“How to Grow Very Rich From the Return of 1970s-Style Inflation” Stephen Leeb

By Travis Johnson, Stock Gumshoe, September 28, 2009

Today’s wee tease is from a guy who is most known as a commodity and oil super-bull in recent years — and his picks today follow that theme quite nicely.

Leeb’s top pick in the annals of Gumshoedom is actually unrelated to gold, oil or other commodities — his top pick on our tracking spreadsheets has been Western Digital, which he touted back in January, at a time when apparently a large number of people thought no more computers with hard drives would ever be built. But most of the stuff we see from Leeb is about hyperinflation, peak oil, and the fairly widely-held “commodities to the rescue” theme for those who are afraid of a debased dollar.

So what is it today? Today we’re looking at an ad for Leeb’s Real World Investing, which is a commodity-focused advisory … a subscription will run you $997 at the current “sale” price.

Here’s the excerpt where he lays out the argument for inflation:

“As the Treasury prints boatloads more money,the value of the U.S. dollar is going to go down and the price of most everything you can think of is going to go up!

“Inflation is likely to hit 10% by the end of 2010 and perhaps as high as 15% or even 25% by 2012! Its effect on the stock market and upon your life will be profound.

“Why are my figures so much higher than other well-known economists? Because they don’t like to write about things that tie their stomachs in knots, and for which they have no solutions. I’ve got answers, so I’m not intimidated by the major inflationary factors that—even if they’re only half as bad as my projections — are about to wreck havoc with our economy.

“Here’s why imminent inflation will be every bit as painful, if not worse than that of the 1970s:

“1. We’re now playing on a much bigger world stage. The two billion, increasingly-affluent people of India, China, and other Eastern and Middle Eastern nations are now competing with us for the commodities needed to support their middle-class lifestyle.

“2. We’re squandering billions of our capital on a rapidly diminishing supply of increasingly-more-expensive fossil fuel … and the world is running out of cheap oil, as well as a dozen critical metals. And don’t kid yourself, alternative energies are not going to replace fossil fuel soon enough to save us.

“3. Our balance of trade is out of control and about to catch up with us. The Chinese especially are tired of using their trade surplus to buy ever-bigger stacks of U.S. T-bonds. That game cannot go on forever. When the dollar gets weak enough, the Arabs and others will stop using it as the world’s reserve currency. The Russians are already lobbying for a switch. That would put us on the outside of the world’s economic system, looking in.

“4. Our very expensive standard of living makes it impossible for U.S. manufacturers to compete with many of our trading partners. I mean, who would ever have thought that General Motors, an American icon, would go belly up? It’s not just the unions either. An overpaid bureaucracy, a legion of lawyers and millionaire CEOs have all been feasting at the consumer’s expense.

“5. Americans are now way over their heads in debt. The equity in their homes has suddenly vanished. Tens of millions of home owners are watching the American dream turn into a nightmare. We’ve been saving less than 1% of our income and we have $11 Trillion in personal debt. Meanwhile, Indian families save a governmen-aided 28% a year and Chinese families, 42%. They might wind up owning the joint.

“6. Global warming—real or not—along with healthcare, will continue to consume every spare cent in the national budget.”

And based on that argument, he essentially says the only recourse is to own the stuff the world will still need — grains, metals, oil, etc. — to avoid losing your purchasing power.

“You may be thinking that, because $70-a-barrel crude is down from last year’s high, that inflation is not a threat. You may be tempted to think that because gold is down a bit from its recent high that the trend is down. But I’m sorry to say that you need to brace yourself for a patch of 70s-style heavy duty, across-the-board inflation! It’s going to happen again, in spades! Only this time, it could be even worse because we are now in a time of convergence of multiple exponential curves: energy, food, water, population growth, mineral and energy depletion are ganging up to create the perfect storm….

“The good news is—it’s not too late to jump on the commodities band wagon and not only protect the buying power of your nest egg, but grow it by five fold as well! Yes, crude oil is up 100% from its recent low, but if you accept that crude will be trading back at its 2008 high before very long, that represents a potential double on your money!”

He then goes on to reassure you, however, that it’s not as easy as it sounds — you can’t just invest in commodities willy-nilly (my words, not his), you have to pick the right stocks of commodity producers. And who can help you do that? Why, Leeb’s Real World Investing, of course!

And after a long discourse on buying things the world needs and fighting inflation with the commodities that are in limited supply, he then takes a bit of a turn and goes on to talk about his favorite … gold stocks. Gold has sometimes been an effective safe haven for inflation spikes, but it’s not really an industrial commodity. No one needs gold (well, almost no one), and it is primarily driven by demand for savings and investment, particularly as a store of wealth. It’s not a currency, since you can’t really buy anything with it, but it is, according to most gold fans, the only “real” money.

But anyway, if the dollar’s going to return to its downward trend of the last decade or so, as he says, and break off the recent “flight to safety” recovery it enjoyed during the financial crisis, it’s probably safe to say that the price of gold in dollars will go up. Which would help gold miners. Which gets us to his specific teases for today:

“Don’t Stop at ‘JUST owing gold!’ Supercharge Your Gold Profits With Our #1 Gold Play!

“We’re firm believers in owning a portfolio mix of established gold mining companies along with promising, smaller outfits that offer the potential for outsized gains though organic reserve additions. We’ve found a Vancouver, BC-based company that’s going to the far ends of the earth in search of minerals deposits.

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“The company’s primary focus is on the Oyu Tolgoi copper and gold deposit in Mongolia’s Gobi dessert one of the world’s largest undeveloped copper and gold res