Shocking New Forecast!
by Larry Edelson

Dear Subscriber,

I'm wrapping up my holiday in beautiful Phuket, Thailand, after a few days of much needed rest.

But not to worry. As you know, I've been on top of the markets — even having my laptop with me while sitting on the beach so I could keep an eye on all the market moves and important developments.

In fact, I just had subscribers to one of my premium publications grab 268% gains on a position I recommended last month!

Meanwhile, if you've been following any of the recommendations I've made in my column here, stick with them! We should soon see another leg up in stocks ... another decline in bonds and the dollar ... and soon, after a small pullback, a new leg up in gold.

Right now, however, I want to talk to you about some important thoughts I had last week, while having the time to reflect on the markets.

And I include, for the first time ever, a shocking new forecast. More on that in a minute.

First, I'm going to start by telling you like it is ...

The Wall Street "experts" and other "pundits" who don't understand the macro picture ... who don't understand history ... who continually miss the big trends ... and who steer you the wrong way — are as ignorant a lot as I've ever seen.

They ought to be ashamed of themselves.

•  They missed the tech wreck of 2000 — 2001.

•  They missed the top in the Dow in 2000.

•  They missed Enron and WorldCom.

•  They missed the bear market in the dollar.

•  They missed the bull market in commodities. In gold. In oil. In food and agriculture.

•  They missed the bursting of the real estate bubble. The mortgage and derivatives disasters. The bankruptcies of Fannie Mae, Freddie Mac, Bear Stearns, Lehman Brothers, AIG, and more.

Could they have been more wrong? What are they smoking?

And now, they continue to miss the big picture, yet again!

Big Picture #1: The U.S. Dollar Is Toast.

How, I ask you, is the dollar going to hold its value when the Federal Reserve is now accepting just about anything as collateral for loans?

How is the dollar going to strengthen in any meaningful way when the Fed has already swapped out $1 trillion of its pristine assets for junk?

The U.S. dollar is bound to buckle under the weight of runaway spending.

How is the dollar going to stabilize when the Fed is about to print up another $1.3 trillion? When it's guaranteed $14 trillion?

When the budget deficit is exploding? When there is another $102 TRILLION in unfunded debts, liabilities of Social Security and Medicare?

I repeat, the dollar is doomed. It will slide in its long-term downtrend, continue to lose purchasing power — and then, as I've told you before, it will be replaced with a new reserve currency, likely, a new monetary regime implemented by the International Monetary Fund (IMF).

I've long maintained that the Fed and the authorities in Washington will do whatever it takes to avoid a repeat of the Great Depression, even if it means destroying the value of the U.S. dollar.

Now, given the events of recent weeks — the dollar's turn back to the downside ... the developments at the G-20 meeting in London ... the calls from the U.N. ... from China ... and Russia for a new reserve currency — it should be abundantly clear that my warnings have been right on the money.

It should also be clear that — despite short-term deflation — the next major trend will be re-inflation of almost all assets prices, by de facto currency devaluations.

While we're not there yet, we're getting closer by the day. And if you get stuck in the deflationary mode of thinking, you're going to see your cash lose an enormous amount of purchasing power.

Playing the coming wave toward currency devaluation and concomitant asset reflation will not be easy. Chief reason: Most will be looking for signs of traditional inflation — in the CPI ... in the PPI ... in wages ... and more.

But that's not where the inflation will take root. Instead, it will take root in currency devaluations ... in the loss of confidence in government that is now erupting ... and it will show up in select assets, but not at the same time.

And I hope that you will let me guide you — because if you follow mainstream advice, 99 percent of what you hear out there, once again, will be dead wrong.

Big Picture #2: The Bond Market Is Bursting.

How can it not?

With all the money printing that has to be done ... with all the new debt the Treasury is going to issue ... with the value of the U.S. dollar set to remain in the claws of a long-term bear market ...

... How, I ask you, can U.S. Treasury notes and bonds not collapse? And interest rates, conversely, soar?

Bonds have fallen nearly 7 percent since the beginning of the year.

I maintain my position on the U.S. bond market. And that is don't touch it with a ten-foot pole. If you own bonds, get the heck out of them now.

Indeed, the bond market is finally waking up to seriously deteriorating credit worthiness of the United States. Since the first of the year, bonds have fallen more than eight full points, nearly 7 percent — equivalent to a $7,000 loss in principal for a $100,000 face value bond.

