CHRISTIAN DEHAEMER’S Bubble & Bust Reportmedia.angelnexus.com/pdf/bbr/bbr-march-2017-w58.pdfThese...

C H R I S T I A N D E H A E M E R ’ S

Bubble & Bust Report

March 2017



March 2017 Issue

1



Why the U.S. Dollar Will Fail in the Next 1 to 3 Years: Runaway inflation, a lack of faith, and a

global effort to get rid of the dollar...Let me ask you a question: do you know why one of the most iconic societies of the ancient world completely died out?

I’m talking about the Greek city of Athens.

This ancient culture is arguably responsible for all of Western society as it exists today — poetry, art, drama, philosophy, critical thinking processes, modern medical practices, due process in court... democracy itself goes back to the Greek Athenians.

And yet, even without a paper currency and even with all their collective genius, the leaders of Athens were not immune to debasing and inflating their own currency.

You see, Athens is the first culture in the ancient world to use gold as a standardized and measured unit of currency. Although gold had been used as money since ancient Egypt, Athens was the first to produce coins worth varying amounts into circulation.

Yet, at one point, Athens found itself having to spend a lot of money on two particular things: social programs and an expensive war with Sparta.

In order to pay for these things, Athens decided to debase its own currency.

Let’s say they took 1,000 gold coins in taxes. They would then melt these coins down and produce new coins, this time with 50% copper and 50% gold.

1,000 coins went in, 2,000 coins came out and went into circulation.

At first the Athenian population took these new bronze-faced coins at face value.

Yet, after a while, so many of these bronze coins were put into circulation that prices began to rise.

And, as per Gresham’s law, which states in a nutshell, “Bad money drives out

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good,” the Athenians began hoarding the pure gold coins still in circulation, as they were more valuable.

Those pure gold and silver coins disappeared from circulation. Suddenly, it took a whole lot of copper coins to buy a single gold coin, and the world experienced its first hyperinflation.

This contributed directly to Athens’ downfall.

Aristophanes wrote of the currency in 405 BC:

The ancient coins are excellent in point of standard; they are assuredly the best of all moneys; they alone are well struck and give a pure ring; everywhere they obtain currency, in both Greece and in strange lands; yet we make no use of them and prefer those bad copper pieces quite recently issued and so wretchedly struck.

Looking throughout history, the same story of failing empires arises again and again.

The government begins paying for too many expensive social programs and involving itself in expensive wars, so to pay for this it debases its own currency, which causes deficit spending; people begin hoarding assets and driving up the price; and hyperinflation occurs, causing total economic collapse.

The question is, how close is America to becoming a failed Athens?

Did you know that in 1981, when Ronald Reagan became president, the national debt was $591 billion?

Yet from 1981 to now, in one generation, there are 33 times more dollars in existence than in the first 205 years combined.

It took just three and a half decades to go from $591 billion to $20 TRILLION in debt — that’s a number most of us can’t even fathom.

And that’s only going to grow.

Just look at this chart...

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What you see here is right after WWII in 1944, when the Bretton Woods system began and the U.S. started printing more money than it had gold available.

Then, after Nixon took the dollar completely off the gold exchange standard, we began printing money like crazy due to expanding social programs and the Vietnam War.

Yet it wasn’t until two defining events occurred that the printing presses went into maximum overdrive.

The first was the dot-com bubble of the early 2000s, after which the U.S. economy experienced a turbulent post–dot-com bubble recession agitated by September 11th.

This, paired with a brand-new post-9/11 war, caused the Federal Reserve to start printing more money than it ever had before.

Yet none of that compares to the debt creation that occurred directly after the 2008 financial collapse.

In just the years since 2008, we have gone from $10 trillion to $20 trillion in debt.

According to a 2014 Harvard study:

If the Federal government spent its yearly revenues exclusively on debt reduction

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and ceased all of its operations, it would take three to four years to pay down the national debt. Or, the government could pay down the debt in one blow if it simply took more than $52,000 from every person living in the U.S. — including children, the elderly, and the unemployed. If this one-time “debt reduction fee” were levied only on those in the workforce, the cost would be over $106,000 per person.

Just like Athens and every other failed empire throughout history, the government has begun debasing its own currency. It has created a debt it can never pay back. It is creating money out of thin air.

This is why I recommend you invest in items that have intrinsic value. When inflation goes up and the dollar goes down, these assets will rise with or higher than inflation. And the ghost of inflation is finally here:

Later in this issue, I’ll tell you about one investment that should be a 300% to 400% winner over the next three years.

Christian DeHaemer Bubble and Bust Report

March 2017 Issue

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Urgent Gold Trade Buy Now and for the Future

Gold prices are going to jump starting next week. And you absolutely need to be a buyer right now.

Fed futures have put a +60% probability on a March rate hike for the past two weeks — and it is now reaching a 90% probability for a hike. So there's very little doubt the FOMC will bump up its overnight rate this month.

This has pushed 10-year Treasury yields much higher over the past several days and knocked off almost 4% from gold prices as investors increase their short positions.

Once the Fed does make the announcement, these new short positions will be covered and the downward pressured released. This will allow gold prices to move higher once again.

This is an extremely easy trading trick that has yet to fail since the Fed began raising interest rates back in December 2015. And it's one that I absolutely must share with all my readers.

But this is going to be a short-term trade. As I just wrote to subscribers of my Secret Stock Files service: get in, get out, and take a small profit. We're looking for yards here, not touchdowns.

For a short-term trade, I'm recommending Barrick Gold (NYSE: ABX) and Kinross Gold (NYSE: KGC). Buy these stocks now and sell them into rising gold prices following the March FOMC meeting.

