I recently returned from the New Orleans Investment Conference and the Good Doctor asked for my impressions. Well here it is:
The conference is billed as a resource conference. Virtually all of the companies presenting were resource companies. However the general sessions covered the gamut of investing, economics and politics, with a focus on the future of the economy. It was very broad. I try and approach the conference with a clean slate each year. I try to avoid cognitive disequilibrium (dispensing with new facts when they contradict your old established ideas) and try to come to conclusions based not on my preconceived ideas, but solely on the facts as presented. That said, it was difficult because there were many varied opinions present about our future as an economy. No one present thought gold/silver would decline in value (only one thought they would stagnate) over the next 12 months.
The positives were reinforced primarily by Denis Gartman. He had all sorts of charts showing how the economy and the market would go much higher from here. I had to dismiss Mr. Gartman because not once did he mention the word "DEBT", and in my opinion, no reasonable forecast of the future can be held if the 'debt' issue (both public and private) is ignored. Lawrence Ralston opined that "recession is probably off the table because balance sheets are so strong." He thought the economy would go slow for a long time. Rick Rule stated that manufacturing jobs should start returning from China in earnest by 2015 due to the lower energy costs (natural gas) in the U.S. . Steven Moore was of the opinion that everything done in Washington over the past three years has been wrong, if we just start getting some of it right, "we are prepared for a great expansion, with 2 trillion dollars of cash sitting on the sidelines".
On the negative forecasts for our economic performance in the future the line of the week was by Glen Beck. I am not a Glen Beck follower, I've never seen his show. But I've got to tell you his one hour talk was the most riveting, dynamic speech I've ever heard. I thought to myself this is what Hitler, Churchill and MacArthur must have sounded like! The line was: why are you people troubling yourself with investing (sic) "within the next 5 years no matter what you do, we are all broke." Expect to see three things come out of this economic mess: 1) Another great war 2)The greatest Depression 3) Civil War.....not too promising! A number of presenters made the case that the only way out of the debt problem is inflation. Some said all we need is 10% a year, others said it would result in massive inflation.
General Metals forecasts:
Most have projected rising prices for gold/silver over the next 12 months, the reasons being:
1. The amount of gold in the ground is being depleted by 83 million ounces a year (Brent Cook)
2. Extending the trading channel for Gold thru the elections of 2012 we get $2100 to $2600 gold. The growth of M1 is going exponential. (Brian Lunden)
3. The rise in the price of gold is 100% correlated with the rise in the incomes in Chindia. That's only going up.
4. All bubbles come from excessive leverage. Gold has very little leverage today. Allowing Banks to use gold as tier one capital (Basal III) will keep the gold in the Central banks, they will no longer have to sell gold to replace it with sovereign debt, which until now, could be leveraged higher. (Frank Holmes).
5. Commodities move in very long cycles. This gold cycle is only half way though the shortest cycle we've seen in the last 200 years. (Adrian Day)
6. I think dow to gold will be 2 to 1 within the next 3-5 years (Ian McAvity)
I'll continue with a miners wrap in a subsequent post.