"75 hit " like the alamo or colonel custer, page-23

@yatchy

"daily reckoning" is a freebie you can subscribe to,they're also in the same stable as "diggers and drillers" & "Australian small cap investigator".These two you have to pay for.They're part of Port Phillip Publishing group.
What your referring to is their last freebie titled "EXIT THE DRAGON" in which they are VERY BEARISH on the Chinese economy because of the property bubble which is about to implode.
Hence, Australian resource stocks are going to collapse.
Hey, it's an interesting read if you can get your hands on a copy.Form your own opinions.......................... "Exit the Dragon"

The investments you need to ditch now or China's 2010 collapse could clean you out

REVEALED IN THIS MUST-READ LETTER...

* Why at least ONE THIRD of your private wealth and 107,000 Aussie jobs are under imminent threat: discover why the most basic assumption behind Australia's 'miracle economy' is about to be proven catastrophically wrong... and what you stand to lose when China's real estate bubble bursts this year...

* Ghost towns, theme parks and enough empty Beijing offices to fill 35,612 tennis courts: Revealed what's REALLY driving the Chinese property boom... and why you're staking your financial future on bogus demand...

* Two 'evasive' investments you need to make urgently: discover the Aussie investments you need to ditch now... and two to move your money into quickly if you want to shelter your wealth from the fallout while everyone else comes undone...

AUTUMN 2010

Dear Friend,

When any relationship ends, it's painful.

"The worst part," said a close friend at The Lord Cardigan restaurant in Albert Park, Melbourne the other night, "isn't the break-up itself..."

"It's the moment you first realise you've been deceived."

His eyes narrowed...

"You breeze along happily, believing everything's okay, loving everything about your life... and all the while, behind the scenes, you're being duped.

"The moment you find out things aren't what you thought they were that's what hurts the most. It's the deception. Nothing prepares you for the shock..."

I did what I thought a friend should: I offered words of condolence and support, made sure his glass was regularly topped up, and picked up the bill at the end of the night.

I felt awful: I couldn't warn my friend that the most important relationship in his life was under threat.

But I CAN warn you. You see...

Like my friend, you've been breezing along
in a relationship you think is wonderful

This relationship provides you with great returns on your private share portfolio and your super.

It gives the state you live in money to build roads, offer healthcare and provide jobs. It keeps the value of the dollar in your pocket strong. It saved Australia from a recession last year. And it has underpinned our economic growth for the past decade.

You may not even realise you're in this relationship. You may take all of the above benefits for granted.

But you are in this. EVERY Australian is.

And today I'm writing to tell you: we're being duped.

Things are not as you think they are. This relationship is on shaky ground. And today I want to reveal the extent of this deception to you before any kind of 'separation' is announced.

Because believe me, when that comes later this year, if you're not financially prepared for it, you'll need more than a free meal and a few words of condolence to see you right...

I'm talking about Australia's and your relationship with China.

"Ah!" You might be thinking...

"But I'm not in a relationship with China!"

S&P equity indices
Oh, but you are, whether you like it or not!

Let me show you just how strong your relationship with China is...

Take a look at the pie chart to the right. This is the ASX the Aussie stock market broken down into its component sectors. I've circled three sectors for you: Materials, Industrials and Energy. (Source: S&P equity indices)

These three sectors contain the stocks that have benefited most from the China building boom: exports of Aussie materials and energy, and mining operations that dig resources out of the ground to send to Chinese construction firms.

What does this mean to you?

Well, these three sectors make up 39 percent of the entire Aussie stock market. If you're an investor, the chances are that at least 39 percent of your money is being staked on China's continuing growth. In reality, it's probably way more than that.

Resource, materials, energy and mining stocks are what most half decent investment advisers, your colleagues at work, your mates down the pub even your Granny would urge you to buy right now.

And if you leave your investment decisions to a fund manager (highly likely) your portfolio is more than likely flooded with these stocks, whether you realise it or not.

