent, dragged down by stakes in financial companies. The average U.S. stock mutual fund fell a record 39 percent in 2008, according to Morningstar Inc. in Chicago. The Standard & Poor's 500 Index declined 37 percent including reinvested dividends. Read on...
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