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An Update on the Most Important Trend in the World

By Brian Hunt, Editor in Chief, Stansberry Research
Monday, April 26, 2010

Around the office, we've taken to calling it "the most important trend in the world."
Right now, just about every productive citizen in America is reading newspaper stories about the crazy levels of debt the U.S. is taking on in order to pay for its huge defense complex, "free" health care, bailouts, and mushrooming social programs.
Most of them – even if they don't have a bit of interest in the stock, commodity, or real estate markets – are asking, "Can we really pay for all this stuff? It seems crazy."
Around the office, our answer is: No way, no how can the U.S. government pay for all that. Trying to pay for all that stuff is going to devalue our paper currency and drive up the price of "real money," gold.
This situation – the U.S. government issuing blank checks to everyone eligible to vote (job or IQ optional) – is what we're calling the most important trend in the world. And to monitor this trend, we use a simple tracking system... which we'll update you on today.
We track this trend by watching the price of gold, which represents "real money" that cannot be debased, or plotted alongside U.S. government IOUs (bonds), which are being passed out like beer at a frat party right now.
You see, we think we're right... but we always monitor the market to "test" our thesis. Here's the trend at work:
In the chart, the rising black line displays the percentage change in the price of gold. As Europe and the U.S. blow up their finances, gold gains. It's up about 25% in the past year. The declining blue line is the percentage change in U.S. IOUs (as represented by the big U.S. bond fund TLT). The value of our IOUs can decline just like a crack addict's credit score can. They're down a little over 5% in the past year.
The classic Wall Street definition of a bull market is: "a series of higher highs and higher lows." Bull markets tend to take a few steps forward, then one step back... The same goes for bear markets, only we say these are a series of "lower lows and lower highs."
With these definitions in mind, take another look at the chart. Note those higher highs and higher lows for gold... and the opposite for Uncle Sam's IOUs. It's the most important trend in the world.
If you think that there's such a thing as a free lunch... that the solution to a debt crisis is to take on more debt... and that the tooth fairy exists... you can forget about this trend.
But if you know 2 plus 2 equals 4... and if you know you can't borrow, tax, and spend your way to prosperity... you'll get on the right side of this trend and accumulate gold.
Good trading,
Brian Hunt

In The Daily Crux
Market Notes
Major oil-services firms surge... Baker Hughes and Schlumberger hit fresh highs.
Timber REITs Plum Creek and Rayonier hit 52-week highs... lumber firm Masco at new highs, too.
Homebuilders gain on new home sales... new highs for D.R. Horton, Pulte, and Lennar.
Earnings today... Boston Scientific, Humana, Whirlpool, Plum Creek Timber.
Market Watch
Symbol Price
S&P 500 1221.53 +1.3% +10.1%
Oil 37.77 +1.5% -2.8%
Gold 135.20 -0.1% +13.4%
Silver 27.93 +0.4% +47.9%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 19.39 -9.2% -8.2%
Gold Stocks 564.53 +1.3% +10.6%
10-Year Yield 3.00 +1.4% -9.6%

World ETFs
Symbol Price
USA 122.56 +1.3% +10.2%
Canada 30.44 +1.3% +13.8%
Russia 21.63 +2.3% +16.7%
India 37.73 +1.9% +20.0%
Israel 16.47 +0.9% +9.7%
Japan 10.58 +1.0% +7.4%
Singapore 13.88 +1.0% +19.2%
Taiwan 14.72 +1.6% +17.8%
S. Korea 56.56 +1.7% +22.8%
S. Africa 70.85 +3.9% +22.9%
China 45.06 +1.4% +0.1%
Lat.America 52.82 +1.4% +6.7%

Sector ETFs
Symbol Price
Oil Service 136.18 +1.5% +14.8%
Big Pharma 64.13 +0.6% -3.3%
Internet 72.13 +0.7% +22.3%
Semis 16.03 +2.1% +28.9%
Utilities 31.21 +0.3% +1.6%
Defense 18.51 +1.3% +10.1%
Nanotech 9.99 +1.3% +0.0%
Alt. Energy 9.95 +1.4% -4.4%
Water 18.31 +1.1% +12.2%
Insurance 16.07 +1.2% +18.3%
Biotech 20.58 +1.1% +27.1%
Retail 19.65 +0.1% +28.4%
Software 24.59 +0.9% +24.1%
Big Tech 53.73 +1.0% +21.9%
Construction 12.99 +2.1% +13.3%
Media 13.57 +1.1% +25.0%
Consumer Svcs 67.26 +0.8% +23.3%
Financials 54.87 +2.4% +5.2%
Health Care 64.22 +0.7% +1.3%
Industrials 63.25 +1.6% +19.7%
Basic Mat 73.57 +1.6% +21.6%
Real Estate 55.24 +1.4% +23.8%
Transportation 91.17 +1.4% +25.6%
Telecom 22.48 +1.1% +17.1%