In recent statements made by federal reserve chairmen, “Helicoptor Ben” said he would continue to goose the economy with the $600 billion Treasury bond buying program. Despite reports that the program would be cut short due to a strengthening economy we know this simply isn’t possible. The federal reserve must raise the debt ceiling and debase the currency in order to bailout state budget deficits, pension funds, social security and bad debt held by banks and consumers.

“If output is too low and unemployment is too high, then that would be a situation that requires more stimulus.” – Ben Bernanke

Not only do we believe that QE2 will be carried out in its entirety, but we also believe QE3 is already on the table. Rising interest rates on our massive debt load would be catastrophic, as would a failure to raise the debt ceiling for the US government. All of the liquidity injections and bond purchases are destroying our currency. Paying attention to the price of gold and the chart below will help you understand how close we are to piercing through key technical levels.

The Federal Reserve is holding a two-day meeting to address lackluster jobs numbers, weak growth and low inflation. Ben Bernanke seems optimistic that the purchases of government debt will spur economic growth, while some economists like Marc Faber and Paul Volker disagree. Stagflation and hyper-inflation are two words being thrown around by skeptics while others argue that QE2 simply won’t be big enough.

Analysts disagree on size and scope of quantitative easing, but most agree that the dollar (NYSE: UUP will suffer in both the short and long term. This dollar devaluation is necessary to bail out state budget deficits, pension funds and bad debt held by banks. In summary, our currency will be sacrificed to make toxic assets appear healthy. The problem with this logic is that debts will be repaid in devalued dollars with reduced purchasing power.

Disclosure: Author is long gold at the time of publication.

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Canadian Based Company with  Huge Gold Reserves

NovaGold Resources Inc (AMEX:NG, Free Analysis!), a Canadian based minerals and exploration company may not have notable production, but it holds one of the world’s largest unhedged gold reserves. While the company came under fire in late 2008 for delaying mining infrastructure plans, its assets have made a dramatic increase in value. NovaGold owns 50% interest in two of the worlds largest underdeveloped copper-gold properties. With proven reserves of over 17 million ounces of gold and another 12.5 million ounces of measured and inferred reserves, the company is extremely levered to the price of gold.

With precious metals reserves increasing so quickly, the company could once again attract several suitors. Barrick Gold made an offer in 2007 and was quickly rejected, undervaluing NovaGold’s massive unhedged reserves. This time around things could be different. Gold mining companies could finally step up to the plate with reasonable offers in effort to replenish depleting reserves. In any case, Novagold is said to have plans in the works to begin infrastructure build out at Galore Creek. The transition from a exploration and development company to a gold producing company could be extremely profitable for investors. Paulson & Co. and Soros Fund Management have taken large stakes in the company, collectively amounting to greater than 15% of the total shares outstanding. In a recent announcement, Paulson & Co has filed a 13D with the SEC declaring a  9.10% stake.

Click Here: Get a Free NG Stock Analysis!

Small Silver Producer with Projects in China

Silvercorp Metals Inc, (NYSE:SVM, Free Analysis!) explores and developes mining properties in Canada and China. The company has several projects focused on silver, lead, and zinc mines in the Ying Project, the HPG Project, the TLP Project  and the LM Project in China. It also has interests in the Silvertip project in northern British Columbia, Canada. A well financed company with over 75$ million in cash equivalents, Silvercorp should be able to expand and grows reserves going forward.

The company is particularly attractive based on its foreign asset reserves, particularly in China where it produced better than 4.5 million ounces of silver. Inflation coupled with a rise in industrial demand for precious metals should send this stock higher. Silvercorp Metals also pays a small but significant dividend of 1% for long term investors. With silver making huge moves higher it would not be unreasonable to see dividend hikes in the future. Asian countries have seen tremendous growth GDP figures. These gains could not have been possible without large quantities of industrial metals for infrastructure build out, automobile manufacturing and electronics production.

Click Here: Get a Free SVM Stock Report!

