"It is the dull man who is always sure, and the sure man who is always dull." ~ H. L. Mencken 1880-1956, American Editor, Author, Critic, Humorist

In early February we stated that it would be far better to buy oil then gold based on the oil to gold ratio. The risk to reward favoured investing in oil. We then published this article and as expected the single celled Gold bugs responded with fury by firing of plethora of emails stating that we had lost our minds. For the full article click on the following link Full Article

Oil was trading in the 52-54 ranges at that point in time and Gold was trading at 620. Oil gained roughly 60% in that time frame and Gold 18%; clearly oil was a better investment and those that followed our advice and purchased options on oil stocks, or on the oil index, etc locked in huge gains.

Now the ratio is moving more in favour of Gold; in February this ratio was at 12.5, today it stands at 9.00 after having dipped as low as 8.5.

Ideally this ratio should dip to the 7.5 level; this can come about from several ways. One would be for the price of oil to sharply rise over the next few weeks while the price of gold pulls back slightly or the other would be for the price of Gold to pull back dramatically while the price of oil remains stable. This does not mean that investing in oil is not a good idea it just means that the advantage is now on Gold's side. As Silver moves faster on a percentage basis then Gold the rewards could be even larger for those who decide to invest in this metal.

Canadian Dollar

Roughly 2 years ago when the Loonie (Canadian dollar) was trading well below the US dollar we made the bold prediction that it would one day trade on par with the US dollar. We are comforted to see that lady luck has seen fit to smile on us once again and bring this prediction to fruition. Almost 3 years ago we predicted that the Loonie would one day explode as at that time the Canadian dollar was doing virtually nothing when compared to other commodity based nations such as Australia and New Zealand. This also goes to prove our dog theory which states that every dog will eventually have its day and when it does have its day it will usually have twice as much to dine on then the others. It took time for the Canadian dollar to move but when it did it moved with a fury.

We now believe that another currency out there offers the same potential that the Canadian dollar offered for those who took our advice and bought it roughly 2 years ago.

Tactical Investor Proprietary indices

The last time we updated this chart was in June and at that time the reading was 1680; in July it rose to 1701 and in August it inched up to 1710. It appears to be trending sideways and it could mount a correction as it has not looked back once since Feb 05. However the last time it took a dip was back in August 06 and then instead of correcting it soared even higher. As we have stated before the next red line zone is 1800 and should we breach that before the Year is out the situation will explode. The last red zone was 900 and at that time we stated if we were to cross that zone before the end of 2006 the situation would truly become horrendous. Since then sectarian violence has exploded, the Taliban have emerged as a more organized and dangerous force, Pakistan is in chaos and Iran refuses to bend.

Afghanistan which was being trumped as a success story is in complete chaos however the press here makes it look like everything is rosy. It so bad, that those Afghanis who seek U.S. Visas have to go to Pakistan to get them. The reason for this is that the U.S fears that a long line will attract suicide bombers. This simple admission illustrates how much ground the coalition forces have lost. It's a powder keg waiting to implode (it has already exploded) and the coalition forces are barely holding on. In Pakistan Musharraf is in the battle of his life; his political career for all purposes is over and the only thing keeping him in power now is the backing of the military. He could lose this backing anytime if the masses continue to rebel against him. Iran continues to snub the United Nations and U.S as it's still secretly being backed by Russia and to a lesser extent China.

As we stated before the scales of power have tilted against the US; the US is no longer the Sole master of the world. A new world order has emerged that this group that is being led by Russia is slowly changing the rules of the game. This new group has an unbelievable edge over the US; military Russia is equal to the U.S as the U.S would never dream of attacking them. The second edge comes from China; they have full control of the economy via their huge treasury holdings. A simple hint that they were going to dump these holdings could send the US economy into a complete nose dive. Finally as a back you have India; the country with world's second largest army and one that also possess nuclear weapons. When you examine this trio there is simply no way the US can win and actually it has already lost the battle. The problem is that the politicians in Washington simply refuse to believe this. They think they can continue to bully and push the rest of the world but their Empire is crumbling on all fronts.

Our religious provocation index is suggesting that this current war could last up to 18 years before its all said and done. Remember how the Russians lost Afghanistan; all it took was several thousand shoulder fired missiles and the rebels in Afghanistan were able to destroy the then so called second strongest army in the world. They are employing the same tactic now; they hit and run and the coalition forces like big blind elephants bring their massive firepower and blindly aim at anything that moves. The same situation has been unfolding in Iraq.

For those of you that remember the revolutionary war in the US; remember how a bunch of Yankee rebels were able to defeat the red coats (England). All they had was superior musket rifle which was more accurate and could fire from longer ranges. These rebels would simply wait and ambush the red coats basically a hit and run strategy. This simple strategy was enough to crush what was then the strongest army on earth. The same technique is now being used in Iraq and Afghanistan, only this time instead of simple rifles they have shoulder fired missiles and highly destructive explosive devises. The principle however is the same; cause as much damage as possible to the enemy with the expenditure of minimal resources. It costs these guys 50,000 or less to inflict millions of dollars damage at a time. Thus it's easy to conclude that these wars are lost and they were lost causes even before they begun. As previous empires crumbled (the Soviet Union and the British Empire) when over stretching their resources, the same fate lies in store for the US. As we stated long time ago this is a religious war and things can and will only get worse.

"Whenever you hear a man speak of his love for his country, it is a sign that he expects to be paid for it." ~ H. L. Mencken 1880-1956, American Editor, Author, Critic, Humorist