Now here's the thing about these companies you're invested in:

They are all riding high on the China boom

"Pinning our economy to China comes at a price. We believe [there will be] a slowing in demand for resources over 2010 and as a result prices will come off. Of course, with resource stocks making up almost 40 percent of the Australian stock market, this will mean a bumpy ride."

Paul Winter, Equity Strategist
Investors Mutual Limited
We pile into these stocks because of huge Chinese demand for our natural resources.

Total resource exports to China were worth AU$42,353,000,000 to the Australian economy in 2009.

That's an increase of 31 percent on the previous year.

The only other country that increased its imports of Aussie raw materials in 2009 was India by a much smaller 7.2 percent.

All other trading partners cut their orders of Australian resources in the same 12 month period.

Look at the graph to the right. See how China has now overtaken Japan as our main trading partner. (Source: Australian Government Dept of Foreign Affairs
and Trade)

A lot of Aussie resource stocks including many of the ones you may own have gone up on the back of this Chinese demand. And a lot of people have made a lot of money quickly.

Check out the charts (right).

Look at the 10 year performance of leading Aussie resource stocks BHP Billiton, Rio Tinto and Woodside Petroleum (03/00 03/10).

These stocks have gone to the MOON over the past decade (aside from a small but significant blip I'll get to in a moment).

Bottom line: This is why your fund manager is furiously loading up on resource shares on your behalf... maybe even as you're reading this...

My advice today:

Pick up the phone.

Tell him to stop.

Why?

Because these stocks and hundreds more like them will plummet like an anvil in a Roadrunner cartoon when the China bubble bursts

Whoa there just a second...

Why would China stop buying Aussie resources? Don't the Chinese want 400 new cities by 2020? What are they going to build them out of marshmallow?

I know this goes against the grain. The idea of China suddenly saying: "stop the cranes we're big enough now" is fanciful to say the least.

But here's my point: I don't think they'll have a choice when their real estate bubble bursts.

My friend, there's much more to China's seemingly relentless growth than meets the eye. And that means one of the most basic assumptions behind Australia's 'miracle economy' could soon be proven catastrophically wrong. If you have even a shred of interest in your future financial security, I urge you to spare me the next five minutes of your time...

You won't read a more valuable
letter in the next 10 years

You may have already figured out what's at stake for your own wealth in the event of a China collapse. If you haven't, I'm about to spell it out for you so you may want to pour yourself a stiff drink before you read any further.

But first I want to make a very important point:

There IS an exit strategy on the table for you today. That's why I'm writing. You can 'invest your way around' the coming storm as long as you're a) smart and b) quick.

In this letter I'll explain exactly what you need to do now to protect your wealth from the effects of China's real estate bubble bursting. I've identified two investments that are natural hedge positions against any decline in China's imports of our natural resources. I want to tell you about them today.

Take my advice and you could avoid the hassle and heartache that most Aussie investors will stumble blindly into (because they don't know it's coming). Better than that: you should even turn a PROFIT while everyone else is struggling to make sense of what's going on.

Let me be absolutely clear: you will not get this warning anywhere else. Too many people in the financial services industry have a vested interest in the China growth story. The last thing they want you to do is move any money out of Aussie resource stocks.

But I'm 100% independent, I don't have a vested interest in your cash, plus I have a track record for spotting this kind of thing. I'll explain more about me, and my 'Exit the Dragon' strategy in a moment. First, you need to know:

Why much of the demand for Aussie resources you've built your investment strategy around is BOGUS

I said earlier that one of the most basic assumptions behind Australia's 'miracle economy' is about to be proven wrong.

The assumption is that China is hooked on economic growth.

It isn't. If you take only one thing away from this letter, let it be this: China's expansion is POLITICALLY not economically motivated. This is NOT about economic growth; it's about political stability... stability at ANY cost.

"It [has become] rational for [Chinese]state and non-state actors to spend much more effort on politics and much less effort calculating market risks and rewards."

