The question mark hanging over the worlds markets grows bigger every day that the leading indices move onward and upward into the high ground.

 

For centuries economic booms have been followed by a corresponding downturn, the higher the peaks, the lower the troughs, the longer the up cycle the longer the down cycle.

 

In modern times the cycles have more or less followed a five year pattern but this time the bulls have had a good eight year run.

 

For at least the last twelve months there has been an increasing number of factors in the US economy giving rise for concern, from housing busts to excessive personal debt, from ever increasing US national debt to a diminishing manufacturing capacity, escalating cost of overseas military involvements with the hope of successful outcomes receding by the day.

 

Looming oil and natural gas shortfalls, excessive liquidity constantly fuelled by printing more greenbacks and the consequent dangers of inflation, the seemingly inevitability of the diminishing value of the dollar, and now the conundrum of interest rates that has to be faced.

 

Put ´em up to control inflation and bring more pain to the property market, employment and all the other associated factors, or bring ´em down and allow inflation to let rip and the dollar to bomb and of course just delay, and make even worse, the inevitable consequences.

 

In the meantime the markets continue to roar ahead with no apparent thought that the good times are bound to come to an end, probably sooner rather than later.

 

And why not take advantage of the profits to be had while optimism reigns and caution has taken a back seat?

 

But as they say “what goes up must come down”!

 

If only we had the gift of foresight because we cannot recall a time when so much money could be made if we could only get the timing right.

 

It is recognized that markets fall much faster than they rise so going short in virtually any of the market sectors at just the right moment is going to make a killing – if only!

 

Make no mistake, this exceptionally significant correction will take place and when it does it will affect even those stocks and commodities that are considered to be safe havens and stores of value in desperate times.

 

So much of investor activity from the ´big dogs´ to the ´man in the street´ is taking place with borrowed money, in other words leverage, that when the downturn gets underway the debts will mount and, human nature taking its course, the first action will be to realize profits in the hope that there may be a recovery.

 

In which case gold and other precious metals and uranium and the miners will be as vulnerable as any other stock.

 

There will be cycles within cycles and there undoubtedly will be ´up´ days but in a bear market they hardly ever reach the peak of the preceding upturn whereas the troughs just get progressively deeper.

 

So what is the message we are trying to get across?

 

In the first place be on your guard and look out for those warning signals. Bear in mind the old adage, ´sell in May and go away´, so just perhaps investor optimism may begin its erosion during an historically poor month for the markets.

 

Don’t be hustled out of precious metals, gold particularly. Get the timing right and load up because in this camp we see gold up to anywhere between $1500 and $2000 an ounce by the end of 2008, but that is just our opinion (and our hope).

 

We cannot see any other alternative in the energy sector than an increasing move towards nuclear power.

 

It is becoming more and more acceptable to even the most fervent greens as the only realistic alternative to fossil fuels in the fight against global warming.

 

Even Australia, which has had a policy of not allowing any more than three uranium miners to operate and where about 24% of the worlds resources are located, has come round with the Labour political party at last after thirty years voting to open up the country to uranium mining.

 

On this note check out the policy on uranium mining in The Northern Territory and in South Australia, these are areas where there are existing mines so it is reasonable to assume that Uranium may be present in nearby locations.

 

Again there are likely to be opportunities to buy into the metal and its miners that should not be ignored.

 

Keep in mind that there are 435 active nuclear reactors in the world, with France the leader in nuclear technology getting nearly 80% of its electricity from this source, whereas the US obtains under 20 %.

 

The Bush administration has introduced a number of measures to assist and encourage the power utilities to move over to nuclear power (see our earlier post for the details).

 

And then there is China with only 2% of its electricity generated by nuclear power and planning a massive increase.

 

Worldwide there are thirty nuclear power stations under construction and a further 150 being planned so the stage is set for all things nuclear!

 

Wherever you are reading this please remember that the United States still retains the overriding influence on world markets, when the US sneezes the rest of the world catches a cold!!

 

But keep the faith as we truly believe that gold and uranium will not let you down.

 

 

 

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