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Strategies & Market Trends : Natural Resource Stocks -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (3145)	11/10/2003 11:48:57 AM
From: Jim Willie CB	Respond to of 108578

INTERVIEW OF MARC FABER AND JIMI ROGERS By Jim Puplava of Financial Sense Sept 8, 2003 (I will not distinguish much between Faber and Rogers, since consistent views) Evidence is that price inflation is on the rise, despite reports, all anecdotes point up Cost of services are up, education, entertainment, postage, insurance Hedonics smooth out the economic statistics, done by Bureau Labor Statistics We have deflation and inflation at same time, economy is a composition of sectors Some price inflation like with hard assets, esp residential real estate Clear price deflation in mfg goods, consumer electronics, big China effect Some price reduction is not deflation, but natural product cycle development After new innovation, and initial product introduction, economy of scale kicks in Monetization and monetary expansion never ceased or slowed in recent years Asset price growth is symptom of rising money supply () Central Banks cannot control where new money is directed We have had absolutely mad credit extension recently Debt growth is now 8x faster than GDP growth benefit !!! Investment and speculative flows have resulted in exported inflation since 1980 Faber: Major downtrend for USDollar in next two years Commodities like gold cannot increase in supply as fast as the dollar Perception that USEconomy is growing now, but primarily driven by financial assets Rogers: multiyear USDollar bear should be expected Fed resolves by easing rates, with big credit expansion since 1980 Faber: trade gap of 5% of GDP likely not to decrease, but probably rise Fed will inject more new liquidity Financial markets will have to react to higher price inflation later on Japan bond yields have moved from 0.5% to 1.5%, US yields from 3.2% to 4.5% We are in the midst of a bond revolt right now on worldwide scale () Faber: expect higher interest rates in 2004 US has lost its ability and willingness to save, moral and intellectual chasm The wise among the population see the potential for big speculative gains Faber: never never inflate the entire system, leads to disaster, destroys society () Faber: this is a suicidal monetary policy, monetization has never worked in history Federal deficits will produce higher interest rates in delayed fashion War effort, police adventure, exercise in domination bring heavy costs () Massive upside price inflation is in the pipeline, masked by doctored statistics US is a debtor nation, with debts exceeding the rest of the world combined A 1929 style of deflation is out of the question right now However, deflation systemically is possible, but in terms of gold money terms US has serious foreign dependence on capital, mfg, energy (a dangerous situation) () US parallels to 1980 decade in South America, which saw hyperinflation Coming is a standard of living deterioration, wealth loss inside the USA Strong price inflation should lead eventually to capital and currency exchange controls US$, Euro, Yen, Yuan, Gold are the main currencies (commercial or reserves) () But only gold cannot be increased in supply indefinitely

To: isopatch who wrote (3145)	11/10/2003 11:51:43 AM
From: Jim Willie CB	Respond to of 108578

part 2 of Faber-Rogers interview on commods, gold, oil Chinese Economy now has balanced trade Chinese surplus with US, but deficit with Japan and Middle East nations for oil () USDollar will depreciate badly versus hard assets There are no longer ANY sound currencies Worldwide central banks are printing money, leading to economic destruction In time expect decaying societies, eventually war, and social breakdown Faber: Chinese Yuan is the most sound currency in the world today Big phenomenon now is relationship between Chinese Yuan and Asian currencies An integration is underway among the Asian trading block China has large US$ reserves and gold reserves If Asia forms the ACU (Asian Currency Unit), then watch Yuan be valued 30% higher China is fast becoming the workshop and service center of the world Numerous levels of available workforce, with 600 million hoping to enter cities US GDP is $11T, China is $1T, but China is larger in terms of unit sales China is now approx 40-60% the size of the US GDP in volume terms China imports steel now, but has large demand for commodities China is in the genesis stage of tremendous growth Commodities will be strong for gold, silver, oil, natural gas Bull market in next 10 years in commodities requires change in investor mindset Commodities will be eventually sponsored, promoted, subsidized by financial institutions Public will come to the scene later, only then plan on exit strategy, but no rush 2002-2003 represented a milestone for Commodity Research Bureau index indicates a bull market for commodities that should last at least 10 years () Faber: expect a time in a few years for $100 crude oil, gold at a multiple of $350 Even more everyday items like coffee will see sharp rise in price within 5 years Stocks could rise, but a falling US$ means stocks will fall in real value Commodities require time to develop, find a mine, find oil pool, find land Mine properties are delayed by environmental regulations and obstacles Takes time to drill, foster budgets, capitalize equipment Great difficulty to develop non-ferrous and precious metal mining The last 20 years brought about a lack of productive capacity for commodities Commodity inventories have been systematically whittled down Russia is stripping and dumping materials on the markets, widespread theft Russia’s get-rich quick mentality has built no new productive capacity With monetary expansion, lack of capacity, commodities will go thru roof in price () Mining industry operating at 95% capacity utilization A struggle is underway with oil, with depletion peak somewhere around 2006-2008 () Saudi Arabia has the potential to blow up as a regime, threatening oil supply Ride the longterm bull market in commodities for many years Avoid the herd where high price premiums are paid Avoid publicity and promotions, which now are mainstream stocks There will be upcoming commodity mutual funds, but none yet Rogers Index fund, mining stocks, oil & gas stocks are good ideas Promising nations are Russia, Brazil, Indonesia, Thailand, Canada, Australia Rising commodity prices mean rising production costs, very bad for stocks Own gold in a deposit bank box outside the USA, which will execute seizures