He reminds us that “in 1933 the US government banned the ownership of gold by US citizens and purchased all but rare gold coins from the US public. They did this, at $20 an ounce. Two years later they revalued gold to $35 an ounce, a 75% revaluation” which instantly gave the government a lot of new, but still 100% gold-backed money to spend!

What a blatant, brazen theft! And nobody says anything! But let me take a few bucks out of the employee pension fund, petty cash drawer or the coffee jar, then it is some kind of “big deal” around here and everyone wants me to get fired! What kind of crap is that, huh?

Anyway, so how much gold are we talking about? Well, the total amount of gold above ground that you can put your hands on is estimated to be about 140,000 tonnes, which is approximately 90% of all of the gold that has ever been mined, which is estimated to be 160,000 tonnes.

Added to that, there is an annual mine production of roughly 2,500 tonnes of gold, but which is becoming harder and more costly to find and mine.

Perhaps it is all this talk of confiscation of gold that has Doug Hornig of Casey Research’s Gold & Resource Report commenting that when FDR made private ownership of gold illegal in 1933, the dollar was on the gold standard and thus 100% backed by gold.

The difference between then and now is that “we have long since abandoned the gold standard, and Obama doesn’t face FDR’s constraints on monetary inflation” which is (insert sound of trumpet fanfare) the winner of the coveted Mogambo Award For The Understatement Of The Week (MAFTUOTW).

It wins for two reasons, the first being that is so terrifyingly true! There are no constraints on the government getting the Federal Reserve to create as many dollars as it, or anyone, needs or wants, and thus it is beyond ludicrous to even compare the 1933 gold-backed dollar against the pathetic piece of almost-worthless fiat money that the dollar has become, to which Mr. Hornig alludes when he says that Obama has it easy, as “However much money is needed to finance his New Deal Redux, he can have it. All he has to do is rev up the printing press or turn an unlimited number of bits and bytes into electronic cash.”

And he is, alas, absolutely right. Unlimited amounts of money can be created just by asking for it. In fact, no one has ever disputed that fact, as it is the whole reason behind having a fiat currency! Hahaha!

In relation to the prospects for a confiscation of gold, he asks, “Given this kind of clout, what does he need gold for?” which is exactly right! If you can print money to spend, why do you need gold to sell to get money to spend? Hahaha!

Unfortunately for Mr. Hornig, he does not go on to the Mogambo Bonus Round (MBR) because I must deduct points from his score since he is grammatically incorrect to end a sentence with “for”, as in his “need gold for?”

Instead the sentence should have properly read, “Given this kind of clout, for what does he need gold?” which IS grammatically correct, so you can see the crucial difference!

And perhaps it is this “correct grammar” thing that makes the colossal incompetence of the Federal Reserve even more terrifying when adding that undertone of grammatical precision to the nightmare that the Fed created so much money and credit that it allowed the dollar to lose so much purchasing power since 1933 that gold is now almost $1,000 per ounce, up from the $20-to-$35 per ounce rip-off that financed the whole New Deal for a decade! Grrrr!

Of course, I would love to go on and on from there, waxing evermore contemptuously lyrical and angrily ever-louder about why I despise the un-Constitutional, un-holy Federal Reserve and everything it stands for, which is summed up in the Mogambo Big Book Of Economic Stuff (MBBOES) as “Purposeful inflation in money and credit by a central bank to create unprecedented amounts of debt for unbelievable of amounts of consumption that inevitably leads to ruinous inflation in consumer prices and ruinous deflation in asset prices such that it destroys the entire economy, which will soon lead to many, many poignant stories of ordinary men and women who, along with their doomed children, are wandering around, dazed and lost, living under bridges and overpasses, calling themselves Lost Children Of The Mogambo (LCOTM), forever bleating for pity that they did not listen when he told them to buy gold because their government was acting so insanely with fiscal and monetary policy, and now they are being cruelly punished by persistent price increases against which these people can only offer falling or stagnant nominal wages and collapsing real, inflation-adjusted wages, devalued assets, vanished wealth and disappearing jobs, which means a drastically falling standard of living until they are finally reduced to eating lawn clippings and miscellaneous bugs while screaming for revenge, whereupon the world then devolves into a dreary, post-Apocalyptic, dog-eat-dog world where, once again, for the umpteenth time in history, we learn that the dogs that eat well are going to be the ones who switched to gold when their governments started wallowing in such fiscal and monetary lunacy, which is why you ought to be out buying some more gold right now.”

