Dear Member,
 As the markets shake and investors lose sleep, Pinnacle Digest would like to explain why many commodities are hitting record highs and why the resource industry will emerge the victor. So what has taken gold, energy and various base metals and commodities to record highs? The source for the current bull-market in terms of commodities which we find ourselves in is shifting from Chinese demand to inflation.
Inflation will drive commodity prices higher. If you are a true value investor forget about the market perils of the moment. Buy into gold and energy along with the energy metal: molybdenum. As investors scramble for safe havens we believe they will pour their money into commodity tied resource based public companies, increasing their value tremendously in the coming years.
A wise man once said: If you're going into the jungle, you better have a guide. Let us be your guide. Our "Weekly Volumes" will help you understand how we see the market and more importantly where we see it going.
In the United States and Canada inflation has been on the rise in recent years. This inflation is beginning to spread, slowly  moving into other areas of our economy such as products and food. Reports have shown that in America, crude food prices have risen 26% this year alone. Central Banks have been on a campaign to raise interest rates in an attempt to curtail this trend of inflation. How can the Federal Reserve expect to raise rates when the US economy is moving like molasses and their housing market is taking its last breath? Never mind the global credit crunch originating from the US sub prime mortgage fiasco which has resulted in trillions in losses. They can't. That is why they have lowered the interest rates the last two adjustments and will most likely have to lower them again to stave off a full-blown recession. Keep in mind that when interest rates drop, inflation rates rise.
Commodities and the companies that mine them have risen the last five years. They have risen on surging demand at home in North America and from the developing countries on historic demand levels. The upside which has not been factored in is that commodity stocks have traditionally been used as a hedge against inflation. Inflation has been low in the recent years. It has not been a major factor driving commodities to record highs, until now. Inflation will spur a massive movement into the resource based sectors sending companies and commodities to all time highs.
We have come across some very interesting information about a sector we constantly update and it could prove to be a safe haven during these distressed times. Every sector has a period of seasonal strength. Enter: Energy Sector. From November to the end of May the TSX energy index has proven to be a profitable trade in nine of the past ten periods. What is more amazing is that the average gain per period was 14.9%. 14.9% in nine out of ten periods while the TSX index as a whole has gained in only 4 of the past 10 periods at an average gain of 3.4%. It's obvious why we like the Energy Sector. This fact is astounding and has to do with seasonal demand for crude and  winter heating fuels in North America. The winter drilling season is from December to March. It also perpetrates to the fact many investors spin out of their hot summer mining deals as mines go dormant in the winter months. Many oil and gas companies announce news in late November and December about exploration and development programs set to commence during the winter season. Our team is reviewing a handful of companies set to announce such programs and encourage you to do the same.
Many investors doubt our theory because of uncertainties around Alberta's restructured royalty taxes. It may influence it in a very negative way, but on the other hand may not. These doubts need to be answered and explained directly. Announcements involving the spending plans from the industry for next year are about to be released. If the majority of companies decide to curtail money spent on exploration and development this winter or leave the oil sands altogether, this seasonal play will not exist.
We believe many companies operating within the oil sands will in fact curb some development and exploration until they realize where the oil is. It's a funny situation. The oil sands' companies have cried and cried and some have held their word and left the oil sands taking major funds with them. That being stated, their cries are getting quieter following the 20% increase in royalties. How much is oil up in the last six months? Oh yes, now we remember. We stated immediately after the imposed tax increase what it would take to make the oil sands economical and are standing by our statements. Take a moment to read some of our past volumes on this particular issue.
As the markets head further into uncertain waters stick to the fundamentals and time the rush to commodity based companies.
Our team is in the process of making our site even more user friendly and more adept to our interactive investor community. Any comments regarding our site, which is also your site, is always encouraged.
All the best with your investments,
Pinnacle Digest
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