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Few investors and even fewer Wall Street gurus have a clue as to whats coming down the pike. When the shocks hit, they will be unprepared, even devastated. I dont see the U.S. sinking into a deep depression. But I am convinced some very rough waters lie dead ahead. Sit back for a moment, put all distractions aside, and think about whats happening. What you will see are not temporary flukes. They are deeply embedded trends that are just beginning to unfold and can only intensify. Below are three of the specific threats I see plus my ideas on the best investments to counter each, while also generating some nice, hefty profits that are not only good for you and your family, but also beneficial for all concerned. First Threat: The Cave Man Bin Laden, who lives in caves tucked in the remote mountains of Pakistans border with Afghanistan, cannot be forgotten. His latest recording, released this week, MUST be taken very seriously. Al Qaeda takes years to plan its attacks, and the clock is ticking. And his latest threat is a vivid reminder that terrorism is not going away.
Am I shouting fire in a crowded theater? I dont think so. Nor do many Washington experts and private think tanks. Consider, for example, the comments by Christopher Brown, a security and terrorist expert with the internationally recognized Hudson Institute. On Tuesday, he declared:
Worse, Brown indicates theres new evidence that an attack could involve unidentified poisonous substances and black market surface-to-air missiles procured from Chechnya. Scary, but possible. And this man is no rookie. He is frequently called upon to brief Congress, the Department of Defense, the State Department, the CIA, the National Security Council and the White House. I pray hes wrong. I hope bin Laden rots in his cave. But given the amount of time that has elapsed since 9/11 … the many other explosive conflicts across the globe that weve been alerting you to … and the extreme complacency I see in the markets … Its time to raise I know this is often hard to do in todays environment. Indeed, right now, investor But typically, when investor complacency is this extreme, its the prelude to the perfect storm precisely the kinds of shocks Im talking about here. You can see how this indicator behaves in the chart to the right. History shows that, when investor complacency is this low, when they think theres virtually no risk in the world … thats when the next crisis is likely to be the most shocking to investor psychology and the most devastating to their finances. The Asian Contagion of 1997. The Long-Term Capital Management collapse of 1998. The Tech Wreck of 2000-2002. Each and every one of these came when investors least expected it. Just like right now. I think the lift-off phase for this indicator is about to begin. Between bin Laden, oil prices, and more threats Ill discuss in a minute, I believe it would be imprudent NOT to raise your alert level. How should your portfolio counter the Bin Laden threat? First, own gold! In the wake of political instability, investors worldwide flock to gold as the epitome of real money. And when theres terror or war, they do so with even greater zeal. Right now, gold is trading at another, new 25-year high. Other than a brief dip here and there, I think its going much higher. Your protection: Allocate at least a modest portion of your portfolio to gold. I like the StreetTracks Gold Trust (GLD) the best. Each share represents 1/10th of an ounce of gold bullion. Also, own top quality gold mining shares. See my latest Real Wealth Report for specific recommendations. Second Threat: Iran Last week I showed you how very serious the Iran situation is. This week, it got worse. And right now, Secretary of State Condoleezza Rice is preparing to formally refer Iran to the United Nations Security Council. In response, Iran is …
At the same time, Israel is on high alert.
