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Welcome to the "Wolf Creek Pass" School of Monetary Policy

I don’t know if you folks remember that hit ditty: a humorous tune about two truckers attempting to manhandle an out-of-control 1948 Peterbilt down the “other side” of Wolf Creek Pass – a death-taunting section of U.S. Highway 160 where the elevation drops a hefty 5,000 feet in a relatively short distance.

The song’s two characters – a truck driver named Earl and his brother, who’s his partner as well as the song’s narrator – are taking a flatbed load of chickens on a speedy trip down this winding, two-lane Colorado highway. After the narrator gives Earl the above-mentioned warning, the ancient semi’s brakes fail.

From there on down, the narrator tells us that the brothers’ trip “just wasn’t real pretty.” The truck careened around hairpins and switchbacks, and then raced at an uncontrolled 110 mph toward a tunnel with “clearance to the 12-foot line” – with chicken crates sadly “stacked to 13-9.”

The drivers and the runaway Peterbilt “went down and around and around and down ’til we run outta ground at the edge of town… and bashed into the side of the feed store – in downtown Pagosa Springs.”

Believe it or not, I started thinking about this funny old country tune the other night – right after I’d read a piece about QE3 and the U.S. Federal Reserve.

As zany as it first sounds, the parallels are striking.

  • 2013 Silver Price Forecast: Silver Will Perform Like Gold on Steroids This past March, I asked a highly successful investment advisor what he thought about gold. Since he deals almost exclusively with very high net-worth individuals, his point of view was especially intriguing.

    He confided to me that many of his clients had been asking for gold and gold-related investments over the past few years. I can't say that I was surprised.

    But what he told me next simply shocked me.

    "Gold's much too volatile, it's too risky", he said. "Sure it's up, but I try to discourage my clients from investing in it."

    It simply floored me that he thought gold was too volatile. Gold is only up 580% since it bottomed in 2001, without a single losing year to date.

    That's not something you can say about the stock market or any other type of investment.

    I can hardly imagine what he must think of silver, as silver prices are up by 725% since 2001.

    Today, silver is trading around $34, but our 2013 silver price forecast now has the shiny metal going much, much higher.

    What will power that rise?

    Since it's slaved to its richer cousin, all the fundamentals for higher gold would apply.

    I wrote about them yesterday in my 2013 gold price forecast.

    As history has shown, silver moves almost in sync with gold, but exaggerates its movements, both on the up and down sides. That's why I like to think of silver as "gold on steroids".

    To continue reading, please click here... Read More...
  • 2013 Gold Price Forecast: Expect Gold to Deliver Another Record-Setting Year No two bull markets are ever the same, and gold is no exception.

    During the last secular gold bull market in the 1970s, gold rose from $35 in 1968 all the way to $200 by late 1974.

    Then the unthinkable happened. Between late 1974 and mid-1976, gold prices were cut in half, dropping from about $200 to $100.

    At the time, many gold investors sold out in disgust, never to return.

    But then a funny thing occurred. Gold prices started to climb again, rising from $100 in mid-1976 all the way to $800 by January 1980.

    And anyone who was fortunate enough to own gold at $35 earned better than 20 times their investment in just 12 years.

    Twenty-one years later, a new bull market began. Since 2001, gold has consistently performed in what now appears to be a record-setting run.

    2013 gold price forecast

    In fact, since 2001 the average return on gold is now just shy of 18% annually over the last 11 years.

    I know of no other major asset that has turned in this kind of performance -- ever. This rise in gold prices is simply unmatched.

    This is what a stealth bull market looks like, one that I fully expect will keep powering on.

    Now, let's have a look at where gold prices might be headed in 2013...

    To continue reading, please click here... Read More...
  • 2013 Dividend Stock Forecast: The Road to True Wealth Starts Here If you listen to the press, Taxmageddon is going to be a "nightmare" for dividend stocks.

    There's only one problem with this scary story: It isn't true.

    Of course, I'll be the first one to tell you I'm not in favor of higher taxes on dividends.

    And it is true that if we fall off the "fiscal cliff" taxes on dividends will revert to the full income tax rate of each individual taxpayer.

    For the top taxpayers that means the top rate on dividends will rise from 15% to 43.4% if dividends become fully taxable again.

    However, that's not as bad as it sounds, which is why I believe dividend stocks will remain the place to be in 2013.

    Here's why.

    First institutional holders of dividend stocks are taxed at their own rate so they did not benefit from the 2003 cut in dividend taxes. That means they won't suffer from a new increase.

    And even among individual investors, many have their investments in IRAs or 401(k )s or other tax- deferred accounts. These holders will continue to receive dividends that won't be immediately taxed.

    As for those on more modest incomes, perhaps being retired and living mostly on their dividend income, they will pay taxes only at 15%, 25% or 28%.

    These are the thresholds which have been indexed for inflation since 2001, meaning the vast majority of tax payers will never get close to the 43.4% figure that makes for great scary headlines.

    But it's not just all about tax rates. There are other reasons why savvy investors should continue to invest in dividend stocks in 2013.

    One of them is Barack Obama...

    To continue reading, please click here... Read More...
  • 2013 Emerging Markets Forecast: Forget About the BRICs Buy These Rising Stars Instead Savvy investors know there is far more to the markets than sitting on your hands worrying about the fiscal cliff.

    Believe it or not the world doesn't revolve around the United States-or the Western world.

    To continue reading, please click here... Read More...
  • "It's Like Gold On Steroids" Sure, gold remains the favorite of most precious metal investors, but THIS is the metal you really want to double down on right now. Three catalysts will propel the price much, much higher over the coming months and years. Read More...