That's just the opening salvo in a massive bear market in bonds that could last years.

Big Picture #3: The Dow Jones Will Hit At Least 44,000 By 2015.

Yes, you read that right. And I know what you're thinking. Larry has completely lost his mind. Perhaps he is suffering from some kind of sun stroke at the beach or had too many drinks last night.

But fortunately, none of those are the case. Again, I'm simply telling it like it is: When currency devaluation takes place, the bluest of the blue chips eventually adjust upwards to reflect the lower-per-unit purchasing power of the underlying currency.

It has happened in every third-world country on the planet where there has been a massive currency devaluation to inflate away debts.

It happened in ...

•  Brazil, where the real was devalued on January 10, 2002 — and the Bovespa Index subsequently exploded 445 percent higher to reflect the weaker currency

•  Argentina, where the peso was also devalued in early 2002 — and the Argentine merval went on to gain almost 500 percent

•  South Korea, where the won was devalued throughout the late 80s and into the 90s — and the Kospi Index of blue-chip South Korean companies rose more than 650 percent

In Indonesia, in Malaysia, and in countless other countries where in virtually every case, currency devaluations ultimately led to asset re-inflation as prices adjusted to reflect the new, albeit lesser, value of the underlying currency regime.

Why does it happen? Simple: In floating exchange-rate systems, asset prices always adjust to the new medium of exchange to eventually reflect their inflation-adjusted values in the revalued currency.

And while on the surface, a currency devaluation sounds bad, in the end, as asset prices reflate, the underlying economy gets a boost ... money and credit velocity rise at a healthy pace ... innovation and productivity climb ... unemployment declines ... and economies begin to thrive again.

So how do I expect it to pan out with the Dow Jones Industrials? At its all-time peak in terms of purchasing power in real terms, the Dow Jones Industrials would buy 44 ounces of gold.

At its March 6 nominal low of 6,500, the Dow only bought about seven ounces of gold.

Assuming gold stays within a trading range of say, $700 to $1,000 over the next six years — then the Dow would have to climb back to at least 30,800 to regain its former purchasing power.

If gold were to average $1,000 an ounce, the Dow would have to climb back to 44,000.

And if gold moves higher, as I expect it will, then 44,000 for the Dow could end up on the low side of the range!

In other words, the 44,000 figure assumes no additional devaluation of the dollar.

I know, it's a hard concept to understand and the figures are unbelievable. And some will say it's not accurate to use gold as real money.

But if gold isn't real money, then what is?

Moreover, this re-inflation process has occurred in almost every emerging and third-world country on the planet, as I mentioned above.

The only difference is that it's now about to happen to the first world.

The problem: Only a very small handful of investors will recognize it and ride it to its full glory.

That's because 99 percent of the analysts and investors out there will be waiting for earnings to take off before they buy stocks ... or for the end of the depression and better news on the economy.

Unfortunately, by the time either of those occur, the asset re-inflation will already be under way ... and almost everyone will be left in the dust with their heads spinning from trying to figure out how stocks can be rising.

Mind you, we're not there yet. More selloffs could occur in the stock markets, even new lows before the full-scale reinflation process takes hold.

But as soon as I see confirming signals that what I call "The Great Asset Reflation Scheme" is under way — you can rest assured I will not let you miss it.

For Now The Only Way To Protect Your Money And To Profit Is To ...

First, own gold!

It's the ultimate currency ... has held its purchasing power for more than 5,000 years — no matter what governments have done to money.

Specific recommendations can be found in my Real Wealth Report.

Second, stay out of U.S. Treasury notes and bonds.

They are a disaster in the making.

Instead, with any money you have that is not invested in gold or my recommended natural resource or Asian stocks — keep those liquid funds in a Treasury-only money market fund.

Third, stick with tangible assets, natural resources.

In addition to gold, consider other natural resource investments via ETFs and stocks in select natural resource companies — namely, oil and gas, foods, base and strategic minerals and metals, and more.

All of which will adjust higher to reflect currency devaluation.

Tangible assets and natural resources should easily outperform almost all other investments — for all the uncommonly sensible reasons and forces I cite above.

More details and, of course, ongoing profit opportunities can be found in my Real Wealth Report.

Bottom line: Stay focused on the big picture.

Best wishes,

Larry

About Uncommon Wisdom

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Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in UWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD 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 in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

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