i think we are at, or near, a great buying opportunity for resource stocks. the us dollar has been propped up by the worldwide coordination of central banks, and i expect that to unravel after next week's election.

i do not think we are heading for a deflationary depression, nor has a commodity bubble burst. stockpiles of everything are at low levels, and future production of many commodities is declining. that is not how a bull market in commodities would end.

while there is the possibility of some short-term weakness caused by tax-loss selling, margin calls, or forced liquidations, i think we are close enough to a bottom that i have done some buying this week. some financially strong companies are down 80-90%, and the markets are already discounting everything short of an asteroid hitting the earth.

i expect to see an environment like the stagflation of the 70's, only worse, and gold, silver, oil and gas stocks will lead the way. without going into specific companies, starting from these depressed levels, i believe even the majors will provide outsized returns for the next several years. here is a story to illustrate my point:

"In 211 BC, Rome was at war with its ancient enemy, Carthage. The great Carthaginian general Hannibal had already defeated the Romans in battle several times, and had slaughtered their armies. In 211 he marched his army to the gates of Rome itself, throwing the city into a panic. As luck would have it, the land outside the city happened to be up for sale.

Someone bought the property despite the fact that it was encumbered by having the entire Carthginian army camped on it. The buyer must have been confident that Rome would eventually drive off the enemy. And in the end, the Romans would sack Carthage, sell the population into slavery, burn the city to the ground, and then dump salt in the earth so that nothing would ever grow there again. The Romans took their wars seriously; no Marshall Plans for them."

so my point is that when things look bleak, that is the best time to buy. most of us have seen our personal balance sheets shrink in the past year, especially since july. but for all the pain that has caused, it has provided us with a great opportunity. it's as true now as it was in ancient times, fortune favors the bold.