Wednesday, November 5, 2008

Getting Rich from an Obama Presidency

The Democrats have inherited an inflationary mess from their sister party, the Republicans. A testimony to the Democrats' incompetence is that their leading economists are talking about the likelihood of "deflation" when the Republicans just doubled the monetary base on top of 2 1/2 decades of Republican monetary depreciation. Rather than make inflation into an issue, the Democrats complain that there isn't enough inflation. The reason is, of course, that their programmatic suggestions, to include Post Office- and New York City-Subway-style government health insurance and "spreading it around", require that our impecunious government spend ever more. As well, George Soros, Goldman Sachs, Morgan Stanley and Warren Buffett must be paid.

Here are a few pointers about inflation:

1. Buy without holding prisoners. It is time to buy the Lexus, Lincoln or Mercedes you have been thinking about. If you've been saving for a Lexus consider borrowing to buy one instead. Use the cash as a down payment on a leveraged investment.

2. If you are planning to retire, have some gold. My friend wants to keep gold under the mattress. He's holed up with a rifle, bars of gold and dry food. If you're not quite so paranoid, take a look at SPDR Gold TR (GLD) or Ishares Comex Gold Trust (IAU).

3. Consider a commmodity investment such as Powershares DBC Commodity Index Tracking Fund (DBC). This exchange traded fund tracks the Deutsche Bank Commodity Index, which is composed of light sweet crude oil, heating oil, aluminimum, gold, corn and wheat. Commodities have taken a beating this year with oil falling by more than 50% and gold falling about 34% (it is currently about 25% below its high).

4. Consider gold stocks. These have underperformed gold this year and so can catch up to the gold price as well as travel up along with the gold price during the Democrats' inflation. Some examples are Agnico (AEM), Eldorado (EG0), Kinross (KGC) and Randgold (GOLD).

5. Take a slice of Jim Rogers's thinking and buy his commodity index ETF, Market Vectors Hard Assets Producers ETF (HAP). Jim Rogers designed the index to take advantage of the global commodities boom. HAP began this past September (2008) and sold as high as 38 or so before falling to its current $23.93.

With an Obama presidency, it's going to be rock 'n roll time for commodities. Let's make some money!

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