The Story of How Sam Walton Started the Bull Market in Gold
Monday, February 4th, 2008
By Michael Lombardi, MBA for Profit Confidential
The year is 2002. Sam Walton is gone, but the bull market in gold bullion prices is just starting. By 2003, there will be a handful of analysts calling the start of the new bull market in gold bullion, Michael Lombardi being one of them.
From humble beginnings, Walton built the world largest retail company. Even after he left, Wal-Mart grew and grew to become the mammoth company it is today. With 1.4 million employees and millions of customers, estimates have about five percent of all U.S. retail sales happening at Wal-Mart.
As Walton grew Wal-Mart, it became ever so apparent that American consumers demanded lower and lower prices for the goods they purchased at Wal-Mart. Walton, wanting to satisfy his customers’ needs and grow his business, started introducing “made in China” goods at his stores early. As the years passed, Wal-Mart’s offerings of Chinese goods exploded. Other retailers, like Target and Costco, followed suit. Was there ever any doubt that the U.S. trade deficit would eventually get way out of whack because of the huge American consumer demand for lower priced Chinese goods?
With the huge demand for Chinese goods, Chinese manufacturers and exports started accumulating massive amounts of U.S. dollars. China today sits on over $1.0 trillion U.S. And, like everything else, too much of anything lowers prices. Too many American dollars means a lower value for the greenback on world currency markets. And that’s exactly what is happening.
By now, you’ve heard George Soros’ comments that the U.S. dollar’s supremacy as the official reserve currency of the world is coming to an end. And what currency will replace the American dollar, George? Gold is the only answer.
Yes, I turned bullish on gold bullion in 2003. And yes, I wrote a forecast earlier this year predicting that gold would top $1,000 in 2008. (Today, I feel gold is overbought and due for a price correction. While I believe we are still very early in the gold bullion bull market, I would not be surprised to see gold prices correct sharply here in the confines of a bull market trend.)
So, there you have it. Inadvertently, by opening up the American retail market to China via Wal-Mart, Sam Walton started the great flow of U.S. dollars into China, which eventually led to the oversupply of U.S. dollars… a falling price for the greenback and the subsequent rise in price and demand for gold bullion.
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Tags: bull market, chinese economy, gold, gold bullion, U.S. economy
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
