India just reported GDP growth of 9.4% for the fiscal year ended March 2007. This is way above the 8% predicted rate of growth and moving toward China’s stunning 10.4% growth rate.
India, like China is becoming an engine of global growth. The U.S. is clearly no longer the important engine of global growth that it once was. Let us face facts. The U.S. has lost much of its global political leadership, and now its global economic leadership is coming into question.
The U.S. is still the world’s biggest economy, but with a growth rate of less than 1% in the last quarter, and with close to double digit growth in India and China there is little doubt that the U.S. will lose its status as the world’s biggest economy within a decade if these trends persist.
We are American, and we are pro-America, but we are also realists. Let us invest in those areas where the money is to be made. Let us invest in the countries that are growing fast and in the commodities and precious metals which will benefit from these trends. Let us look at the transportation companies whose products and services are necessary to effectuate this growth and at the energy and base metals which are the building blocks of any economy. Let us also look at the global financial intermediaries that will provide the financing for this growth and at the precious metals stocks where many of the profits will be invested.
In our opinion, gold will play a major part as a vehicle that central banks will acquire to strengthen their balance sheets. Recently, Spain sold some gold. The buyers were the central banks of countries with growing economies-the buyers were Asian central banks.
As power shifts from the U.S. and Europe to Asia, so do the central bank gold holdings shift from U.S. and Europe to Asia.
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