The world economy is growing steadily. The European, Japanese and U.S. economies are moving ahead at a respectable rate. Australia and Canada, which are leading suppliers of raw materials, are growing fast. China and India are speeding along at a very rapid rate. Even some countries which are doing their best to destroy their economies, with populist politics, wild nationalization and excess taxation regimes are doing well. This in large part is due to strong demand for their raw materials. Let’s talk about the last group first.


Venezuela, Bolivia and possibly other Latin American nations are engaging in wildly irresponsible economic policies. These policies will lead to the suffering of their people in coming decades. Yet these countries continue to benefit from their extractive industries. High commodity prices allow them to temporarily decrease production, (due to taxes and the nationalization of the mining companies, which results in producing less oil, natural gas and minerals), while increasing their revenues, due to higher world prices.


The same themes we have been discussing for three or four years are still good for investment in our opinion.

There is significant global demand for energy from all the developing countries. However, there is unstable supply due to:
1. The growth of populist politics in Latin America.
2. Wars in the Mid-East.
3. Brewing wars in Mid-East and South Asia.

Oil, natural gas, coal, uranium, and equipment or services that help companies to find, to mine, to transport and to deliver the energy. Secondary themes are alternative energy like ethanol, wind power, solar etc.

Energy has been the largest portion of our portfolio for years and continues to be.


For four years we have been bullish on precious metals, it has been the second major concentration of our investments. Much of the credit for our success goes to the incomparable Jim Sinclair who writes It is true that we have had an economic view, which argued for precious metals very strongly. Thus, we would have owned them if we had not known Jim. However, Jim’s superb fundamental and technical input and price objectives have made the process much easier.

Jim’s predictions about the gold price have been accurate as has the policy of holding major positions and selling part of the position on price spikes and repurchasing on dips.

I send Jim daily economic and fundamental information about the growth of world and national economies, which will create demand for precious metals, energy and base metals. Jim has a great deal of economic insight himself, and as I have stated before he is immensely knowledgeable about global financial and economic events.

For our clients we have focused on precious metals stocks in politically safe environments, such as Canada, U.S., Australia, Tanzania, Chile and Brazil. We have avoided more politically risky environments like Indonesia, Peru, Bolivia and Venezuela.


We start with a top down global economic view based upon research and input from myself and a group of contacts. I pick the countries, and industries for investment based upon our economic view. Further research on individual companies is carried out by the Guild Investment Management analytical staff, which includes two full time and two part time professionals other than me.

All of this input is supplemented by the wise insight of a group of fellow professional investors for whom I have immense respect. I speak to eight of these individuals frequently and to others less frequently. We take input from them, and sort them according to our global economic and industrial outlook. We favor those inputs, which jive with our global macroeconomic, country and industry forecasts. From this data, we pick those investments which we believe to be attractive.



The dollar is not yet falling fast but it is beginning to depreciate once again. Rest assured that in the long run the dollar is going substantially lower versus most major currencies. Even the International Monetary Fund (IMF) is urging dollar depreciation to resolve global imbalances.

The U.S. politicians are criticizing the Chinese for having an unfairly low currency. The fact is that the IMF does not agree, they have said in effect that the dollar would have to depreciate significantly against a variety of currencies in order to balance out global economic imbalances.
The fact is that they are correct. The rise of the Chinese Yuan alone would do very little to improve the U.S. balance of trade. I believe that the dollar has to fall against the currencies of most of our trading partners, in order for our trade balance to move to the acceptable range.


The U.S. dollar has a new problem now that the word has been leaked that the Federal Reserve is at least considering stopping or slowing rate increases at 5% for the Fed Funds rate. This is not going to help the dollar, as consumer inflation is now starting to rise in U.S. Inflation will soon be more noticeable, even by the standards of the frequently manipulated official U.S. price indices, the laughably inaccurate CPI (consumer price index) and PPI (producer price index).

Recently, the world’s oldest central bank, the Swedish central bank, has been selling dollars and switching primarily into Euros. In the last month, they have decreased their dollar holdings by 17%.

The Swedes have 340 years of experience as central bankers, and they have decided to focus on higher returns, instead of liquidity for their currency portfolio. For Swedes, the U.S. dollar return is a function of its interest rate, and its appreciation or depreciation versus the Swedish currency. Obviously the Swedes believe that the dollar will depreciate versus the Swedish Crown.