I would probably end the Predictable Mogambo Tirade (PMT) with something in the vein of drawing an eerie parallel between the Fed creating too much money and credit, which leads to disastrous, ruinous, murderous inflation in prices, and the fact that the American government once gave smallpox-infected blankets to the Indians, which seems so, so apropos, which deliciously rhymes so you know it must be true.

Or maybe I would angrily relate how I, a normal, tax-paying citizen, call the CIA and demand to know under the Freedom Of Information Act if they are spying on me, or if any other jackbooted, government-Gestapo thugs are spying on me or tampering with my stuff, such as messing with my dishwasher which, after about 12 years of perfect performance, is now making this strange intermittent groaning noise, like a belt slipping or something that goes rrrrRRRrrrrrRRRrrrrrr, and then they put me on hold, and then they come back on the line and tell me that nobody is spying on me, but you can tell from their voices that they are lying.

Mr. Hornig is not sure that the CIA is out to get more or that a confiscation of gold is in the cards, although “An argument can be made that the yellow metal is still useful. It runs like this: Creating money out of thin air is inflationary, and a large stash of gold, even if it doesn’t officially back anything, serves as a sort of counterweight. People around the world will have greater confidence in your currency knowing that, as a last resort, you can pay your bills in gold. And the more gold you have, the better.”

Nevertheless, Mr. Hornig speaks for both of us when he says, “all things considered, a modern-day gold confiscation is not high on our list of financial worries”, although he adds the caveat that “Never say never where government stupidity is involved”, which sums it up perfectly, making it almost unnecessary that I jump up and yell, “Buy gold, silver and oil to save your worthless butt whenever your own government is acting with fiscal and monetary stupidity, which they are doing right now, which means” (insert musical soundtrack with heavy backbeat) “you should be buying these things RIGHT NOW because investing is easy when you KNOW HOW!”

Source: Why the Government Doesn’t Need Your Gold

This is all, apparently, part of the new Targeted Investment Program, which is government-speak for “new giveaway program that will end up costing the nation whole multiples of actual dollars expended when measured in the sheer tonnage of misery and suffering, or its equivalent; inflation/loss of buying power that all that new money and credit will create, which is not to mention the further cancerous distortion of the economic fabric by the government being an even bigger piece of the economy, especially now that the total amount of government (local, state and federal) spending is already over half of freaking GDP to start with!”

Of course, the Treasury anticipated that I would make a stink about this new giveaway program, and they are emphatic that this is not a “giveaway”, and that it was a “participation” in getting grubby, incompetent hands on free money, the lucky recipients being “weighed on a case-by-case basis.”

It was here that I initially stopped reading and went off on a loud rant about corruption and stupidity in Congress and the sheer, colossal, towering stupidity of the weird economic theories of the Federal Reserve! And with the fawning endorsement by the overwhelming majority of the nation’s universities and professors, who teach that stupid crap, which is the same staggeringly stupid econometric theories that have gotten us into this mess!

It all became surreal when Madoff – the guy who amassed, so they say, $50 billion worth of losses in a huge Ponzi scheme – was called to testify about it by Congress! Hahahaha!

I can tell you everything you want to know about it; The Federal Reserve created the excess money and credit so that huge amounts of money would be borrowed and spent by the government, which contributed not only a lot of economic activity, tax revenues, and inflation, but which also caused a problem by winding up as a profit in somebody’s pocket, who then has to decide “Where to put all of this damned money?”

