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Welcome to Profit Confidential • Wednesday, May 23, 2012

Expect Significant Inflation

Monday, April 24th, 2006
By Mitchell Clark, B.Comm. for Profit Confidential

Earlier this year, I predicted that the big news for 2006 would be precious metals. If 2005 was all about the price of oil, 2006 would be all about gold, silver, zinc, copper.you name it. I wonder if this forecast was slightly incorrect.

Right now, it looks like 2006 is going to be a year about all commodities, not just precious metals. With the price of oil over $70 a barrel, this means oil companies are getting much richer, and raw material costs for the rest of the economy will keep rising. Don’t forget that oil isn’t just used to facilitate transportation. You need a lot of oil just to make a piece of plastic.

So, the whole commodity basket continues to explode, with well deserved corrections along the way.

One of the western world’s best investment analysts is Jim Rogers, Jr. He was the analyst who worked with George Soros at the Quantum Fund. Whatever comes out of Jim Rogers’ mouth is most definitely worth considering. His latest book on the current commodity boom is a must read for investors.

Jim Rogers figures that the price of oil could easily go to $150 a barrel. He continues to say the same thing in every speech. There just haven’t been enough new oil field discoveries to keep up with demand. He figures precious metal prices will keep going up, but he really thinks that the biggest commodity price increases to come will be in agricultural commodities. Jim Rogers is usually proven right over time, so you can expect a cup of coffee and a pastry to get more expensive over the coming years.

The best thing you can do as an individual investor is to have some exposure to commodities in your portfolio. Jim Rogers contends that almost all bull markets get way out of hand when it comes to valuations. Not only does the law of supply and demand apply to individual securities prices, but there is also a tremendous amount of institutional speculative money out there that contributes to the irrational exuberance. As I said, Jim Rogers is usually right, so I think its reasonable to expect significant inflation over the next several years.

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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