Two years into our “Great Recession” (or “Greater Depression,” depending on who you talk to) gold is selling for $944 an ounce. But back in 1980 – against the backdrop of double-digit inflation in America and a prolonged economic stagnation – gold reached a peak of $850. That’s the equivalent to about $1,900 in today’s money.

Of course, the world was a very different place in 1980. Deflation is now the bogeyman stalking the global economy (although here at Notes we believe a surging asset-price inflation is not far off). And back then, there were persistent rumors that Ronald Reagan was going to bring back the gold standard and send gold, in 1980 money, to $1,000 an ounce.

But as John Katz and Frank Holmes point out in their excellent book on the subject, The Goldwatcher (2008), the supply and demand

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Resource legend tips his hat to three soon-to-bubble sectors… The housing market has “bottomed out” says PNC… our gentle retort… Alan Knuckman with an economic indicator far superior to unemployment: chicken sales… Our panel of “whiskey shooters” on the worst-case scnerio… how to get out of Dodge if the dollar collapses… Britian now REALLY in crisis… recession, taxes cause wave of pub shutdowns…

Let’s make some trades this morning. We asked Rick Rule, a living legend here in Vancouver, what’s the next bubble market? “The Canadian market does not care about small oil and gas companies,” he told us yesterday. “Which means that small Canadian O&G companies are selling for 50-60% of net asset value. They are very, very, very cheap. They are unloved, with no finance options and no trading liquidity… and I love that. This value is free. There will be much money made in small-cap

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Value Investing: Following in The Footsteps of Sir John Templeton

by Alexander Green, Advisory Panelist

Last week I had a chance to speak with hundreds of investors at FreedomFest in Las Vegas.

I can tell you that the mood out there right now is unremittingly bleak. And when it comes to value investing, that’s cause for celebration. Here’s why…

Analysts will tell you that stocks only reach bargain levels when they are cheap relative to sales, earnings and book value. But here’s how to know when stocks are cheap without looking at a single number:

It’s when people are apoplectic about their stock portfolios. It’s when they are gloomiest about the prospects for the economy. It’s when they wish they had never met their stockbroker.

That’s when stocks are truly cheap. So that’s when it pays to buy them…

Sir John Templeton - Value Investing Through Maximum Pessimism

Sir John Templeton, the man who

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For two decades, the Japanese economy has been dead as a doornail – in spite of hefty Japanese consumer savings. Why?

Field Reporter: Are they slow-moving, chief?
Sheriff McClelland: Yeah, they’re dead. They’re all messed up.
– Night of the Living Dead (1968)

In B-grade horror movie lore, Tokyo has to fend off attacks from rampaging monsters like Mothra and Godzilla. If the cinema were more true-to-life, however, Japan would be less worried about overgrown fire-breathing lizards… and more terrified of zombies instead.

In response to a recent Taipan Daily asking what brought us out of the Great Depression, a number of you responded with a good question. “What about Japan?” Or rather, “What about Japan’s extraordinary rate of consumer savings – and why hasn’t it helped?”

After putting in a massive blowoff top to cap a truly insane 1980s bull market, Japanese stocks proceeded to head lower… for the next twenty years. The Nikkei is …

For two decades, the Japanese economy has been dead as a doornail – in spite of hefty Japanese consumer savings. Why?

Field Reporter: Are they slow-moving, chief? Sheriff McClelland: Yeah, they’re dead. They’re all messed up. – Night of the Living Dead (1968)

In B-grade horror movie lore, Tokyo has to fend off attacks from rampaging monsters like Mothra and Godzilla. If the cinema were more true-to-life, however, Japan would be less worried about overgrown fire-breathing lizards… and more terrified of zombies instead.

In response to a recent Taipan Daily asking what brought us out of the Great Depression, a number of you responded with a good question. “What about Japan?” Or rather, “What about Japan’s extraordinary rate of consumer savings – and why hasn’t it helped?”

