Equedia newsletter says...

A few weeks ago, Société Générale, one of the oldest banks in France and the 3rd largest Corporate and Investment bank in the Eurozone, released a 68-page report entitled 'Worst-Case Debt Scenario: Protecting Yourself Against Economic Collapse."

In their report, they advised clients on how to prepare their portfolios in the case of a complete global economic collapse.

Hoping for the best, but preparing for the worst.

Under each category, they presented a bull and bear case for sector performance, highlighting the positives and negatives for each scenario.

What caught our attention in the report for specific sector performances was their view on Mining and Metals. In particular, Gold. Take a look.

Bear Economic Scenario:

"(Gold) should outperform commodity benchmark as gold would be sought out as a hedge against dollar risk ."

The report gave gold a positive outlook rating for both the short term (12 months) and long term (2 years) under a bearish economic scenario.

Bull Economic Scenario:

"Strong demand for inflation hedging and physical purposes should outweigh increasing supply ."

Even under the Bull scenario, the report gave gold a positive outlook rating and suggested that gold will outperform for both the short term (12 months) and long term (2 years).
Click the image for the full report

Regardless of our economic outlook in this report, gold is set to thrive.

Combine that with the facts in our previous reports and you can see why our views on commodities and precious metals remain bullish. (see A New World Currency? What the US Goverment Doesn't Want You to Know - click here)

The U.S. dollar has been the world's reserve currency for the last 60 years. Many people believe this will never change. Perhaps not.

But that doesn't mean foreign countries won't find a workaround.

This year alone, China initiated more than $200 billion worth of swap agreements that allow their trading partners to pay for Chinese goods and services directly, without converting into dollars or having to trade their currency openly. The actual numbers could easily be more than double that but China and their trading partners may not want to anger the US or other European nations by disclosing the exact amount.

At the same time, you can bet that China will be looking to slowly unload more of their US Dollars in favour of Gold. (see Facts on Gold You Need to Know. - click here)

So while the US limps along attempting to sell bonds and implement further consumerism of their goods (Buy America), China and its trading partners are taking matters into their own hands and creating a new global marketplace for currency trading that's outside the traditional fiat paper currencies.

That's why investors continue their hurdle toward gold.

Despite recent events that should have fundamentally sent gold prices down, nothing has been able to stop gold in its tracks in this market:

• The metal climbed 7.4 per cent in the previous nine sessions, the longest rally in 27 years.
  
• The price has dropped only twice this month.
  
• It has gained 33 per cent this year, heading for a ninth straight annual gain, while the dollar is down 7.7 per cent.

It's no wonder why every investor's focus is on gold and precious metals.

And the proof is in the pudding.

No other exchange is more dominated by resource and mining
stocks than the TSX Venture and the Canadian markets

Now take a look at the Venture's performance in the last year.
Compare that with the Dow Jones
Now with the S&P 500

They may appear similar at first, but if you look closely, you'll see that in the last 52 weeks, the TSX Venture has beat both the S&P 500 and the Dow in overall performance and relative gains, by more than doubling its own value.

Even more interesting is the fact the TSX Venture could have been an indicator for our economic market crash back in March. By losing most of its value in 2008, well before the major decline in the overall markets of the DOW and S&P 500, it inherently predicted the fall of the stock market before the masses.

It' no surprise why we look toward the Canadian junior market, not only for profit, but as our crystal ball.

That's why we continue to focus and evaluate mining companies in the Canadian and TSX Venture markets.

Right now we have our sights set on our featured silver company on the TSX Venture, Silvermex Resources Ltd. (TSX-V: SMR) as it continues to hold ground near its 52-week high since the launch of our report.



So, although we may see some sell-offs before Christmas, and possibly another bubble burst, you can be certain that the miners will remain strong in the long term.

Remember what happened back in March when the markets took its worst plummet ever in our modern age era? The miners and resource players were able to raise over $45 billion outside of the regular banking system! (see Playing Ball with Resources and Obama Talks G20 - click)

You can bet the investors who were part of the $45 billion investment are smiling from ear to ear.

Stock Newsletter Picks: tested verus the results!

Canada's biggest investing newsletters have passed the biggest credibility check they may ever face.

In the midst of a historic stock market plunge a year ago, these newsletters told readers to chill out and buy stocks. With surprisingly few exceptions, that was just the right approach.

The Successful Investor told readers to buy Linamar Corp. (LNR-T14.650.211.45%), which had lost more than 60 per cent of its value since the beginning of 2008. Linamar has almost doubled since it was recommended. The Investment Reporter highlighted Toronto-Dominion Bank (TD-T66.190.350.53%), which has since risen almost 17 per cent.

There were misfires, too. General Electric (GE-N15.94-0.24-1.48%), Manulife (MFC-T18.49-0.01-0.05%)and TransCanada Corp. (TRP-T33.980.280.83%) were among the recommendations that didn't pan out. But a year after Canada's biggest investing newsletters met the bear market, we can describe the results as very good.

