Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Seeing Through the Financial Markets Panic to Profits …

Stock-Markets / Emerging Markets Oct 31, 2008 - 09:26 AM GMT

By: Money_and_Markets

Stock-Markets

Best Financial Markets Analysis ArticleLarry Edelson writes: First, some important news no one else is telling you: The Dow is now trading at the equivalent of the 2,500 level, down a whopping 77% from its high.

Yes, you read that right. In terms of “honest” money — gold — the Dow Jones Industrials has already lost 77% of its value!


Now, how could that be, you ask.

Simple: It's because the world no longer uses “honest” money and instead economies — and asset prices — float on variable currency exchange rates with nothing but “a promise to pay” backing them.

So to really understand what's happening to values — the nominal prices that you see in the markets whether they be for stocks, bonds or commodities — you must look at them in terms of the one asset that always holds its purchasing power: Gold.

For instance …

In 1999, when the Dow hit its real inflation-adjusted peak of 11,210, it bought 44 ounces of real money, gold.

Today, the Dow buys less than 10 ounces of gold.

That means the Dow now buys 34 ounces less gold, a purchasing power loss of 77%. That essentially means the Dow is already trading at the equivalent of 2,578.

Now, you might argue, as others do, that it's mostly because the price of gold has soared so much over the last eight years.

But that argument actually reinforces my point: Your money, even after the recent rally in the value of the greenback, is worth a whole lot less than it was a year ago, two years ago, five years ago, eight years ago, even ten years ago. And so on.

This is a hard concept to understand at times, but it's so important that you do. Why? Because only then will you know how to position your portfolio to profit in the months and years ahead.

Savvy investors like Warren Buffet, Jimmy Rogers, Mark Mobius, and Barton Biggs understand it.

Smart investors like Barton Biggs, Jimmy Rogers, Warren Buffett, and Mark Mobius look past fear toward opportunities.
Smart investors like Barton Biggs, Jimmy Rogers, Warren Buffett, and Mark Mobius look past fear toward opportunities.

Indeed, just a few days ago, Warren Buffet wrote the following in The New York Times …

“Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.”

He's right.

Of course, Buffet has the capital and staying power to jump into the markets now and buy, whereas many investors don't. So for most of you, I think holding cash and gold right now are the best and safest investments for almost all your capital.

Even so, that shouldn't change your view or understanding of the world and what's happening.

And it certainly should not prevent you from preparing for some of the greatest buying opportunities of a lifetime in all types of assets.

To see how assets inflate over time, ask yourself the following questions …

Arrow If you could go back to the depths of 1932 and buy stocks or commodities, would you? You bet you would.

Arrow If you could roll back time to the severe 1973 — 1975 recession and buy stocks or gold, would you? You bet you would, especially gold, which soared from the $130 level to $850 by January 1980.

Arrow If you could buy stocks after the 1987 stock market crash, would you? You bet you would!

Arrow If you could turn back the clock and buy stocks or commodities during the 1990 S&L crisis, would you? You bet you would!

Arrow If you could go back to the Long-Term Capital Management and Asian currency crises of 1997 and 1998 and buy assets, even real estate, would you? You bet you would!

Arrow If you could go back to the year 2000, or even 2001 post-9/11, and buy gold, other commodities, even real estate, would you? You bet you would!

The ONLY difference between the current crisis and past crises is, yes, that this one is larger and more severe in scope.

But that doesn't mean it will be resolved differently. Quite to the contrary, it will be resolved the same way all past financial crises have been resolved, through inflating away debt. Because no matter how you slice it, the historical record shows that without gold backing currencies, inflation is baked into the cake via monetary policy.

Another market that's quickly becoming a huge bargain: China

In fact, I see five major reasons why China continues to offer excellent long-term potential …

Reason #1: Contrary to popular opinion, China's exports continue to grow!

The talking heads in the media want you to believe that China's exports are getting hammered. But that's simply not true.

While exports to the U.S. are down 10% this year, all told China's exports through September are up an astounding 21.5% over the same period last year.

Where are all the exports going, if exports to the U.S. are declining? They're going to Vietnam, Thailand, Indonesia, Malaysia, and more.

In other words, China's exports within Asia and Southeast Asia are up, big time.

That's a testament to rising consumption within Asia as much as it is to China from a purely export point of view.

And speaking of consumption …

Reason #2: Retail sales are exploding higher.

Retail sales over the Chinese New Year holiday jumped 16% over 2007 even while bad weather crippled the nation's transport infrastructure during the holiday period.

More recently, during its week-long national holiday between September 29 and October 5, China's retail sales surged 21% year-on-year.

That's not all. In September alone retail sales soared 23% over last year — that's close to the fastest pace in at least nine years!

What's more, January through August retail sales volume in China rose 14.3% versus 12.9% for all of 2007, while the value of the retail sales rose to a 12-year high.

And in the months ahead, retail sales and domestic consumption appear set to rise even more as Beijing cuts interest rates … slashes taxes … and lowers the downpayment requirement for first-time homebuyers from 30% to 20%.

Also announced on October 22, a reduction in the property deed tax to 1% from 3%-5% for first-home buyers and for those who purchase properties smaller than 90 square meters … plus, a whopping 30% discount on mortgage interest rates!

That is sure to help propel retail sales growth in the months ahead.

Reason #3: Government Spending. Having nearly $2 trillion in its piggy-bank is a nice way to weather this global financial storm.

It's why growth in urban fixed-asset investment in China is 27.6% higher in the first nine months of this year from a year earlier.

And it's why up to $400 billion in new investment has been earmarked for rural China with a growth objective of doubling rural incomes of 750 million Chinese within the next three years.

Reason #4: Monetary policy is being relaxed.

Inflation has cooled a bit in China, so monetary authorities are loosening up their grip, cutting interest rates and bank reserve requirements for the first time since 2002. And more cuts are in the offing.

Reason #5: China's stock market is trading at dirt-cheap price-to-earnings ratios.

China's market has been hammered hard and it's now trading at almost unheard of levels, with P/E valuation multiples as low as 5 to 1.

Cheap? You bet they are. Can they get cheaper? In this panic environment, of course they can.

So what does all this mean and what should you do? You have to see through the panic to the profits. Once-in-a-lifetime bargains are going to be popping up all over the world.

Stay tuned for my signals!

Best,

Larry

P.S. To position yourself for the once-in-a-lifetime profit opportunities I see coming, subscribe to Real Wealth Report . For just $99 a year, get 12 monthly issues, all my analysis and recommendations, flash alerts and more! It will be the best $99 you've ever spent!

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules