A Once-in-300-Years Gold Rush

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A Once-in-300-Years Gold Rush By Sam Hopkins | Monday, June 1st, 2009 Gold is changing the face of Brazil once again. Amid a mining investment surge the country hasn't seen in three centuries, Brazil's leadership is using new economic strength to turn away from the U.S. dollar. We'll look at these twin trends here, and what investors stand to gain. Following the discovery of glittering riverbed resources in the 1690s, hundreds of thousands of wildcatters poured into the then-Portuguese colony, and the influx of men and money into the Sao Francisco Valley helped the colonial power base from the northeastern city of Bahia, southwest to Rio de Janeiro. It was a hundred years before the limits of contemporary surveying and mining technology brought Brazilian gold production to a virtual halt. Today, there are again hordes of prospectors sweeping into new parts of the country's interior. As was the case in the gold craze 300 years back—the biggest mining frenzy the world would see until the 1849 California Gold Rush—rumor spreads quicker than fortune. But unlike in colonial times, Brazil is now an independent and rapidly rising country, free to set its own terms for investment and exploration. The Sao Paulo Geological Institute's Helio Shimada says Brazil's gold production potential is up to 200 tons per year, and foreign firms like Barrick Gold [NYSE: ABX] and Anglo American [NASDAQ: AAUK] are working to ramp up output. The government wants those companies to work with the Ministry of Mines and Energy to keep the nearly 400,000 wildcatters thought to be scattered throughout the Amazon region from doing major environmental damage and scarring the landscape with crude exploration pits. Informal gold exploration activity steadily declined during the secular gold bear market of 1988-2000, but government-sanctioned mining and alluvial deposit collection led formal output to increase through most of that time. Advertisement Multiply Your Money by TEN with Gold The biggest gold rush in history is right around the corner. And it could push gold prices to over $5,000 an ounce! Fortunately, there's a new investment vehicle on the market that doubles the daily profits of gold. And it could turn every dollar invested into TEN! To learn more about this incredible opportunity, click here. Since expenses for wildcatters are more difficult to defer without massive credit lines large companies have, so is the risk, and so small-scale speculators fold up their tents more quickly when prices drop. As prices rose again recently, knee-jerk wildcatters headed into the hinterlands again. The government wants them out. So international miners are pumping money into Brazil. Already the top emerging market in Latin America, brazil just logged a 30% jump in foreign direct investment (FDI) over the previous record from 2007. And as the leadership brings in more and more money inflows, there's another bullish gold trend in the works down there. Brazil's new Gold Century is also contributing to the dollar's decline. That's because President Luiz Inacio Lula da Silva is pushing for Brazil to settle more of its international business in the local currency. Brazil Leads De-Dollarization of Global Trade Lula has railed against "blue-eyed bankers" for causing the worldwide recession, even while he managed to keep Brazil in good shape. The latest figures show that Brazil turned in a current-account surplus in April, and the country was raised last year to investment-grade status by S&P. Brazil is in a position of strength, and Lula knows it. Now, instead of doing deals in dollars, Lula wants transactions between Brazilian and Chinese firms to dodge the greenback. Steven Barrow of South Africa's Standard Bank says such a move could start the "creeping de-dollarization" of international trade. And as the U.S. currency sheds its arbitrary value, gold stands to gain. Brazil is positioned to benefit both from the local currency boost, and from a surge in gold exploration and FDI. Make sure the mining stocks in your portfolio have exposure to Brazil. Also, check out NYSE:EWZ, the iShares MSCI Brazil Index ETF. That exchange-traded fund is heavy on materials, with a 26% allocation to companies like mining giant Rio (NYSE:RIO). We'll keep you up to date with the latest developments in Brazil's gold production progress. Regards, Sam Hopkins P.S. Wherever the resource lies, gold investors need to know the dynamics of the international gold market. My colleague Greg McCoach has uncovered a little-known phenomenon that can lead to compounded profits, and he's written a full report about it. You can learn more about Gold's Doubling Effect right here: http://www.angelnexus.com/o/web/12671 Comment on / Rate this Article	Subscribe to our RSS Feed What is an RSS Feed? Related Articles World Gold Production Born Into Debt Junior Mining Sector Renewable Energy Mining $555 Billion by 2020 There's a new leader in the global green energy market. This underestimated nation already dominates the solar, wind, and hydro power industries. Now they're raising the stakes even higher... All told, their clean-tech market will be worth $555 billion by 2020. G.E., DuPont, and even T. Boone Pickens have already staked a claim. Now it's your turn. You can't afford to let these profits pass you by. Read the full report today. Foreign Indices & ETFs iShares MSCI Canada Index $23.59 0.49 iShares MSCI Brazil Index $57.77 2.57 iShares MSCI Hong Kong Index $14.54 0.36 Market Vector ETF Russia Trust $25.75 1.79 BLDRS Emerging Markets 50 Index $37.33 1.33 Economic Releases for the week of Monday, June 1st, 2009: Jun 01 - Personal Income and Spending Jun 01 - Construction Spending Jun 01 - ISM Index Jun 02 - Auto and Truck Sales Jun 03 - Factory Orders Jun 03 - ISM Services Jun 03 - Crude Inventories Jun 04 - Initial Claims Jun 04 - Productivity Jun 05 - Average Workweek Jun 05 - Hourly Earnings Jun 05 - Nonfarm Payrolls Jun 05 - Unemployment Rate Jun 05 - Consumer Credit Brought to you by Wealth Daily From the Archives... 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