A "Bump in the Road" or Great Depression II .....

In this issue:

• "A Bump in the Road' or Great Depression II

• A Look at Where We Are - Gold

• What is a Warrant?

"A Bump in the Road" (as Obama says) or Great Depression II

On my recent trip to New York attending the Hard Assets Conference, I had the pleasure of meeting Tom Cammack. Tom was visiting with the President of one of our top holdings and I jumped into the conversation with them.

Tom Cammack is more than an interested investor.

Tom is a CPA and CFA and is currently a senior investment manager with the Teacher Retirement System of Texas. For your information, the system has a value around $100 BILLION.

In his book, Inflation Nation, Tom presents the facts in layman's language that all can easily understand and what each individual needs to know to invest correctly in the current environment. After the latest employment stats released on Friday, I believe Tom would say that this is no bump in the road and that we are getting closer yet to Great Depression II.

I frequently cheat and go to the back of the book (first) and believe me, we are leading our subscribers to opportunities that will pay off big in the coming environment. Yes, we, the good guys win in the end due to our recognition of the investment climate and correctly positioning ourselves and you for great gains.

Tom clearly explains:

Keynesian Economics vs. The Austrian School of Economics

Killer Flation: Inflation, Deflation and Stagnant Growth

What to Do and How to Prepare

I encourage you visit, www.InflationNation.com for more information and how you can order a copy of this valuable publication. Inflation Nation is a fast read that will put everything into perspective for you and give you more confidence in your investment decisions.

A Look at Where We Are - Gold

It currently appears that gold will stay in its uptrend at least for one more week as we head into the 8.6 year cycle hitting the week starting on Monday June 13. If gold continues to rally into this date then we will be looking at this as though the immediate top is in place and then it will be time for a meaningful correction. Any significant strength in this coming week would therefore serve as a good selling opportunity while maintaining your core holdings. Normally these cycles would suggest a trend change, not a continuation of the current trend. Thus we could be entering a 'some what delayed - sell in May and go away', setting up some great buying opportunities in the coming weeks and perhaps months.

We share with you (with permission) some of Steve Saville's (The Speculative Investor) recent comments:
 

"....Our view is that gold either made an intermediate-term top at the beginning of May or will make an intermediate-term top very soon. This view is largely based on the performance of the silver/gold ratio, which clearly signaled an important trend reversal during the final week of April and the first week of May. Such trend reversals in the silver/gold ratio generally coincide with intermediate-term gold peaks or lead them by no more than a few weeks.

If gold is going to make a new high before commencing a multi-month correction, then this week is the most likely time for it to do so.

If gold manages to make a new high this week it will be interesting to see where silver is trading at the time. A new price high for gold along with a sub-$40 silver price would be a definitive bearish non-confirmation.

Given that a) our HUI/Gold Oscillator came close to generating a rare buy signal last month, b) the gold sector of the stock market has now been in correction mode for 6 months, c) gold stocks are generally under-valued relative to gold bullion and d) the public appears to be excessively bearish on precious metals equities, the stage appears to be set for a multi-month rally in the gold sector. The problem is that downward corrections in gold and silver bullion are probably not close to being complete, which probably means that the beginning of the aforementioned rally is still some way off...."

We are in total agreement with Steve and believe that Caution, Patience and Cash is absolutely necessary at this time.

What is a Warrant?

Our writing here is not intended to educate investors on all aspects of warrants and we encourage you to visit our Learning Center for more information.

But, briefly, a warrant is a security giving you, the holder, the right, but not the obligation, to purchase the underlying security at a specific price and expiring on a specific date in the future.

And why should you be interested in warrants? Simply put, leverage: more bang for your investment dollar. The additional leverage should be at least twice that of the underlying security giving you a substantial reason to consider using warrants.

There are currently over 100 warrants trading on natural resource companies and 40 of those warrants have remaining lives of over 2 years, a few with over 4 years of remaining life, thus giving investors a long time to play this bull market without the fear of short term market fluctuations.

Our Gold Subscribers have unlimited access to our Warrant Database and also access to my personal portfolio and to our Insider Trading data with Buy and Sell recommendations. My personal portfolio now includes over 80 different positions.
 

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    Dudley

Dudley Pierce Baker - Owner/Editor - Guadalajara/Ajijic, Mexico
Bruce Ross - Webmaster and Administrative Assistant - Phoenix, USA

Jeff Baker - Assistant Editor and Administrative Assistant, El Paso, USA

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