Go For the Gold and Grains in 2008!

Today's comment is by Eric Roseman, Investment Director and editor of Commodity Trend Alert.

Dear A-Letter Reader,

The trading year is winding down fast. In fact, the 2007 investment year is all but gone - so now the big question is: What's coming up in 2008?

First, 2008 is an election year. So Washington is likely to target high oil prices and do whatever's possible to soften prices in 2008.

The politicians may even dip into the supplies from the U.S. Strategic Petroleum Reserve to temporarily pullback prices. They won't be able to put a huge dent in this oil bull market, but it could be just enough to please voters. After all, they want to keep car-driving voters happy at the polls.

So instead of oil, the best risk-adjusted gains in commodities will lie in the grains complex and precious metals.

Be Ready to Pounce on These Incredible Bargains!

Both sectors offer extremely compelling supply and demand fundamentals. Prices for wheat, corn, soybeans, gold, silver and platinum are all mired in tight supply imbalances. So I see all these hitting new nominal highs in 2008. The only exception is palladium, which is still stuck in a six-year rut.

I urge you to use any short-term weakness in these markets as your chance to grab these great values.

Adjusted for inflation, gold prices should fetch about US$2,200 an ounce before this bull lies down to rest. Meanwhile the grains remain extremely cheap right now. They're trading approximately 70% below their 1980 inflation-adjusted highs.

My Commodity Trend Alert service, now in its sixth year, continues to focus on precious metals, gold mining stocks, the grains and special situations in oil exploration and drilling, mainly on insider purchases. That's where the biggest profits lie in 2008.

Don't Bother with Base Metals

Base metals are going to be the weakest commodity sectors next year. After years of booming demand, base metals are clearly topping-out. They just can't hold their profits amid a U.S. economic slowdown and increasing supplies from major producers. The base metals are highly sensitive to any decline in global economic output.

Although emerging markets will continue to grow next year, they still have not decoupled from America's growth cycle. That means any sharp slowdown in U.S. growth, which may have already suffered a quarterly GDP (gross domestic product) contraction, will affect prices for copper, lead and other metals.

Already in late 2007, nickel prices have crashed. And several other base metals have heavily consolidated from record highs earlier this year.

These corrections in the primary trend for the base metals happened despite an uninterrupted advance in China's GDP in 2007. That's proof that base metal prices are still sensitive to U.S. demand and increasingly, rising supplies. On a risk-adjusted basis, the base metals offer poor returns over the next 12 months and should be largely avoided.

Copper Is Already Pulling Back

Feed the World, Biofuel Boom Propel Grains

Grain supplies have continued to decline over the last 18 months. But demand continues to rise, especially for food consumption and alternative fuels. That means higher prices are in the cards for 2008 and beyond.

From their lows earlier last year, wheat, corn and soybean prices have more than doubled. And still, they remain incredibly cheap compared to their inflation-adjusted highs in 1980-1981.

Corn-based ethanol, a growing alternative fuel in the United States, remains expensive to produce. Manufacturers continue to suffer from margin-related pressure because corn prices remain historically high. But ethanol is here to stay because it's politically viable. So ethanol production will continue to shoot corn prices higher for the foreseeable pressure.

More Grains Please!

But even more compelling than ethanol consumption is the emerging market boom. We're seeing growing populations and soaring demand from emerging markets. As diets expand and wages rise, more people will consume wheat and soy-based products.

Plus, as diets diversify to include more meats, emerging markets will need more feed for their animals. This whole relationship is rapidly becoming a virtuous circle - which will drive grain prices to record nominal highs as supplies decline.

The grains also offer extremely powerful portfolio diversification benefits. Grains tend to advance when stocks have an "off" day in the markets. Prices for wheat, soybeans and corn have no correlation to equity trends.

Along with gold, silver, platinum and the gold stocks, the grains offer the best upside over the next 12-24 months. Then sit back and watch as exciting profits head into overdrive amid a weaker U.S. dollar and concerted global central bank expansion of credit in 2008.

ERIC ROSEMAN, Investment Director

P.S. Around the world, all my investment colleagues are focused on what will boom and bust in 2008. And like me, many of these experts believe we could see a recession after next year. So to prepare you for the turbulent markets in 2008 and 2009, we're joining forces in St. Kitts this February 20 - 23 for The Sovereign Society's special "Emergency Money Summit."

