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Impressions of the New Orleans Investment ConferenceLarry LaBorde After the past 5 days in New Orleans I am still suffering from information overload. Personally listening to almost 40 presentations from some pretty smart people with differing opinions can be confusing. Although many speakers seemed to have common threads that ran through most of their talks. Many speakers felt that: 1. Bonds are finished. And to a lesser extent many felt: 1. Copper is going to turn
down There were also a few memorable comments from several speakers such as: Larry Abraham's (multinatl@aol.com) enlightening description of how the Chinese intend to spend their 1 trillion dollar surplus in the 3rd world was fascinating. China intends to loan Chinese contractors money to build infrastructure (using Chinese built equipment) such as toll bridges, toll roads, ports and water systems. The Chinese contractors will own and operate these assets for profit so they can pay back the loans. The 3rd world will get their infrastructure built and the Chinese will make many new friends. They will then buy raw materials from their new friends whom they will extract over the new bridges, along the new roads and out of the new ports. The 3rd world will benefit selling their agricultural and minerals exports to China. China will benefit by creating new export markets for their consumer goods. Curtis Hesler (www.protiming.com) said that 85% of the investment return is a result of investing in the right asset class. Only 15% of the return is a result of investing in the right individual asset. Dennis Gartman (www.thegartmanletter.com) reminded us to: take profits every now and then, buy things that are going up and sell things that are going down. (Sounds simple but how many of us hold a losing position too long.) He also said he does not trust US GDP numbers because bureaucrats count goods and services poorly. He does however, believe in income tax numbers. He has more faith in yr/yr increases in income tax revenue as opposed to yr/yr increases in GDP as a way to gauge growth in the US economy. He also believes that in the future Japan is going to become a small unimportant country due to its demographic problems. Long on ag commodities and high tech - short on copper. Frank Veneroso (www.venerosoassociates.net) feels that the run up in base metals is a result of hedge fund buying. He feels that this is not a result of demand but a result of speculation in the market. This is causing imbalances that will result in surpluses that will have to be worked off over a period of years pushing base metal prices back down. He is definitely short copper and other base metals for years to come. Jon Nadler (www.kitco.com) said there is an infinite supply of paper dollars chasing a finite supply of gold. Most of the gold purchases are going into the people's pockets and not the vaults of central banks. The new central bank of the people is the gold ETF. Pam Aden (www.adenforecast.com) confirmed that we are in the 6th year of a gold bull market. Copper is a bubble but gold is not. Gold is rising in all currencies since 2005. Invest with this gold trend and stay with it until the general trend changes. Corrections for a few months mean nothing. The gold bull will probably run 10 to 15 more years. Robert Meier (RMB Group 800.345.7026)
said we are in trouble in Iraq. We must travel to the other side
of the world and have terrible logistics working against us.
We also have terrible economic forces against us. A $1,000 RPG
can take out a $7,000,000 tank. The 21st century will be full
of wars for natural resources. Doug Casey (www.caseyresearch.com) was frank, honest and forthcoming with his refreshing libertarian ideas. Doug says you should "internationalize yourself". You should buy a lot of gold and silver coins, speculate in mining stocks and sell it all when Time and Newsweek say gold is the best investment of the year on their front covers. He also said we are living in an awkward time in our history, it is too late to change things but too early to line up all the politicians and shoot them for the mess they have made. Bob Prechter (www.elliottwave.com) said the markets have done terrible when looked at priced in oz of gold instead of US dollars. Oil priced in terms of gold has been relatively flat over the last 35 years. Predicts buyers will simply leave the stock market and both stocks and bonds will drop hard. Dr. Marc Faber (www.gloomboomdoom.com) was my favorite of the conference. He says the 3rd world is financing the developed world - a condition that has never existed before. Debt in the US is growing much faster than GDP which is unsustainable. The 5 major world currencies are the US dollar, euro, yen, renmimbi and gold. Diversify into all of them. Oil demand in emerging markets is growing very fast. Mr. Putin, who now controls the production of Russia's 10 million bpd of oil (more than Saudi Arabia) is the world's largest oil producer and the most powerful man in the world today - not Mr. Bush. Watch the Dow index priced in terms of gold. Go long grains. Paul Van Eeden, (www.paulvaneeden.com) however, seemed to tie it all together in my mind. He said that hedge funds did indeed purchase large positions base metals starting in mid 2005. He says they did so at the same time the Japanese central bank announced the end of the yen carry trade. The hedge funds had such large positions that they could not quickly unwind in the yen carry trade that they became worried about gigantic losses as a result of a declining dollar against the yen if the Japanese central bank stopped supporting the dollar. As a hedge against a declining dollar they purchased metals. Since this very large demand was not coming from true industrial demand it is artificial and may cause misallocations and imbalances in the metals markets. As a result base metals may indeed be in a bubble and fall as the hedge funds unravel their positions. However, gold is money! Another chart showed computations in the rise in gold stocks through yearly mine production figures vs. the rise in the US dollar supply. There is a surprising correlation with the exception of 1979/1980 and the last few years. According to his chart gold is currently $200+ dollars undervalued right now. It appears I now have a valid reason to be short copper (and other overbought base metals) and long gold. In closing I would like to thank all the speakers including those not mentioned simply for brevity's sake for their input this year. I apologize in advance for any misstatement of anyone's work. The meager few words that I have written above are only a tiny fraction of the wealth of topics covered by some of the brightest minds in the world. Most of these speakers have newsletters that are available on a subscription basis for more detailed analysis of political and market conditions. To get individual stock picks you will just have to attend the conference next year. The New Orleans Investment Conference was the best investment in my time and money that I spent this entire year. In addition to the speakers I was able to visit and exchange ideas with investors from all over the world. I highly recommend everyone to take control of their investments and educate themselves. The New Orleans Conference is one of the best ways to do just that. Larry LaBorde 321gold Inc |