Predictably, I spent most of the morning firing off flaming emails to Congress and The Federal Reserve (”Dear halfwit scumbags, You are disastrously wrong and I hate you for destroying us! Signed, Disgruntled in Florida”).

Now I am sorry that I used up all of that time, as the part that I can really use came later in the article, where the “Treasury said it would consider, among other things, whether the ‘destabilization’ of a financial institution could threaten the viability of creditors and others. It also would weigh the extent to which the institution faced a loss of confidence because of the troubled assets it held.” Wow!

At this I yelled, as did Archimedes, “Eureka!” The answer to my troubles at work was right here!

I hastily scrapped all the other “it ain’t my fault” defenses on which I had worked in a feverish attempt to keep from getting fired like I deserved, and now, using this fabulous new TIP scheme to my advantage, I immediately declared my little department to be a bank, and plowed all of the employee pension fund money into it as shareholders of the bank.

Next, I simply – and cleverly – transferred all my department’s losses to the bank as “troubled assets” of the bank, throwing my MasterCard balance in there for good measure so that I can subsequently claim at my trial that this illegal commingling of funds showed it was all obviously a big, tragic misunderstanding, over which I had no control, and therefore I am not guilty of anything, the preponderance of evidence to the contrary notwithstanding.

But my anticipated legal troubles aside, with an entire pension fund invested in a bank that has assets of negative value, at a stroke I have demonstrated a desperate need of money (lots and lots of money!) to prevent “destabilization” of a financial institution which “could threaten the viability of creditors and others.”

It also would weigh in the Heavyweight Class when considering “the extent to which the institution faced a loss of confidence because of the troubled assets it held.”

Now, thanks to my genius, we just sit back and wait for all that lovely money to come pouring in from the Federal Reserve! It’s brilliant!

Alternately, a news item by the Wall Street Journal gave me a backup idea in an embarrassment of riches. The article said, “Cerberus Capital Management suspended withdrawal requests from investors, joining a parade of hedge and private-equity funds that have halted redemptions.”

The actual plan at Cerberus Partners was “to pay 20% of year-end withdrawals in cash and suspend the remaining withdrawals for investors for up to one year.”

Well, this applies to me perfectly, as I would like to have a lot of money without working for it when I can confiscate it from somebody and pay them back at twenty cents on the dollar!

So I ask one of my employees, “Hey! How would you like it if your pension fund returned 20 percent this coming year?” And naturally the guy says, “Sure, I would like that juicy return, but what does that have to do with your rummaging through my lunchbox and stealing pencils from my desk?”

Quickly I say, “Nothing, moron!” and I hustle back to my office to implement Phase 2 of my plan; transfer the money in the employee pension fund into the Mogambo Hedge Fund (MHF), where I can then get my grubby hands on all that lovely, lovely money.

Phase 3 is where I ignore letters, telephone calls, faxes, emails, telegrams, subpoenas, hysterical bankrupted investors banging at the door, and anything concerning the Mogambo Hedge Fund (MHF) until, backed into a corner by the police and their SWAT team goon squads, I send out a letter saying that the MHF will immediately give the employees 20 cents on the dollar, but then the now-world-famous Mogambo Hedge Fund (MHF) is suspending all further payments!

My legal defense is that the employee got what that employee said he wanted; a 20% return on his money! And I got what I wanted; a lot of money without working for it!

So, whee! Innovative financial engineering is so profitable!

For everyone else, of course, they will have to be content to buy gold, silver and oil to capitalize on the stupidity of the Federal Reserve and Congress creating more money and credit, debasing the dollar bit by bit, and everything getting weirder and weirder!