This is a one-of-a-kind event that we created specifically to tell you how to profit during next year's volatile markets. We think it's so important that we're even allowing you to do something we've NEVER done - we're letting you bring a guest for free. This way, your spouse or business partner will also have the knowledge to navigate next year's rocky markets. There's just one catch - you have to sign up by January 1st to bring your guest for FREE. So sign up now, beat the rush. I hope to see you and meet you personally in St. Kitts.

Japan Working Overtime as China
and Europe Make Up for Slumping U.S.

The odds of a U.S. recession have certainly increased recently. We just saw the latest round of dismal housing data and lackluster retail sales. The one bright spot over the past several months has been surging exports, thanks to the falling dollar.

Then a few weeks ago, the Fed reported U.S. industrial production fell 0.5% in October. That was the first time production dropped in five months - it's another sign that domestic growth is slowing.

On the other side of the Pacific however, Japanese industrial output is moving in the opposite direction. It's surging much more than expected.

The yen, like the dollar, is historically cheap compared to the euro, and Europe is a key export market for Japan. The nation also enjoys a close proximity to booming markets in China. Added together, business conditions are looking up for Japan's big export firms.

Bloomberg reported yesterday that Japan's machinery orders surged nearly 13% higher in October. That's twice what economists expected. These numbers show that European and Asian demand for Japanese industrial goods remains strong.

In fact, "exports to China and Europe surged to a record in October, prompting companies including Canon Inc. and Sharp Corp. to spend more on factories and equipment."

Orders for manufacturing gear jumped 10.2%, while Japanese service companies increased orders nearly 9%. Large firms in Japan are clearly gearing up for even faster export growth going forward too.

Analyst forecasts call for Japan's industrial export sector to "increase spending at a pace close to the fastest in more than a decade."

Even if the U.S. manages to avoid recession, we are seeing clear signs of a slowdown in America. So Japan's booming industrial sector is a stark reminder that growth elsewhere in the world continues at a healthy pace. "

Looks to me like decoupling may be working after all in the land of the rising sun.

MIKE BURNICK, Senior Editor & Global Markets Analyst

Privacy & Rights

How to Make a Quick US$102.7 Million

Want to get rich quick? Forget the lottery or Las Vegas. Just file a lawsuit in the United States, and you could hit the jackpot.
On November 28, a Miami jury awarded a former waiter aboard a cruise ship US$102.7 million. The defendant: The owner of a parking lot.

Here's the story. Sami Barrak was in Miami on his day off in July 2002. Barrak and a friend decided to visit Tootsie's Cabaret. It's a strip club located in a now-defunct mall.

After a few hours of entertainment, the men departed. When Barrak's friend returned to Tootsie's to retrieve cigarettes he had left there, a man approached Barrak's vehicle. The man apparently tried to rob Barrak. The man shot Barrak in the neck and then fled the scene.

Barrak survived the shooting, but was left a quadriplegic. He can breathe only with a ventilator's assistance.

Whose fault was the shooting? Did Barrak have any responsibility for sitting alone in a parking lot in an area with a reputation for being unsafe? Of course not. The fault, he alleged, lay with the parking lot's owner, which he alleged had the responsibility of keeping it safe.

A Miami jury agreed. The jury ordered the parking lot owner to pay Barrak US$1.4 million for past medical expenses, US$164,000 for past lost earnings, US$28 million for future medical expenses, US$650,000 for lost earning ability, US$2.5 million for past pain and suffering and a whopping US$70 million for future pain and suffering. The grand total: US$102.7 million.

A judgment of US$102.7 million is enough to bankrupt just about anyone, even a person with very deep pockets and extremely comprehensive liability insurance. Let's hope the owners of the parking lot had a comprehensive asset protection plan in place before the unfortunate Mr. Barrak was assaulted.

And let's further hope that a substantial portion of the owner's assets are held outside the United States, in a jurisdiction less friendly to litigation than Florida.

Click here to learn how you can protect your assets from litigation run amok.

MARK NESTMANN, Privacy Expert & President
The Nestmann Group
www.nestmann.com