Nov 19, 2009

Gold Investing Expert: Bob Moriarty Goes on Record Part II

By Andrew Mickey, Q1 Publishing

Andrew Mickey: Over the short-term, the next few months or a year, do you see any short-term catalysts for gold?

It could be a nuclear war against Iran, it could be riots in the US as the government tries to force an untested H1N1 vaccine on armed citizens, it could be a Court ordering all foreclosures stopped until proof of ownership is proved, it could be the banks admitting they are all broke, it could be China foreclosing on the US. We live in interesting times.

Andrew Mickey: Throughout this rebound, silver continues to lag behind gold on a relative historical basis. Do you see a clear reason why this is and whether it will last?

Bob Moriarty: Gold is money. Silver is a commodity. As much as the silver bugs believe silver is money, if wishes were horses, beggars would ride.

When we go to a gold standard, as we must, then silver will roar. The correct ratio between silver and gold is probably about 25 to 1.

There are many which have attracted plenty of foreign investment like Peru and Chile. But there are also some which the investing public may be a bit wary of – Russia comes to mind.

So which countries do you see as safe, which ones are riskiest, and are there any that investors just perceive the wrong way?

Bob Moriarty: As the US sinks into becoming a third world nation, there will be an enormous backlash against wealth in the country. I see exchange and capital controls soon. If an investor has the ability to get money out of the US, they had best do it soon. The US is going to be one of the most dangerous countries on earth.

A Russian predicted in 1995 that the US would break into 6 mini-fiefdoms. He is probably right. New Zealand and Australia are probably the safest countries to be living, and it’s not just a case of investing safely, it’s a case of living safely.

Chile, Uruguay, Argentina may be good. Owning a small farm capable of being pretty much self sufficient could be a real good idea.

Russia and Venezuela have no tradition of private property rights. South Africa is about to turn into another Zimbabwe, much of the world is about to step into the Dark Ages.

Andrew Mickey: I can only imagine when gold hits $2000 an ounce and companies from “rich” countries who are developing gold mines in a foreign country are accused of “stealing” the people’s wealth. Sounds like something politicians will be itching to do in time.

Do you see an adverse or unexpected consequence of higher gold prices?

Bob Moriarty: We always talk about gold hitting $1500 or $2000 and wonder what the effect will be.

That’s all based on an error of logic. Gold never changes its value. An ounce of gold was worth an ounce of gold a year ago and it will still be true a year from now.

It’s the dollar that changes its value. What we need to ask ourselves is what will be the effect of the additional $99,000 on debt loaded onto the backs of American taxpayers in the last year on the dollar.

Will the dollar of 2010 add 6 zeros or 9 zeros or 12 zeros as the Federal Reserve destroys the financial system of the world? In the not too distant future, one ounce of gold will buy one unit of the Dow. I don’t know if that’s Dow 2000 or Dow 20,000.

Andrew Mickey: Outside of gold and silver, are there any other sectors you like? Agriculture, global LNG, uranium, technology, or anywhere else?

Bob Moriarty: Peak oil is real and the only thing preventing $200 a barrel oil right now is a recession that is morphing into a depression. Energy of all sorts is good.

Food is an analog of energy so agriculture is good.

Uranium is the only reasonable replacement for oil but we have waited for too long to recognize peak oil and we are going to pay for that error of judgment.

Andrew Mickey: Where are you putting your money to work in the short term?

Bob Moriarty: Production stories. Gold first, then silver, then everything else.

Andrew Mickey: If you had to buy just one or two stocks that you could not sell for at least one year, what would you buy?

Bob Moriarty: There is an oil recovery company that makes a field-specific bacteria that breaks down the surface tension of oil.

It’s a private company right now called Titan Oil Recovery but when it goes public, it’s going to be the hottest thing going.

Canada’s Husky Energy presented a paper in New Orleans about the Titan Process and they maintained that they paid for the investment to recover more oil in 17 days. Oil production increases of 100-200% are commonly reported.

(Editor’s Note: Learn more about the Titan Process at http://www.titanoilrecovery.com/)

Andrew Mickey: As an outspoken gold investor, if you were asked to testify before Congress one time, what would you tell them?

Bob Moriarty: They need to kill the Federal Reserve before the Federal Reserve kills the country. But it’s too late.

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There you have it - the quick, dirty, and true analysis about investing in gold and energy from someone who has been doing it successfully for years.

Again, we think the gold, energy, and natural resources boom still have a long way to go before they reach “bubble” territory. And the current and future uncertainty surrounding all of them will only make the race for commodities last longer.

But still, there are many considerations most investors fail to take at this point in the upward cycle.

For instance, when prices start to get really high, we’re going to see unprecedented government involvement. Whether it’s excessive profits taxes, increased regulation, or outright nationalization of productive resources, it’s going to come in some places. Just wait for gold to hit $2,000. It happened with oil in the 70’s.

That’s why it’s important, now more than ever, to look at all the “what ifs” when devising a natural resource investing strategy.

In the end, the natural resource boom is still in the middle stages and there is plenty more to come for those of us who seek out the right opportunities at the right time.

Good investing,

Andrew Mickey

Chief Investment Strategist, Q1 Publishing