Source: The Troubled Asset Pension Fund

“The misguided macroeconomic and monetary policies, especially the confiscatory tax policy and huge government spending – much of it inefficient – was doomed to catch up with the country someday,” says Horacio Marquez, a Wall Street veteran, emerging markets specialist and editor of two trading services affiliated with Money Morning: The Money Moves Alert and the Shadow Stock Trader services.

Argentina’s act of not-so-petty larceny was launched late last month when the government, in a surprise move, ordered Argentine pension funds to liquidate their foreign holdings, the first step in a plan to transfer that money into the state pension system. Argentine President Cristina Fernández de Kirchner said she abolished the 14-year-old private pension system to protect pension money at a time of global turmoil and denied the government had grabbed the cash to service its crushing debt, which officials told The Financial Times is now about $21 billion.

The reality is, however, that surpluses from the state system – known as “Anses” – already have been a key source of government funding, especially in the past year, after a surge in the number of workers returning to the state plan caused its holdings to surge substantially. Expect the use of those surpluses to continue.

Indeed, the government is clearly hoping that the addition of the assets from the private pension system will create an even-bigger surplus that it can use to service its debt. Otherwise, the government might have to cut back significantly on the spending programs that benefit Argentine citizens. And since 2009 is an election year, such cutbacks aren’t an option.

But the strategy is fraught with peril. First, the decision “effectively killed the primary institutional investor in its emerging capital market,” the World Bank said. “Confidence in this market has predictably suffered from this measure, the latest in a series of government meddlings.”

The move calls to question what the government will do about the $10 billion in private investments, including the shares of both foreign and domestic firms.

That makes Anses the country’s biggest investor in its capital markets, whose liquidity and depth will become greatly reduced, The FT said. And the disappearance of the private pension funds will raise a lot of concerns over how the government will be able to keep a steady supply of credit available to consumers, whose spending drives the economic growth in that country, as it does here in the United States.

The lack of available credit major combined with a downturn in confidence in the Argentine financial system might well be the double-whammy that pushes Argentina into a major downturn, which could easily translate into another debt default.

Haunted by Past Problems

To really understand what happened, we need to turn back the clock to 2001, when Argentina – Latin America’s second-largest economy – found itself on the brink of financial collapse. A loss of confidence in the country and its policies induced a surge in capital flight and a major run on the nation’s banks, as investors and Argentine citizens alike exchanged pesos for U.S. dollars, which they then sent abroad.

Argentina was forced to default on the lion’s share of its public debt, estimated at $93 billion. Even today, however, an estimated 30% of Argentina’s bondholders still refuse to accept the 70% discount the government offered to settle the default.

Even in a world not currently gripped by a global credit crisis, Argentina would likely have found it impossible to obtain the finding needed to finance its government operations. But the financial crisis is a stark reality, meaning that the few sources of funding that remain available in the world markets are not open to Argentina.

And with Argentina’s agriculture-heavy domestic economy slumping badly – and now certain to feel the sting of the plunge in food-and-commodity prices – the central government is left with a possible debt-payment shortfall of as much as $10 billion for next year.

“With the abrupt drop in commodity prices, it left Argentina’s ‘cleptocratic’ government little room other than to confiscate private savings in order to reduce its chances of defaulting again in 2009,” says Marquez.

Default Déjà Vu?

There are some disturbing similarities between Argentina’s current economic crisis and the economic malfeasance that led the country to default on its debt in 2001.

Then, as now, the government faced accusations of corruption and mismanagement of debts. Argentina’s current president, Cristina Fernández de Kirchner, succeeded her husband, former President Néstor Kirchner, in December 2007. Like her husband, President Kirchner has been accused of employing dubious accounting tactics.

It is widely believed that the current president Kirchner has underreported Argentina’s inflation situation by replacing members of the state statistical office with handpicked analysts “friendlier” to the administration’s view.

During Kirchner’s husband’s administration, which ran from 2003-2007, several industries were nationalized. Despite having campaigned on a socialist platform of “returning to a republic of equals,” he nevertheless oversaw the state takeover of the postal system, water works and railways.