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Another of our favorite underground investors Whitney Tilson of T2 Partners is sounding the alarm on US Treasurys. He is also pessimistic about retail investors beating the market on their own.

This from a recent interview with Steve Forbes, which you can watch in full on Forbes.com

But then even buying Treasuries, you have the risk of under-performing inflation at today’s rate that you’re getting on Treasuries, right? Certainly with today’s yield, relative to the stock market, I would think Treasuries would be a terrible investment. In fact, we’re short an ETF that owns 20-year Treasuries because we think rates are going up. My point, though, is you can do one of two things.

Generally speaking, to the extent that you can, you can own bonds and stocks, and then within stocks you can pick stocks on your own or you can own a mutual fund or an index fund. I think that

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Notes from the Investment Underground April 9, 2009 Palermo Viejo, Buenos Aires, Argentina

Why you should invest in pipeline companies… Wither Geither’s stress test results? Congress vs the Treasury… Check out of USA Inc with these four BRIC EFTs… How to survive the “Great Money Famine of 2009”… Three questions for Barney Frank… Congressional panel: Liquidate banks, fire top execs… PPIP FLOP… Geithner’s latest Orwellian manoeuvre… And more!

*** We’ve added a new section to Notes. It’s called “Must Reads” and it’s basically a list of the day’s must read articles on money-making and the markets. It’s at the very bottom of the issue. Tell us what you think: info@contrarianprofits.com. Don’t be shy. We’ve got thick skins.

*** We love DailyWealth. It’s quite possibly the single best free source of contrarian money-making ideas out there (apart from Notes, of course).

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Gold Mining Stocks: 5 Reasons to Buy Gold & 4 Ways to Profit

by Dr. Scott Brown, Education Director, Investment U

As you know, I’m very bearish on gold. I’ve been in total agreement with Louis Basenese’s 12 Reasons Why You Should Short Gold and his follow-up article, A Clarification on Shorting Gold.

But we’ve been in the minority.

It was early February when Louis originally made those statements, and gold was close to $923 an ounce. Things have changed since then - but not much.

Gold has been on a roller coaster, moving down then up - to just over a $1,000. It has currently pulled back to under $880. The precious metal’s performance, not to mention its disconnection to the markets, has baffled seasoned experts and analysts alike.

For a market in crisis, we haven’t seen gold skyrocket like many would have expected.

Because regardless of the

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Asset Allocation: Why Investors Should Diversify Beyond Stocks

by Alexander Green, Oxford Club Investment Director

As someone who has spent more than two and a half decades as a research analyst, investment advisor, portfolio manager and financial writer, I’ve often felt the most important question an investor or trader can ask himself is, “What if I’m wrong?”

This is done too seldom, in my experience. And that’s unfortunate. Because when investment lessons are learned the hard way, it can be painful… if not devastating.

For example, when the market was flying high a couple of years ago, many investors became complacent. They blithely assumed that the market might hit a pothole here and there, but overall it would be a relatively smooth ride higher.

The long-term history of the market, of course, suggests something very different. But you didn’t need to be a market historian.

All you really needed to do

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The Investment U Conference Wrap-Up: “Don’t Miss Your Million Dollar Opportunity”

by Dr. Scott Brown, Education Director

It was quite a week at the Investment U Conference in sunny St. Petersburg. It’s been a few days and I’m still a little exhausted at the sheer amount of information covered.

Over the past week we’ve discussed gold, emerging markets and foreign currency Exchanges. In addition we’ve discussed options strategies, commodities, small caps, biotechs and the state of our economy. And yet we’ve really just scratched the surface of the kind of useful, actionable information given out…

There’s a lot that we’ve missed.

And if you weren’t there, then you have no way of knowing what the insiders are thinking, you have no way of knowing if you have just passed over the next big thing - those “million dollar investments” we all dream of.

I highly encourage you to purchase the audio

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