None of the highlighted stocks blew up. And while few of the picks outperformed the 20-per-cent gain of the S&P/TSX composite index since the end of October, 2008, most have done better than the bonds, guaranteed investment certificates and money market funds that investors have been clinging to lately.

It's not just the newsletters that survived this credibility check, though. At a time when lots of investors have been parking cash in do-nothing money market funds and savings accounts, the idea of buying quality stocks in a terrible market has also proved sound. Let's go through the newsletters one by one:

The Investment Reporter

Who's Behind It: MPL Communications, a major publisher of investing newsletters.

What it said in its five weekly editions in October, 2008: “Just keep in mind that the stock market selloff gives you an excellent buying opportunity. This is especially true of the hard-hit Canadian banks.”

“… it's impossible to consistently outsmart all other investors to buy at the bottom and sell at the top. Rather than attempt this feat, we feel that you'd do better holding a well-diversified portfolio of high-quality, dividend-paying companies.”

What worked: Potash Corp. (POT-T118.262.231.92%) and TD Bank have both snapped back nicely, and Petro-Canada merged with Suncor Energy (SU-T37.96-0.05-0.13%) in a deal that valued its shares at a 25-per-cent premium. That was a win for Petrocan shareholders.

What didn't work: General Electric is sort of a proxy for the global economy, which is in recession right now. GE might have worked out better here if not for a dividend cut this past February. Telus (T-T34.400.020.06%) is the more surprising blotch on The Investment Reporter's record. As a telecom stock, Telus should have held up better. The problem has been investor concern about heightened wireless phone competition. Note that Telus shares now yield about 5.5 per cent, which is roughly two to three percentage points more than you can get from a five-year guaranteed investment certificate.

The Successful Investor

Who's Behind It: Veteran stock picker and newsletter publisher Patrick McKeough.

What it said in October, 2008: “The market's drop seems to have turned into a panic reaction that is out of proportion to what's going on in the economy. … However, we think prices of many stocks are low enough now that we'll look back on them a few years from now as bargains.”

What worked: Calling a rebound for Bank of Nova Scotia (BNS-T48.180.270.56%) and IGM Financial (IGM-T41.360.601.47%) was hardly inspirational because these are dominant stocks in their sectors. But Linamar and ShawCor were true home runs. Both are smaller companies in sectors that were reeling last fall – auto parts for Linamar and industrials for ShawCor (SCL.A-T28.600.150.53%).

What didn't work: Gennum (GND-T4.11-0.04-0.96%), a tech stock that has fizzled after hitting $7.50 in January.

Money Reporter

Who's Behind It: MPL Communications

What it said in October, 2008: “What we will say is that this is no time to panic and sell all your stocks and income trusts, and move everything into bonds.”

What worked: Except for Royal Bank of Canada (RY-T56.700.821.47%), the Money Reporter went with a slate of defensive names. As it turned out, RBC was the pick of the bunch, thanks to a year-to-date gain of about 17 per cent. Two of the defensive choices, Fort Chicago Energy Partners (FCE.UN-T10.00----%) and Emera (EMA-T23.65----%), delivered solid gains and at no time fell as much as the broader market.

What didn't work: Canadian Utilities (CU-T40.46-0.19-0.47%) and TransCanada Corp. In a fast-rising market like we've seen this year, no one's much interested in playing defence. Final note: TransCanada has a dividend yield of 4.5 per cent. Just try getting that from a bond these days.

Internet Wealth Builder

Who's Behind It: Investing writer Gordon Pape.

What it said in October, 2008: “Over the long haul, those who invest in solid companies today will be richly rewarded. But in the short term, they may have to reach for the Tylenol.”

What worked: IWB was the one newsletter of the five to have a perfect record. Each of the five picks made last October was higher as of late this week, although some made it by mere millimetres. One impressive thing about IWB's picks is that they included only one defensive name, Enbridge (ENB-T45.070.621.39%). The other picks were nicely diversified throughout the economy.

Reality check: Diageo's (DEO-N68.09-1.20-1.73%) gains were eaten up by the appreciation of the Canadian dollar against its U.S. counterpart.

What didn't work: Not applicable.

The MoneyLetter

Who's Behind It: MPL Communications

What it said in October, 2008: “Each crisis is a little different, and this one is particularly special, in how it manifests itself. But each crisis is also similar, in that they all pass eventually, and they are very often followed by a significant rally as confidence in the future resurges.”

What worked: A trio of income trusts all made at least a little money. The best return came from Bell Aliant Regional Communications Income Fund (BA.UN-T27.09-0.09-0.33%), a good defensive name.

What didn't work: Manulife Financial, the worst performer in the S&P/TSX capped financials index in 2009 and, these days, the financial stock most likely to surprise shareholders in a bad way. Though it's disappointing to see Manulife down about 11 per cent while the capped financial index has gained 35 per cent year to date, it's worth noting that Manulife fell as low as $9.02 in March, 2009. Dark days, those were. Luckily, the newsletters saw past them.