The pattern of the Argentine government’s failure to acknowledge economic reality continues.

The legislature recently passed the budget for 2009, that bases its financial assumptions on 4.0% economic growth (as measured by gross domestic product growth), 8.0% inflation, and a currency valued at 3.19 pesos for each U.S. dollar (despite the fact that it currently takes 3.33 pesos to buy one U.S. dollar), MercoPress reported.

Many economists feel Argentina’s economic growth is likely to be much lower. JPMorgan Chase & Co. (NYSE:JPM) predicts just 1.0% GDP growth for 2009. And some economists have predicted inflation as high as 20%.

Current President Kirchner has chosen to blame the global financial crisis for the government’s need to grab of private sector assets – without acknowledging the role that her administration, and the domestic economy, have played in the current economic crisis.

“There was a [private] system that spectacularly collapsed. This was a policy of looting,” Kirchner said in an attempt to justify the nationalization, the AFP reported.

“It is evident that when nobody regulates the market, nobody controls it and it is allowed to do what it wants, we wind up with a financial disaster like the one the global economy faces,” she added.

But it’s widely acknowledged that without the projected $4.5 billion to $5.0 billion in worker inflows to the private pension system next year, coupled with the current $24 billion in deposits, the Argentine government would find itself dangerously close to another default.

Despite all of the similarities between Argentina’s past and current economic troubles, there’s one important difference for global investors.

During Argentina’s prior collapse, Mexico and Brazil – large Latin American economies and important Argentine trading partners – were faced with their own economic crises. It cast a pall over Latin American investing for emerging markets and international investors. But that’s not the case this time around.

“Argentina, unlike Mexico, China and Brazil, is a fairly closed economy,” says Shadow Stock Trader editor Marquez. “Therefore, the impact to other economies from the Argentine pension nationalization is almost negligible.”

Argentina’s Economic Isolation

Even with its strong average economic growth of 9% for the past several years, Argentina hasn’t been a smart place to park investments since the 2001 crisis.

During the prior economic collapse, large numbers of business owners and foreign investors alike yanked all of their cash out of the Argentine economy and sent it to safer havens aboard. Needless to say, this caused a capital squeeze, and many businesses of all sizes failed, causing unemployment to soar, and government receipts to plummet. With no sources of income, many struck out on their own, without the presence of the owners and their capital, as self-managed “cooperatives.” This helped create some economic and job growth where there was none, and eventually the economy started to rebound.

Although GDP has grown consistently and quickly since 2003, it was only in late 2004 that it reached the levels of 1998 – the last year of growth prior to the recession. Other macroeconomic indicators have have shown a similar rebound pattern.

Strong commodity prices fueled an economy that counts soy as its biggest export, but government mismanagement and questionable economic policies continue to make Argentina a poor investment.

Standard & Poor’s Inc. recently downgraded the country’s credit rating to B-, well below investment grade.

“It’s a textbook definition of an economic disaster,” Nick Chamie, head of emerging-market research at RBC Capital Markets Corp. (RY) in Toronto, told Bloomberg News. The S&P ratings reduction “confirms what the rest of the market knows – that Argentina is close to default and that risk is very high.”

But the good news for global investors is that Argentina’s problems are unlikely to spill over into the economies of its healthier Latin American neighbors.

Even Brazil, Argentina’s largest trading partner, is likely to be unaffected by its Latin American neighbor’s current economic trouble. Argentina accounts for only 9% of Brazil’s exports. And the planned liquidation of foreign assets in Argentina’s pension funds will amount to just $540 million worth of in Brazilian equities – too little to have much of an impact on the Brazilian market.

“Argentina’s government does not pass the first ‘C’ of credit analysis: character,” says Money Morning’s Marquez. “It is not only the ability to pay [its debt-service payments], but the willingness to do it and the track record in doing this that matters.”

