Commodities: Peter Schiff on 2009

Peter Schiff has come under fire for exposing the macro-economic weaknesses in the United States, especially the horrid policies of the Federal Reserve and the government bailouts.

Schiff has gained notoriety and confidence from people because he accurately predicted the collaspe of the housing market and credit crunch well before they happened, and is now projecting the collaspe of the U.S. dollar and the collapse of the bond market, which he thinks is already in a bubble that is ready to burst.

Some of criticized Peter Schiff for some of those investing with him losing money because the exact timing of things hasn't come about yet. But that's ridiculous when you really think of it, as there is no investor or financial advisor in the world that hasn't been wacked by the timing of the market, which those like Warren Buffet, Peter Schiff and Jim Rogers all recognize is impossible to do.

So when taking into account the insights of Peter Schiff and also Jim Rogers, we have to realize that the U.S. dollar will collapse. It's impossible for the government to keep the fiat money presses running and offer up trillions in bailouts without having to pay for that money. The only way they can do that is by printing it out, as other countries like China can no longer take on dubious U.S. debt, as they'll lose big time as the dollar falls in value.

What we need to do is plan in a way that takes the reality that the U.S. dollar will plunge in value. It's no longer a matter of if, only a matter of when. Whether it's in 2009 or not doesn't matter, we need to put our money in things that will not be tied to the dollar in any way, as it will be highly diluted.

A few things to keep in mind for 2009 are the surety that gold and silver will perform strongly, as there's very little else that could be considered a haven of safety for people's money. Also the oil contango or super contango provides an excellent opportunity for safe investment, and should be considered going forward, as the predictable oil futures market is extended beyond what it usually is, the reason it's now being called a super contango rather than just a contango.

Silver prices will probably outperform gold in 2009, when you take into account percentages, although gold is more the haven than silver will be, and probably safer.

Platinum prices in 2009 are a toss up to me, as there are market factors that could drive platinum futures up even though its use in the auto industry will decline. Gold prices have caused Indians who usually buy it in large amounts to start looking to platinum as an alternative as gold prices and futures continue to soar. So platinum prices could receive some support depending on how much demand comes from India, and how much platinum they buy in 2009.

Peter Schiff has the overall economic picture accurate, and so investing in the right commodities will be the most profitable over the next five to ten years. Even after the global economy starts to recover, and gold isn't looked to as a place of safety, then the growing middle classed in China and India will resume their buying again, and raw materials demand will soar, and the commodity bull market continue.

How will grains do in 2009? That is also a toss up in my book. The usual factors will have to be watched, as the recent drought in Argentina and also China has people concerned over the near future of wheat, corn and soybeans. The only problem this year is the harvest has been so successful and food so plentiful, that even with the weather challenges there's so much on the market that it's not offering fundamental support to increased prices.

You also have the economic factor to consider, as people continue to cut back on all spending, and are only buying the bare necessities in order to survive. That will change in the long term, but short term it will affect the prices.

So going forward, keep in mind the overall economic situation as mentioned by Peter Schiff. Those who invest in commodities and develop strategies accordingly, will hold onto their money, those that don't believe the economic situation as defined by Schiff will find themselves struggling to survive as the normal way of investing no longer will cut in over the next several years.