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Time to Buy in Iceland

By Dr. Steve Sjuggerud
Monday, March 27, 2006

“If we’re right, we’ll make a fortune. If we’re wrong... We’ll still make a heck of a lot of money, safely.”

In the latest issue of my newsletter True Wealth, I’m recommending Icelandic bonds. I don’t usually recommend investments as exotic as this. But when the opportunity is this good, you’ve got to be willing to figure out how to do it...

Talking about the potential for annual returns in this investment, I said:

“We’ll make 10% in interest in 2007 and 2008. We should make double-digit capital gains... and if we see a further fall in the dollar, we could have significant currency gains as well. It wouldn’t be impossible to see 25% a year... for the next three years!

I think this bond will beat all other government bonds over the next eight years. If you’re looking for a safe place to put money outside the dollar that still has significant upside, this bond is it.

In the last month, Iceland’s currency has been beaten up. Danske Bank, a Scandinavian bank, warned of a financial crisis in the country. After investigating, I’m not worried. Iceland’s fundamentals are sound. (I’ve put links for more information at the bottom of this letter).

In short, I think Iceland’s currency (the krona) generally behaves like a euro. However, it got overvalued recently, as foreign speculators became attracted to Iceland’s high interest rates. At the first sign of trouble, these speculators are leaving. It’s as simple as that.

This chart really tells the story:

Iceland's currency: Just a Euro, that got overvalued?

Once the currency settles down, I really do believe certain Icelandic bonds will be the best bond plays in the world for the next eight years.

If you’ve gotten in recently, don’t get rattled. Hang in there.

As I explain in the latest issue of True Wealth, there’s a great new reason why Iceland’s currency will “converge” with the euro once again someday. And it could make you a lot of money...

I can’t say it any stronger than I did in my issue: If you’re looking for a safe place to put money outside the dollar that still has significant upside, this bond is it.”

Good investing,


Market Notes


Copper, Silver, Palladium, Zinc
Northern Orion (NTO)… strong metals prices
PetroChina (PTR)… Warren Buffett’s favorite oil stock
Russell 2000 Growth Index… small cap growth stocks head higher
Dow Industrial Average… and so do mega caps
Boeing (BA)… airplanes
Pharmaceutical HOLDRs (PPH)… Big Pharma stocks… see March 23 edition
Rayonier (RYN)… timber
Caterpillar (CAT)… construction and mining equipment
Chaparral Steel (CHAP)… structural steel

NEW LOWS OF NOTE LAST WEEK (MAMA)… former momentum favorite is crushed
New York Times (NYT)… bear market in newspapers
Teekay Shipping (TK)… blue chip oil shipper continues a long slide (AMZN)… 27% off highs
Cattle, Soybeans, Corn, Coffee, Lumber, Butter, Cotton, Wheat

As the major provider of the oil and gasoline China needs to continue its huge economic growth, PetroChina (PTR) is a constant on the New Highs list.

In a matter of weeks, PetroChina and a host of other Chinese blue chip stocks will be allowed to sell shares for the first time ever on the Chinese stock market.

About 10 weeks from now - maybe sooner - Federal Ban 18 will be lifted from Chinese Law. When it is, the best companies in China, now listed on the NASDAQ, the AMEX and the NYSE, will be allowed to return home… and list shares for the first time in history on the local market of Shanghai.

And for the first time in history, Chinese citizens will be allowed to buy them…

As 1.2 BILLION potential investors rush to buy shares, the bidding war could push the price of these stocks to highs never seen before.

-Brian Hunt

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