What If
Monday, May 15th, 2006
By Michael Lombardi, MBA for Profit Confidential
What if you woke up one morning to the news oil had surpassed $100 U.S. a barrel?
As a consumer, you’d likely be upset that it would cost so much more to fill up your vehicles. As an investor, you’d probably be kicking yourself for not owning some oil stocks. Oil is at about $70 a barrel right now… it has only $30 further to climb to make this “what if” a reality.
What if one day the value of the U.S. dollar crashed against other popular foreign currencies?
As a consumer, the cost of most items you buy would rise in price. America imports a great number of things… everything from merchandise to food. A devalued U.S. dollar would likely increase your cost of living. As an investor, a weaker U.S. dollar would make your foreign investments worth a lot more. By the way, how much do you have in foreign investments right now? With U.S. interest rates rising, and U.S. dollar falling, and with so much debt now accumulated in the U.S., isn’t a devalued U.S. dollar a likely event?
What if you woke up one morning to the news gold bullion prices had surpassed $1,000 U.S. per ounce?
As an investor, you’d likely say “thank goodness for my gold holdings” or you would say “I should have listened to Michael Lombardi back in 2001 when he started recommending gold.” If you believe in scenario two above, that the U.S. dollar will fall in value against other world currencies, then you need to believe gold will rise in value because what other form of currency will investors feel secure with but gold?
You can eliminate two of the above “what if” scenarios from your life by simply holding quality oil and gold stocks in your investment portfolio. If you are American, you can protect yourself against a devalued American dollar by having some investments in foreign denominated dollars. As an example, don’t own Exxon on the NYSE. Own Exxon’s subsidiary, Imperial Oil, on the TSX, a major Canadian currency denominated stock exchange.
Both oil and gold have been in strong bull markets this year. But bull markets don’t go straight up–plenty of price corrections happen on the way up. You should look at the sharp price corrections I’m expecting in oil and gold as opportunities to remove the “what if” scenarios from you life.
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Tags: bull market, gold, interest rates, U.S. dollar, 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