Military action may be short and swift. Or it may be long and protracted. In either case, its bound to disrupt the financial markets, causing wild swings in just about every sector. Two Markets, in Particular, Are Bound In response to any one of the shocks, gold is likely to surge that much faster to my next targets $618 and $740. What about oil? For an answer, never forget that Iran is the second-largest producer in the Organization of Petroleum Exporting Countries (OPEC), exporting roughly 2.5 million barrels per day. If Iran were to pull just one-half of that oil off the market in response to sanctions, it would easily be enough to send oil prices to $100 a barrel and beyond. Also keep this in mind: Iran controls its side of the Strait of Hormuz, the critical shipping lane in the Middle East where oil from Kuwait, Iraq, Iran, Saudi Arabia, Bahrain, Qatar, as well as most of United Arab Emirates can be transported. Already, oil is back within a hair of its record highs made just a few months ago. Like gold, it can also experience brief declines, much as it has in the last few days. But I have no doubt its headed much, much higher. My view in a nutshell: Theres no denying or avoiding an energy crisis. Your protection: Key energy stocks, including alternative energy companies. For specific recommendations, see the latest issue of my Real Wealth Report. Third Threat: Avian Flu Bird flu is deadly and its spreading rapidly. It has already jumped from Asia to Europe and from Europe to the Middle East. Suddenly, Turkey is the new epicenter of the disease. Suddenly, the United Nations, the U.S. Government and thousands of corporations are mobilizing to head off a worldwide human pandemic. They unanimously agree the pandemic is inevitable. I concur. I have no doubt that the bird flu will mutate into a new form thats highly contagious among humans. I have no doubt that it will infect hundreds of millions of people and, sadly, kill millions. The only question is: when? Today? Next month? Next year? No one knows for sure. But based on the latest developments in Turkey, I believe it could develop sooner than anyone likes to think. In fact, scientists in London yesterday detected a mutation in the bird flu that could signal a new phase in its evolution. Apparently, its a mutation that makes the bug more readily attach to human proteins found in some of the blood samples taken from infected individuals in Turkey. If this finding holds true, its very alarming. The avian flu is currently killing more than half of the people who contract it. If the pandemic begins this year as I believe it could it will have enormous consequences that will be felt around the globe and in nearly all financial markets. Your protection: Natural resource mutual funds, such as the US Global Investors Global Resources Fund (PSPFX). Its 3-year return through 12/31/05: Up 57.03%. Minimum investment: $5,000. Also, select natural resource companies such as those recommended in my Real Wealth Report. What do natural resources have to do with a pandemic? Heres what no ones talking about … Why Wall Street Is Missing During the 1918 Spanish flu, natural resource prices soared through the roof. A key reason: Shortages developed as consumers hoarded goods before quarantines hit their neighborhoods and towns. On top of that, as critical workers failed to show up at farms, mines and refineries, available supplied dwindled. Coffee went from $.27 to nearly $.50 a pound. Cotton prices soared from just over $.15 a pound to $.40. Coal, the main form of energy in 1918, jumped over 45%! Thats like todays $68 oil jumping to $98.
The index surged by 52% in just three years! For more information on the Avian flu, consider my upcoming special reports on the pandemic. If youre a subscriber, you can get the reports free with your renewal. If not, a subscriber to Real Wealth, subscribe now and youll also get the reports. To Sum Up … Its not a pretty picture. And whether the stock market rises or falls right now, last Fridays 213-point decline in the Dow the worst since March 2003 is evidence of real cracks in the so-called Goldilocks economy. The surges in gold and oil merely add weight to that evidence. All this is reason to One, heed my recommendations to get out of most sectors of the U.S. stock market. The primary exceptions: Gold, oil and other companies or countries tied to natural resources and commodities. Two, keep a good chunk of your funds safe in money market funds. Not long-term bonds! Money market funds! All are required, by law, to invest in short-term instruments only. Three, stick with natural resources. As you can see from my analysis above, they have much more upside potential, even if the broad markets fall. Four, for maximum profit potential with minimum capital exposure in the natural resource sector, consider Sean’s Red-Hot Canadian Small-Caps. When I checked yesterday, he was already down to just 32 remaining slots in his new service. So if you’re interested, you’ll want to call before they’re gone. The number is 800-400-6916. Best wishes for your health and wealth, Larry Edelson About MONEY AND MARKETS MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Marie Albin, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others. 2006 by Weiss Research, Inc. All rights reserved. |
Three Major Threats! Action to Take Immediately …
Im worried. I dont like what Im seeing out there. Im afraid this year harbors hidden future shocks for the U.S. economy that are so profound they could impact each and every one of us. 
Quite to the contrary, an outright attack of major dimensions lies ahead, probably sooner than later. Its already been over four years since 9/11. The next episode is bound to be close. 
alertness is hovering near 10-year lows, based on a tried-and-tested barometer of complacency.
Speaking at an academic conference in Beijing Saturday, Israeli Defense Minister Shaul Mofaz hinted that Israel is preparing for military action to stop Iran’s nuclear program. So dont underestimate the explosive potential of this situation. 
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