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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.

  • Silver

  • Special Report: Though it's Called "Junk Silver," the Profits Aren't Trash Despite its name, junk silver is not junk.

    Indeed, the term "junk silver" is actually a misnomer, since this form of silver investing has provided excellent returns over the past decade. Junk silver consists of U.S. quarters, dimes, and half-dollars minted before 1965, since coins struck before that time contain 90% silver and 10% copper.

    But junk silver's real attraction is that it offers investors the best of both the two possible investing extremes that seem to be attainable right now:

    • First and foremost, during intense bull markets in silver - like the one we're experiencing right now - junk silver tends to outshine (and outperform) silver bullion.
    • But if some of investors' darkest fears are realized, and the U.S. government's overenthusiastic printing of money were to transform the greenback into so much worthless paper, then 90% of U.S. silver coins would be used for the purpose they were originally minted - as money that can be spent.
    Let's take a closer look.

    To understand the basics of junk-silver investing, please read on... Read More...
  • Silver is Emerging From Under Gold's Shadow Gold surged to an all-time record high of $1,298 an ounce yesterday (Wednesday) after a U.S. Federal Reserve plan to jump-start the American economy triggered a slump in the U.S. dollar.

    The yellow metal has now rallied for five straight trading sessions and is up about 18% for the year. Investors are waking up to the fact that the central bank's plan to use U.S. Treasury purchases as a means of injecting another $2.3 trillion into the U.S. economy is only going to further debase the greenback.

    There's no doubt that the ongoing slide in the dollar is going to be bullish for gold. But investors will do a lot better to focus on silver - the "other" precious metal.

    "People are finally starting to understand that quantitative easing will devalue the currency," Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York, told Bloomberg News. "That's why they're shifting into gold and silver."

    For six ways to profit from silver, please read on... Read More...
  • Investors Flock to Gold and Silver on Recovery Worries Investors worried about the global economic recovery pushed gold prices to fresh highs on Friday, marking the third time in a week the shiny metal set a new record. Silver also climbed to its highest price in thirty years.

    Spot gold climbed above $1,282 an ounce in New York and London as a weakening dollar spurred demand from investors for wealth protection, while silver rose to $21.44 an ounce, its highest level since 1980.

    Bullion, which usually moves inversely to the dollar, posted its biggest weekly gain since May as the greenback touched a five-week low against the euro.

    Holdings in gold- backed exchange-traded products (ETP) reached a record this month as investors sought protection from financial turmoil and the prospect of slowing economic growth.

    Read More...
  • Money Morning Mailbag: With Many Ways To Hold It, Investors Need To Get Their Hands on Silver A couple weeks ago, Money Morning Guest Writer Jack Barnes examined the last major commodity to enjoy a true price breakout: silver.

    Barnes detailed why silver is poised for a breakout, based on its current price surge underway in India, the price run up of gold - a leading indicator of silver prices - and the fact that the white metal has yet to set a new nominal record price in U.S. dollars.

    Barnes outlined the actions investors should take to involve silver in their investment plans, offering three strategies: physical acquisition and accumulation, exchange-traded funds (ETFs) and stocks, and options on futures.

    Read More...
  • Investing in Silver: Three Ways to Profit From the Projected Breakout It's the last major commodity to enjoy a true price breakout, and it's already doing so in a foreign currency.

    This commodity has yet to break out in U.S. dollar terms, although its breakout in India is a signal that it's time for U.S. investors to make their move.

    I'm talking, of course, about silver.

    Silver is trading at just under $20 an ounce right now. I think it could hit $50 an ounce by the 2012 presidential election, which would represent a 150% move from here.

    Clearly, the "white metal" can be a major profit center for your portfolio during these uncertain times. Let's look at the strategy that I've put together for you to reap that gain.

    For a look at the author's detailed silver strategy, please read on... Read More...
  • Special Report: How to Buy Silver As precious metals go, silver may not have quite the same mystique as gold.

    But let's be honest: The "white metal" has its backers, too.

    In fact, when Money Morning published its "How to Buy Gold" special report just a few weeks ago, one of the biggest questions that we received in response was: "When can you do the same for silver?"

    That's just what we've done here. In this special report, we show you how to buy silver.

    To find out how to buy silver, please read on... Read More...
  • Commodities Are Key as China Continues to Call the Shots China ended up being the big story this month, as investors looked past Europe to the Far East for clues about what shape the global recovery - if you can even call it that - is taking.

