Frogs. Are You Being Cooked
If you put a frog in a pot and slowly turn up the heat, it will happily allow itself to be cooked to death. Mr Frog doesn't realize the danger… that the increasingly warm and comfortable water will kill him... until it does. Myopia is the medical term for being able to see near objects clearly while those in the distance are blurred.
Gold Stock Analyst (GSA) sees too many US investors as focused on the short term, and as a result it is a nation of myopic frogs. Investors believe the US Dollar is a sanctuary for savings, when it is not. Versus the alternative reserve currencies, Euro, Yen and Gold, the Dollar has been the worst performer. But those who don't travel abroad are not aware how warm the water is becoming... just like Mr Frog.
The Euro began January 1, 1999 with an initial exchange rate of 1.00 Euro = US$1.17. Despite concerns over a potential debt default by Greece and the
other PIIGS, the Euro's current value is near US$1.39. So regardless of the fears, it now trades 19% higher than where it began over 12 years ago vs the Dollar (blue line in chart to right).
At the end of 1989 Japan's Nikkei Stock Index peaked near 39,000 and now 22 years later, it remains deflated at below 9,000; the Nation's economy is moribund with near zero interest rates. Economic theory teaches us that low interest rates and low growth offer other little to attract foreign investors, so
that should add up to a weak or low exchange rate. But the opposite is true. On January 1, 1999 the day the Euro began, one 100 Yen bought $0.88 (88 cents). Now, after Japan's two lost decades, its currency trades higher and 100¥ now buys $1.31. Versus the Yen, the Dollar has fallen 49% (red line in chart).
Gold is money that cannot be manufactured by a printing press and as a result offers safe haven to investors. Over the period since Euro's start on January 1, 1999, Gold has soared from $288 to over $1,700/oz, a 500% gain vs the Dollar (see chart to right).
All but the most myopic frogs should realize the years ahead will see more of the same as US politicians seek their number one goal, re-election. And, despite the current rhetoric, the history of Democrats and Republicans proves they'll continue the loose money and deficit spending policies to try and deliver more benefits and services to voters. Accordingly, be prepared for more money to be printed.
Convinced long ago of Gold's bright future, Gold Stock Analyst analyzes 70 producing miners seeking those whose ounces are undervalued by the Market. From these 70 comes the GSA Top 10 portfolio and we then wait for Mr Market to find what we have already. As can be seen in the two charts below, we've had great success... an audited 10 year gain of +1,360%, and +70% in 2011.
GSA's stock selection process will be detailed in the coming Nov 9-12 conference in Belize. If you can't make it, there's lots more info on the website: http://www.GoldStockAnalyst.com
