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“CAMBRIDGE HOUSE GATHERING”

JANUARY 23, 2007

 

 

Note:  For readers not familiar with the concept of our “Melmania” section, this is where your editor can take any subject and develop arguments regarding some ultimate conclusions.  Since some of those conclusions might sound extremely radical, the name of “Melmania” seems appropriate.


I just returned from Vancouver where I participated in the “2007 Resource Investor Conference” sponsored and organized by Cambridge House International Inc. Many of the top investment experts were present and most particularly it was an opportunity to gauge the prevailing outlook for precious and base metals investments.

In summary, the mood was relentlessly bullish over the long term, but there were stark differences in the outlook for the next three to six months. Some believed we would still see further corrections, particularly in the base metals (except nickel) and there were also predictions we could see $500 gold before it headed higher later in the year.

My own workshop emphasized the fact that there was already a disconnect between the major securities markets and the precious metals markets (as outlined in Melmania, January 19) and I expect the precious metals to move strongly higher over time. That also echoed the prevailing opinion at the conference. Ultimately, there was virtual unanimity behind perhaps the most important single factor of all, as related to our world of metals investing, which is that the U.S. Dollar is expected to move substantially lower in the intermediate to long term future.

Among the reasons offered in support for this belief were:

The enormous Balance of Trade Deficit now ongoing

The substantial American budgetary deficits

Total foreign exchange (Forex) assets held outside the USA continue to grow at an astonishing rate

A rising potential for an international ‘accident’, which could be military, economic or social, which would likely precipitate a run on the U.S. Dollar and which could slice the value of the Greenback thereby leading to an immediate acceleration of inflation.

The growing weakness and vulnerability of Americans to threats in two directions, namely the required importation of over ten million barrels of petroleum each day, much of it from nations hostile to themselves, and the equal vulnerability to financial accidents which would dramatically reduce the value of their currency.

Another view put forward by analyst Ian Gordon was that the US economy runs in long term cycles, called Kondratieff Cycles, of approximately sixty years. Each cycle consists of four seasons, spring and summer when economic activity gains, autumn when it peaks at a high level, and then‘winter’ when he predicts the economy is in danger of severe contraction which will serve to reduce the mass of outstanding public and private debt through the mechanisms of failing businesses, impoverished individuals and massive numbers of bankruptcies. In such an atmosphere, Mr. Gordon suggests the U.S. Dollar is vulnerable to runs by foreigners pulling investments out of America and he also believes the background of a failing economy and weakening dollar would convince many to invest in gold, driving the price of the yellow metal higher.

Conferences of this nature, which are open to the entire investing public, are eminently worth your while to attend. It is difficult to imagine a setting where the non-professional can hear such a wide spectrum of investor information and can meet and talk with so many industry leaders. Investment conferences conducted in English occur in cities like Vancouver, Toronto, Calgary, New Orleans, Las Vegas, San Francisco, New Orleans, New York and London as well as other places including Australia and South Africa.

(As soon as our site is in complete operation, a calendar of conferences will be made available and will be updated on a regular basis.)

It is interesting to note that on the first trading day following the gathering, gold rose by a sharp $12 to just above $645, the highest quote in several weeks. Perhaps we may not have to wait as long as some expect for a resumption of last spring’s powerful yellow bull.
 

 
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