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This Trade Is Better Than Gold

By Jeff Clark
Tuesday, January 6, 2009

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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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%