Small  Producer with Silver Assets in Mexico

Endeavor Silver Corp, (NYSE:EXK, Free Analysis!) is a Canadian based mining company with large silver mining assets in Mexico. Known as the world’s top producer of silver, Mexico has political stability and a favorable tax structure. Because of its history as a world leading silver producer, the country has developed a skilled work force and strong commitment to natural resource development.

The company is well on its way to becoming a premier mid-tier silver producer. After a 10% increase in year-over-year production in 2009, Endeavor forecasts a 20% gain in 2010. Enjoying multi-year high gold and silver prices, the company has increased margins while reducing cash costs. Looking to acquire and buyout smaller mining companies in effort to grow reserves, Endeavor recently made an all cash offer for Canadian based Cream Minerals.

Click Here: Get an EXK Stock Report Free!

Disclosure: Author is long all of the stocks mentioned in this article at the time of publication.


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#1 Compania de Minas Buenaventura SA (NYSE:BVN, Stock Report)

Dividend: 1.40%

#2  Barrick Gold Corp (NYSE:ABX, Free Analysis)

Dividend: 1.00%

#3 Newmont Mining Corp (NYSE:NEM, Free Report)

Dividend: 0.90%

#4 Agnico Eagle Mines (NYSE:AEM, Free Report)

Dividend: 0.30%

Goldcorp Inc (NYSE:GG, Free Analysis)

Dividend: 0.40%

Click Here: Get a Complete Gold Report Today!

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Disclosure: The author is long all of the stocks mentioned above at the time of publication.

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One of the best aspects of the book is its ability to explain complex economic principles in a simplistic fashion. This allows the book to communicate to a wide range of audiences – especially novice investors. This allegorical tale sheds light on topics that are so frequently discussed but so poorly understood.

From the Back Cover of the Book

• Why governments can spend without ever seeming to run out of money?
• Why some countries are rich while others are poor?
• Whether spending or saving is the best cure for a bad economy?
• Where inflation comes from?
• Why it’s so hard to catch a fish with your bare hands?

Coming off his popular book, Crash Proof 2.0, Schiff compares the United States economy to a small island economy. He describes how an economy that was once on top of the world, is now burdened with unfunded liabilities and massive deficits. Moreover, he presents a case for the United States no longer being the engine of the global economy, but the caboose.

“The conventional wisdom is that foreign economies depend on Americans to buy their exports. This is false. The global expansion of the past decade has created new demand everywhere, and people and businesses in all corners of the world are spending. However, in America, spending has largely been achieved through a massive vendor financing scheme. Foreign supplied credit has allowed Americans to continue buying, even while American income and savings have dropped. As this credit goes bad, the losses are landing on the bottom lines of foreign financial firms. In other words, the global pain is not resulting from American contraction but from having financed our preceding expansion. This is a critical distinction few have been able to make, and it is vital to appreciating the decoupling that has already occurred beneath the surface.”

Baytex Energy Trust (NYSE: BTE )

PowerShares Double US Dollar Bullish Index (NYSE: UUP )

We are a society that has lived beyond its means for a long time. In the last five years, it has gone off the deep end.  Americans are relying on foreigners more and more to produce goods, rather than producing them themselves.

The fact that Peter Schiff’s predictions and theories haven’t fully played out yet makes his new book even more intriguing. His new book not only describes why the US economy is on the verge of collapse, but also serves as a financial survival guide. He views the United States as a house of cards with problems brought on by growing federal, personal, and corporate debt; a lack of savings and a weakening dollar. As a candidate for senate in the state of Connecticut, Peter now aims to educate our very own government on its destructive policies.

A few of his major themes are listed below:

• Highlights measures you can take to protect yourself-as well as profit-during these difficult times
• Offers an insightful examination of the structural weaknesses underlying the economic meltdown
• Outlines a plan that will allow you to preserve wealth and protect the purchasing power of your savings

This video serves as proof of Peter’s ability to forecast market direction. Most importantly it demonstrates his ability to understand exactly what caused the market meltdown. Schiff is currently running for a senate seat in Connecticut and begs the question, "how will the same people who got us in to this mess be able to get us out of it?"  His predictions are downright scary and usually go against mainstream media and well known rivals. Schiff’s uncanny ability to forecast our economy thus far makes his future predictions worthy of our attention.


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