    Markets around the globe tanked yesterday (Tuesday) after the Conference Board revised its leading economic index for China to show the smallest gain in five months in April. The index rose just 0.3% in April, which was a significant reduction from the 1.7% gain the Board reported on June 19.

    The news of the error contributed to the biggest sell-off in Chinese stocks in more than a month, and sent U.S. indices into a dizzying downward spiral. The Dow Jones Industrial Average plunged 268.22 points, or 2.65%, to close at 9,870.30 and the Standard & Poor's 500 Index tumbled 33.33 points, or 3.10%, to close at 1,041.24.

    Read More...
  • Investing in Peru – South America's Hidden Gem When investing in the emerging markets, you need to cast your net beyond the obvious candidates. Granted, China, Brazil and India have emerged to become very attractive investment stories (I don't trust Russia, the fourth and final "BRIC" economy).

    But everyone else has heard of them, too, which is why their markets have been bid up very high in the past year. Their prospects remain excellent, but you're paying a lot for them.

    From time to time, however, a country that has been off investors' radar screens has a few good years, and begins to creep onto them. In such countries, risk may be high, but values at least remain reasonable.

    That's why it might be worth investing in Peru.

    To find out why Peru may be worth a look right now, please read on...

    Read More...
  • It's Time to Invest in Canada This isn't the first time that I've written about Canada, a well-run country that has avoided many of the mistakes made by the United States. Its budget deficit is moderate, its balance-of-payments deficit is also small, its banking system is in pretty good shape and it faces very little inflation risk, since the country has maintained a reasonable monetary policy.

    At this point, you might well be asking: Well, if you've said this all before, why does it bear repeating now?

    The answer is simple: As I've hunted for attractive investments recently, I have noticed that a very high percentage of those companies are domiciled north of the border.

    In short, it's time to invest in Canada.

    To discover the profit opportunities available just north of the border, please read on...

    Read More...
  • The Scramble for Africa: Profiting From World's Largest Cache of Commodities In the quarter century stretching from the late-1880s to the First World War, there was a mad rush by the world's leading powers to occupy and annex African territory. Now, 100 years later, the world's elite again are scrambling to make their respective marks on the continent.

    The methods of extraction have changed, but the end goal remains the same - to gain access to Africa's coveted bounty of commodities.

    Most notably, Chinese interests have swarmed Africa, constructing roads, rail lines, municipal buildings, schools, ports, and pipelines in exchange for access to natural resources.

    Read More...
  • How China Will Drive Silver to $250 Silver is up over 44% in the last nine months. But thanks to a new campaign by the Chinese government, silver is about to take off higher. Much higher. Here's how to play silver for a "triple" this year... Read More...
  • The Chinese Are Selling Treasuries – So What Are They Buying? In the monthly U.S. Treasury report this week, it was announced that China had sold $34.2 billion of Treasuries in December (or allowed short-term ones to run off), making Japan once again the largest holder of U.S. Treasuries.

    The battle between China and Japan for the title of largest holder of this dubious asset is not very interesting. What's more interesting is the question of where China is instead opting to invest. After all, $34.2 billion is a fair chunk of change, and China's overall reserves are growing - not shrinking - and now total $2.4 trillion.

    The People's Bank of China usually keeps its holdings a carefully guarded secret, much more so than for most central banks - our knowledge of its holdings of Treasuries comes from U.S. data, not from China. We do, however, have some evidence about the Chinese government's investment thinking, thanks to the holdings of China Investment Corp., the country's $200 billion sovereign wealth fund.

    To discover the details of China’s global investments, please read on... Read More...
  • Silver's Run Quietly Gains Momentum New fears over the U.S. dollar's vulnerability – warranted or not – have been a boon not only to gold prices, but its more affordable inflationary hedge silver. The white metal is up roughly 10% since Money Morning's Sept. 28 analysis of silver with futures trading as high as $17.71 this morning on the New […] Read More...
  • The No. 1 Way to Profit When Silver Upstages Gold While prices of gold don’t necessarily affect silver prices or vice versa, history has demonstrated that when gold rises or falls, silver usually follows suit. This time around, silver has failed to match the gains that gold posted in recent months, spawning a widespread believe that silver is poised for a bull run. Such factors […] Read More...
  • The Only Way to Profit From a Stock Market Bubble Former U.S. Federal Reserve Chairman Alan Greenspan said it was impossible to tell a bubble while you were in it. Well Alan, I’ve got news for you: We’re in one now. The Standard & Poor’s 500 Index is up 58% from its March lows, gold has finally broken through the $1,000-an-ounce level – and may […] Read More...