Today's trading action is a deathblow for the deflationistas... And a day of celebration for the Digest crew, Jim Rogers, and the other financial experts warning the world of inflation.
The deflationistas have argued asset prices (especially commodities) will fall on bad news, which inherently makes sense. But we're experiencing a bizarro economy... Asset prices can never fall too low in a paper economy. The worse the news, the more likely the Fed is to turn on the printing press. And now, the market is preparing for massive quantitative easing.
Today's bad news, worse-than-expected job numbers, sent Mr. Market panicking. The U.S. economy lost 95,000 jobs as temporary census workers were cut and state and local governments pared jobs. Though the recession "ended" 15 months ago, unemployment stays steady at 9.6%.
Anything that responds to inflation is soaring today... And that's how you should measure inflation (not the government-manipulated CPI numbers). The Dow crossed 11,000 for the first time since May. Gold is up 1%. Copper is up almost 3%. Corn, soybeans, and wheat are all up more than 6% (the day's limit). Oil is up more than 1%.
Meanwhile, the yield on two-year Treasurys fell to a record-low 0.36%. Deflationistas point to that one number (the falling Treasury yield) to make their case. But it doesn't matter what's going on with Treasurys. The world is getting more expensive. Inflation is here.
Natural gas is one of the few commodities down today. The oil-to-natural gas ratio is near its 15-year high:
Either oil needs to fall or natural gas needs to rise... assets eventually revert to the mean. Given the market's inflationary tendencies, we don't see oil falling. For our current favorite natural gas recommendation, check out Steve Sjuggerud's May 2010 issue of True Wealth. He recommends a super-safe natural gas stock yielding 6%. Sign up here...
Speaking of Sjuggerud, we're close to launching his new trading service, True Wealth Systems. Porter first introduced True Wealth Systems to the Digest last Friday. After decades of studying the market and collecting and analyzing reams of data, Sjug has developed an accurate trading system for nearly every asset... stocks, gold, oil, housing, China, etc. He kept most of this information proprietary because it was simply too valuable to share.
But Steve has been working with a brilliant Ph.D mathematician to bring his trading systems online, so we can share them with Stansberry Research subscribers. The two have been working for years to develop simple, but deadly accurate, trading systems to help our readers profit. Sometimes, the strategy is as simple as following a moving average. Sometimes it's much more complex. As Steve told me earlier today, he's just "using what works."
The important thing... while these systems are complex at their core, Steve has worked with the mathematician to make them super-easy for our subscribers. Steve tells you exactly when to enter and exit a trend. He even knows how much you can expect to make per year using each strategy. Take a look at the chart below, which shows Steve's system for trading the S&P 500 index. When the line is green, you're in the trade. When the line turns red, you're out.
As you can see, Steve's system picked up every major bull run since 1993 (and much further back... We just haven't charted that data). Using Steve's system, you were in the market 63.5% of the time, and you made almost 12% annually. Steve's trading system also answers the question on most investors mind today... Is gold a buy or sell? According to Steve, when gold is up in the four major currencies, it's in a major bull market. His system flashed a "buy" for gold at the end of last month. Take a look at the historical gold chart...
As you can see, Steve's system also picked up every bull move in gold over the past 40 years. You didn't trade as much (you were only in the market 26.5% of the time), but you made almost 28% a year. After the past three years in the market, even the best value investors in the world will tell you timing matters. And Sjug's True Wealth System is the simplest and most comprehensive tool you can use to spot trends. Alliance members will be the first to receive True Wealth Systems. We don't have a set launch date yet, but we'll keep you up to date in these pages.
During our phone call today, I also asked Steve about the euro, which is approaching $1.40. I recently alerted Digest readers to its recent rally. He said, "It's not signaling yet, but it's getting close." Keep an eye on this doomed currency.
New highs: Prestige Brands (PBH), DirecTV (DTV), Enterprise Products (EPD), Kinder Morgan Energy Partners (KMP), ConocoPhillips (COP), Altria (MO).
"Get off your ass and read what you fellow editors are writing. Dr. Steve Sjuggerud said today in DailyWealth Premium that he's a government stooge. He wants people to go out and buy property from the local government. After they have stolen it from people for not paying extortion money (property taxes) to the local thugs (County Officials).
“Where I live an opening bid of $5000 could possibly get you 5 ac. with a $250,000 house sitting on it. Where else but a government auction can you legally take $5000 cash and be given a $250,000 property. Sounds like a Mafia money laundering scheme.
“Normally Steve is on the mark with his research - this time easy money clouded his judgment. Remind him that getting in bed with the government is never a good idea. Then if he doesn't get it hit him with a 2x4 and tell him to quit sleeping with the enemy." – Paid-up subscriber Rick Michael
"If I only have $1000.00 to $1500.00 to invest, is it worth my while to subscribe to True Income." – Paid-up subscriber John Masbaum
Goldsmith comment: No... it's not. True Income costs that much just for the newsletter. And most of the recommendations require a minimum $10,000 investment. For your money, you'd be best with True Wealth or Stansberry's Investment Advisory. You can learn more here and here...
Regards,
Sean Goldsmith
Baltimore, Maryland
October 8, 2010