But I want to talk about a longer-term gold position with you today.

Sandstorm Gold (NYSE: SAND)

Sandstorm is already in the Bubble and Bust Report portfolio. But as a long-term play, I think this stock is going to be among the absolute biggest winners for us.

Sandstorm is a newer and lesser-known gold royalty and streaming firm. These companies make upfront payments to mining partners in exchange for rights to

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purchase a percentage of the material produced at a fixed price (streaming) or a portion of the revenue generated from a mine (royalty).

Before entering into stream or royalty agreements, Sandstorm completes a due diligence process, which begins with economic analysis. The company says most projects fail at this stage.

The projects that pass are evaluated from a technical point. Sandstorm hires geological consultants that specialize in the deposit type, location, and jurisdiction of the project in question.

Projects that make it this far in the due diligence process are subject to a comprehensive site visit, which inspects and assesses all the physical aspects of the project.

Since 2009, Sandstorm has compiled a portfolio of 142 streams and royalties, of which 21 of the underlying assets are currently producing gold.

Last year, Sandstorm received attributable revenue from nearly 50,000 ounces of gold-equivalent. Based on the company’s existing gold streams and royalties, attributable gold-equivalent production for 2017 is forecast to be between 45,000 and 55,000 ounces.

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And going forward, the company expects attributable gold-equivalent production of approximately 65,000 ounces per annum by 2020.

These royalty and streaming companies are a great way for investors to safely leverage rising gold prices. SAND is trading at about $4 right now, but I think this stock is headed much higher over the long term with rising commodity prices.

Buy and hold SAND.

Until next time,

Luke Burgess Bubble and Bust Report

March 2017 Issue

8



Your Chance for a Possible 400% Gain From the New Lumber Bull Market

The price of lumber is going up. In fact, it has eclipsed the highs set back in 2008.

This startling bull market in lumber is being driven by a number of themes. First of all, the U.S. real estate sector has slowly and steadily come back off its lows.

Still, due to the great recession, there remains some 5 to 6 million houses that

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weren't built. Latent demand is huge, as wages are creeping up as well. Some expect a surge of building over the next three years to peak at 2 million houses a year by 2020.

Second of all, the winter in North America has been extremely warm and without storms, which has elongated the building season. There has also been an historic first-quarter reload in inventory.

The market has also speculated that some Canadian producers have begun to prepare for anti-dumping laws, which they expect to be retroactive 90 days, and have been raising prices to compensate for that possibility.

On top of this, and in line with the cyclical nature of commodities, mills are running near capacity. Hundreds of lumber mills from Maine to Oregon to British Colombia have closed over the last nine years, and there will be capacity limitations this year.

All of this is a net positive for lumber stocks, none of which have yet caught the market’s interest. I've discovered a low-cost lumber producer that could easily be a 300–400% gainer by 2020.

Canfor

Canfor Corporation is an integrated forest products company. It has operations in Canada, Asia, the United States, and Europe.

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The company has two segments: Lumber, and Pulp and Paper. Canfor sells to everyone from Lowe’s to the Home Depot to Kimberly-Clark. The company has strong markets with margins of 80% for its British Columbia products.

From 2010 to 2015, during the downturn in real estate in the U.S., the company invested $500 million in upgrades to its mills and energy systems with an eye to improving productivity. A main focus has been building new markets in China and Japan.

The investing angle here is pretty simple: Canfor is a high-value lumber producer during a bullish upswing.

From the latest earnings report:

Global softwood demand is positive for both NBSK and BCTMP and we expect this to continue through the second quarter as we begin the spring maintenance season. For our lumber operations, weather throughout our operating areas impacted our fourth quarter results. That being said, through the considerable efforts of our teams we saw strong improvement in our financial performance over the course of 2016. Our key offshore markets remain steady, and inventory levels are low, particularly in China.

We expect solid demand throughout 2017. North American housing market continues its gradual but steady recovery, and we expect the repair and remodeling sector to continue the significant growth witnessed over the last number of years. Overall we forecast US consumption of softwood lumber to increase by approximately 2 billion feet in 2017 on top of the over 2 billion foot increase in 2016.

Canfor is a $2.42 billion company in terms of market value. It has a forward P/E of just 13.02 with a price-to-sales of 0.57. Price-to-book is 1.44. Revenue last year was $4.23 billion. The float is small with 69 million shares.

West Fraser Timber Co. (WFTBF) is a competitor. It has a market value of $3.32 billion, a forward P/E of 12.37, price-to-sales of 0.99, and a price-to-book of 2.00. The float is similar at 67.75.

Don't get me wrong; West Fraser is an undervalued timber company as well. It also has assets in Canada and the U.S. But Canfor has a much better book value and a lower price-to-sales. Using those metrics, Canfor would need to go up by over 30% just to equal West Fraser's value today.

March 2017 Issue

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On paper, Canfor is the better buy. Furthermore, there is more upside in the chart.

As you can see by the chart, the downtrend has been broken and there is a new uptrend with higher highs and higher lows. This is accompanied by a volume spike as the smart money starts to buy shares at the lows.

The future of lumber is looking up. If we get a dollar sell-off, the value of lumber will go up in real terms. Housing goes up during inflationary times. Think about how much the value of your house climbed in the 1970s.

Buy Canfor Corporation (TSX: CFP) under $18.35. It currently trades at $18.21. One-year price target is $42.35. Put your stop-loss in at $11.95.

Christian DeHaemerBubble and Bust Report

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