Compared to the fiscal responsibility of neighbors Brazil and Chile, Argentina’s history of borrowing and default make it a bad bet.

Latin America still hosts several choice investment opportunities, but you won’t find them in Argentina.

“The nationalization of pensions in Argentina shows the escalation of confiscatory government policies,” says Marquez. “In this environment, where flagrant violations of property rights are escalating, Argentina is no place to invest.”

Source: With its Pension Fund Grab, is it ‘Déjà Vu All Over Again’ For Argentina?

Forget the UK blues you had on Monday. Don’t despair
about your pension fund value. The credit crunch is
over. Stock markets are now doing what they do… and
going up.

Certainly, that’s how it seems when you look at
yesterday’s phenomenal surge around Western stock
markets… and the continuation across Asian markets
today.

——————————
Markets across the world rally
——————————

Yesterday, the Dow Jones closed up some 400 points, the
FTSE was up 150 points and today in Asia the euphoria
continued unchecked: the Japanese Nikkei up 4.2%, Hong
Kong up 3.5% and India up 2.2%. In Latin America,
Mexico added 2.8% and Brazil 2.9%.

All of this comes on the back of yesterday’s news of
over $23 billion in write-downs. The market, in its
infinite wisdom, thinks that just because banks can
still go to the open market for funds that this credit
crunch is over somehow.

Last time we checked, foreclosures are still rising,
consumers are spending less and banks continue to write
down billions.

The huge rally, then, in banks and retailers
(Kingfisher and B&Q were among the FTSE’s leading
risers yesterday!)… in fact, in just about
anything… seems like some kind of April Fool’s joke –
especially when you consider that about the only shares
falling were mining companies.

I was talking to Robin Tracey who runs our Time Trader
straddle strategy earlier. He has is own thoughts on
this recent rally. “I think it’s just that traders had
been beaten down for too long – the pessimism was
overdone. As soon as we got a bit of “good news” from
the finance sector, the bulls took their cue and a bout
of optimism has blasted in to the market,” he told me
on the phone earlier.

——————————

—————-
Just a short squeeze… or a meaningful rally?
———————————————-

Will that optimism last, I wanted to know… asking
Robin to look into his crystal ball and give me a
definitive answer on where I should place my chips.

“Who know? Not you and certainly not me,” he replied, a
little too honestly perhaps. “This could be either a
severe bout of ‘short covering’ or it could be a
serious “upside initiation”, in other words the start
of a bigger rally. It doesn’t feel like the latter to
me, but I’m afraid we’ll have to wait and see.”

OK, Robin – so the markets could go up… or they could
go down. Thanks for that! Actually, Robin doesn’t care
too much about that. His strategy is market neutral. In
other words, he does not try to guess direction –
that’s a mug’s game in his view. People are invariably
wrong and “most of the time” markets don’t move that
much from month to month. His fascinating strategy aims
to capitalise on that.

The doors are closed on this service for this month’s
trade – but as soon as Robin’s inviting new traders to
join the May trade, I’ll let Profit Watch readers know
first. It could be your kind of thing. Keep an eye out
next week.

———————————
Lots of action in oil and gold…
———————————

Meanwhile, there’s just as much volatility over in the
commodities complex, where we’re still in the throes of
a sizeable volte face in the gold market.

Here in Profit Watch I’ve been musing for a while on
whether that thrust we saw through $1,000 dollars an
ounce would stick… or whether we’d get a decent
correction. Having a rudimentary understanding of
technical analysis, I had $750 in my mind as a possible
retracement level… a possible buying opportunity.

Well clearly we came nowhere near that… but the
market is certainly giving latecomers to the party a
reason to start thinking about jumping in… what do we
make of that?

