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2015/09/28

How to Invest in This Hated Sector

Energy & Resources Digest
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Monday, September 28, 2015
If You Were Nearly Certain It Would Make You Money, Would You Invest?

Let me ask you a quick question...

Would you invest in a company that...
  • Found a way to increase production by 600%
  • Operates up to 70% cheaper than competitors
  • Is rated a unanimous "Buy" by 21 ratings firms
  • Is set to double production in the year ahead?
If your answer is yes, click here. If no, you may want to look into a beginner's finance course.

Making Money in Natural Resources


editor headshot Take a big, deep breath. The air you just inhaled is the only thing in our world that doesn't come from something mined or grown.

Yet, right now, most investors hate the natural resources sector. Why? The general view is global economic growth is slowing.

Slower growth means less demand for natural resources, like gold, silver, platinum and palladium. However, investors and analysts are overlooking one important piece of data.

Many mining companies have closed unprofitable mines. And as mines close, supply and demand equalize.

This causes prices to rise. Currently, we are still balancing supply and demand.

And that means one thing... Commodity prices are cheap. That makes right now the perfect time to invest in natural resources - specifically precious metals companies.

The Lazy Man's Way to Riches

If you can set aside seven minutes each week, this gentleman will show you how you can bring home $121,139.
  • You will not work from home.
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  • You will not have to do any actual "work" at all!
Watch, live on camera, as he shows you how to bring home $121,139... with just minutes a week. It's all right here...

Last week, I had the pleasure of visiting the Toronto offices of Sprott Global Resource Investments Ltd., a precious metals investment firm. My host was Rick Rule, the president and CEO of Sprott U.S. Holdings Inc.

Rick has spent his entire career in natural resources and is viewed as a top expert in the field. Television, radio, and online and print media often seek out Rick's thoughts on natural resource investing.

After a chat with Rick about what he's seeing in the industry, he introduced Eric Sprott, the company founder. Mr. Sprott has spent 40 years in the investment industry.

Our chat was candid.

Sprott explained why now is a good time to be thinking about natural resource investing, primarily in precious metals. He warned inflation is much higher than "what we are told to believe."

He quoted the Chapwood Index, which estimates the rise in real cost of living in America. According to the index, America's real inflation rate has been between 10% and 12% since 2011.

Often, natural resource stocks are used as a hedge against inflation. So if the real inflation rate is as high as the Chapwood Index suggests, now is the time to look at natural resources.

Sprott mentioned four other reasons he's bullish. Here they are, from his mouth to my pen.
  • Gold manipulation: Sprott suggested traders may be manipulating the gold markets. In fact, the government is actually investigating the Treasury market regarding gold and silver manipulation.
  • Peak gold: Gold demand is rising in China, where imports doubled to 46.4 metric tons this past March. Shipments to India also more than doubled to 72.5 metric tons.

    Gold forecasters expect peak mine production this year. According to data provided by Sprott, gold production will drop 50% in just the next seven years.
  • Silver boom: The silver market is on fire, too. This year, India's silver imports are on pace to jump 30% higher than 2014's levels, to a total of 300 million ounces.

    Right now, India is consuming about one-third of the world's supply of silver. What is all this silver used for?
  • Solar panels: Millions of them. China alone plans to install 100 gigawatts of solar power by 2020. That will use a lot of silver. One gigawatt of solar energy requires 236 metric tons of silver to produce the panels.
Between now and 2020, China alone will use 26,300 metric tons of silver. The current annual world production is about 25,000 metric tons.

There's no question in my mind that the price of silver is going to soar as solar panel production increases. I'll certainly be watching this relationship closely.

The Oxford Club advocates that every investor have a portion of their portfolio invested in precious metals. And the upcoming demand for silver is a shining example why.

Now, admittedly, investing in precious metals can be daunting. But there are safe and easy ways to do it. One of them is through exchange-traded funds.

And Sprott offers several of them in the precious metals sector, namely the Sprott Physical Gold Trust (NYSE: PHYS), Sprott Physical Silver Trust (NYSE: PSLV) and the Sprott Physical Platinum and Palladium Trust (NYSE: SPPP).

Good investing,

Dave

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Law of Money Flow

Just like in nature, the stock market follows specific "laws." Like when earnings rise, share price follows. Or the more volatile a stock is, the more risk is involved. Today, we're sharing a new rule... one that allows you to focus ONLY on stocks going straight up. Click here to find out more.
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