The Coming Economic Collapse

This is the title of a new book by Stephen Leeb in which he predicts that the price of oil is going to reach $200 soon. He also gives some stock recommendations. He believes the coming decade will be very similar to the 70-s when stocks did very poorly. So his first stock recommendation is to avoid index investing. "Stay away from index funds, large-cap funds and any other vehicle that mirros the broad market." I guess that includes ETFs that track a broad market index. His other recommendations:
- even worse will be the so-called defensive stocks
- avoid small-cap stocks as well

Investment Jackpots according to Leeb:
- Gold and gold shares
- Oil and oil shares, including oil service companies, in particular.(among them, Shlumberger)
- Real estate
- Companies well positioned to capitalize on growth in China and India such as 3M, Coca-Cola, Procter & Gamble, and Texas Instruments
- Zero-coupon bonds as a hedge against deflation

World Glut 2006*

Somebody told me that markets, on average, drop seven times (7x) faster than it takes to rise.  This year we're close : from Dec 31 to now, markets have risen and given back near everything  in 3 weeks, since 18 May.

The entire western world along with Japan have been the leading "producers" of easy money the  last 4-5 years after the dot.com blowout. In the simplest of terms, monetary investment  will expand to fill the amount of liquidity alloted to it. That is to say, the recent run up  in many sectors and markets have been feeding on the "easy" money which has been injected  into world economies over the last years...

Our estimation of this from January this year was that by Q4/2006 the FFR (baseline Fed interest  rate) would be 5.25 or 5.5% (2 more 25bp hikes). We are sticking by this figure.

Randolph Buss

http://www.safehaven.com/article-5375.htm

Blogged with Flock

The real stock market panic is yet to begin

While a general stock market crash may pressure all stocks (including precious metal stocks) to  go lower, precious metals and precious metal stocks are being offered now at significant  discounts (much of the excess that caused sharp drops in price has been washed out).  

In the years ahead, the high prices we have all seen in gold and silver will be surpassed many  times over. In addition, leaving your money in short-term cash with no price risk while receiving  5%, looks a lot better than losing money in stocks or real estate! Suddenly, risk is a four letter  word and cash is not trash.

http://www.moneyweek.com/file/13994/the-real-stock-market-panic-is-yet-to-begin.html

New US Depression

As I have said before, possibly the best definition of a depression is a period when most people's standard of living drops significantly.

Youcan also define it as a period when distortions in the economy and misallocations of capital are liquidated. The distortions are almost always the result of government intervention in the economy, through things like taxes, regulation and currency inflation.

Those are the factors that caused the unpleasantness that began in 1929. Since the US government is exponentially more powerful and invasive today than it was in either the 1920s or the 1970s, I expect the consequences will be much worse this time around. Things could have come unglued,and almost did, back in the 1970s. I don't see how the US will dodge the bullet this time.

Although that's not really a good analogy, in that, for reasons we don't have time to explore in depth, a depression in the US is probably inevitable this time.

By Doug Casey for for The Daily Reckoning.

http://www.moneyweek.com/file/13928/how-to-prepare-for-a-new-us-depression.html

Blogged with Flock