If you’ve been reading this thing for a while, you know
me. I’m a gold bull over the longer term. I’m not
necessarily a gold bug like some of my colleagues –
Fleet Street CEO, Bill Bonner, William Rees-Mogg at The
Fleet Street Letter or Dan Denning who heads up the
Australian version of our Daily Reckoning letter. These
guys believe gold is the only true store of value in a
depression and they’ve been calling it upwards for the
last 10 years or more… and rightly so.

As inflation rages, gold shines… and that’s what
we’ve been seeing in 2007 and 2008. At its $1,030 high
of a couple of weeks ago, gold was up 23% since the
start of the year.

But I note from Ben Traynor’s Fleet Street Daily email
today that we’re seeing a decent pull back now…

————————————
Gold falls, but oil stays above $100
————————————

Gold is down to $888, he tells me in his excellent
commentary (you should sign up for that if you get the
chance, by the way – see the link at the end of this
email.) But oil has stayed above the magic $100 mark
(excepting a short spell yesterday when it poked its
nose just below for old time’s sake).

“I find it interesting that gold fell but oil didn’t,”
muses Bill Bonner. “Oil has real demand behind it,
while gold is monetary.”

“Absolutely,” agrees Garry White. “You make loads of
stuff from oil. Plus,” he adds, “there’s a real supply
crunch going on. We all seem to focus on US oil
inventories, but we should be looking at capacity in
producing nations too.”

The Gulf is experiencing a power crisis, and it’s
hitting production capacity.

“The fundamentals are in the driving seat now!” says
Garry. “And the fundamentals are tight.

“A US energy economist has a neat explanation as to why
this is happening – and it fits exactly with my view of
the world. It’s all about population growth leading to
energy shortages – and he believes it’s hitting oil-
producing nations hard.

“Writing in the Financial Times, Ohio Northern
University Energy Economist AF Alhajji, said that
Opec’s vanishing excess capacity was now keeping the
oil price above $100. He argued that Gulf States’ power
crises were now a primary driver of the oil price.

—————————————
Gulf power crisis is real – and growing
—————————————

“Alhajji argued that when considering total oil stocks,
you must include inventories in industrial nations PLUS
excess capacity in producer states. We all seem to
focus on US oil inventories – be we should be looking
at capacity in producing nations too.

“Despite rising inventories; vanishing capacity in Gulf
nations makes total global oil stocks so small that
this has been the main driver keeping the oil price
above $100, he argued.

“So, based on this analysis, when we are considering
global oil stocks, oil EXPORTS from these countries are
the most important factor – NOT total oil production.

“Rising living standards, soaring populations and
urbanisation is increasing demand in oil-rich nations.
They are using their own oil to supply their soaring
energy needs. This would also explain why Opec has been
reluctant to increase production… it simply can’t
because of its own power shortages.

“In March, the Middle East Economic Digest warned of an
imminent power and water crisis across the Gulf. It
said there was a serious supply and demand imbalance
caused by a lack of infrastructure investment earlier
in the decade.

“The GCC is currently building a Gulf power grid that
will connect the six member states, paving the way for
a regional electricity market. The grid will not come
online until 2009, however.

“So, a temporary change in the dollar’s fortunes has
revealed that fundamentals are taking over as the main
driver.”

Garry’s advice? Buy commodities – and oil in
particular. If you’re looking for his specific profit
plays, then just get on board his Smart Commodities
letter.

To find out why oil is one of Garry’s Power Trends – 5
trends that could see smart investors make an absolute
killing in the months ahead, read here:

http://click.fspeletters.com/t/15025/1632470/156272/0/

Past performance is not a reliable indicator of future
results. Your capital is at risk when you invest in shares,
never risk more than you can afford to lose. Please seek
independent financial advice if necessary.

That’s all for today…

Until Friday…

Best regards,

Frank Hemsley
Profit Watch

P.S. Remember to get your name on to the list for Ben
Traynor’s Fleet Street Daily e-letter (it’s free!) Just
go here for details:

http://signup.fspinvest.co.uk/LF/fsd.html?newsourcecode2=XFSDD304