Robert Gottliebsen
Business Spectator
This finally became clear to me on 12th February this year. The Chinese showed their hand and the alarm bells began clanging. Right now they're clanging louder than the chimes of St. Peter's Basilica at midnight on Christmas Eve.

My message to you today is clear:

You are gambling your returns maybe even your retirement security on the political whims of an irrational overseas communist government.

This bogus demand for resources has created a real estate bubble in China.

James Rickards, former general counsel of hedge fund Long-Term Capital Management calls it "the greatest bubble in history with the most massive misallocation of wealth..."

Stephen Green, an economist at International Bank says: "We believe we now have a bubble in many [Chinese] cities, particularly the big ones..."

Jim Chanos, President of Kynikos Associates says: "I see all the signs of a credit induced real estate bubble that I think is going to be a doozy..." Worryingly, he concludes: "I'd be very leery of companies who are exporting materials to China to build up this construction bubble..."

These are strong words and here are some strong images to back them up:

China's 'ghost towns' expose the myth of economic growth

Watching the Chinese New Year celebrations in Shanghai earlier this year, you'd assume the fastest growing nation on earth to be a thriving place, full of energy, excitement and hope for the new decade. But that's the China they're happy to show off.

What about the other China the one you don't normally get to hear about? Places like...
Chenggong
Ordos
Thames Town
New South
China Mall

* Chenggong where there's no one home... Construction of this city in Yunnan province started in 2003. Seven years later this shiny new metropolis teems with pristine high-rise apartment blocks, marble tiled government buildings, state of the art high schools, a large university campus, and a CBD filled with shops, banks and municipal offices. It's got everything except for the one major ingredient a thriving city needs: people! (image source www.ft.com)

* Ordos which is deserted... Full of fancy buildings and abundant infrastructure, this Inner Mongolian city was built from the ground up in just five years and meant for 1 million inhabitants. Today, the streets are deserted. Residents of Old Ordos, 35km away, are largely unimpressed with the gleaming new city they didn't ask for and have decided to stay put. (image source: www.nytimes.com)

* Thames Town which is uninhabited... this English-themed 5bn Yuan development on the outskirts of Shanghai is a collection of Georgian and Tudor-style townhouses, low rise apartments and gated complexes, designed to house 10,000 people. The development opened in 2006. Four years later, despite a huge marketing effort, the town is uninhabited. It's now a place Chinese couples visit for a few hours to have wedding photos taken. (image source: www.psfk.com)

* New South China Mall which is empty... Opened in 2005 in the city of Dongguan, this 9.6 million square ft behemoth is the biggest shopping mall in the world, with room for 2,350 stores. It has seven 'zones' modelled on various cities and regions of the world. It also has a 25 metre high replica of the Arc de Triomphe, a 2.1 km internal canal complete with gondolas and a 553-meter long indoor-outdoor roller coaster! Trouble is, 99 percent of the stores in the so called "Great Mall of China" lie empty. (image source: www.thenational.ae)

Isn't this just the weirdest thing you've ever heard of?

Imagine: you can be walking around in the most populated country on earth and not see a single soul for weeks and months on end? Doesn't this make you just a little suspicious... or concerned?

It certainly raises several questions which as an investor in all this you have a right to hear the answers to...

But at least now you know what happens to all
that Aussie iron ore, coal and copper!

These recently built multi-billion-dollar ghost towns should be enough to make any Aussie resource investor twitchy. Here is actual physical proof that the companies you invest in are servicing a demand that just isn't there.

But that's just the beginning of it.

I'm guessing you haven't heard about Beijing...

Like me, you probably assumed that China's capital was a bustling commercial city and had completely embraced the country's transition to a market economy...

Well, get this: currently HALF of all the commercial real estate in the centre of Beijing is vacant. We're talking about a space the size of 35,612 tennis courts just empty.

"It does not make sense for China to build more empty buildings and add capacities in industries where you already have overcapacity. I think the Chinese economy will decelerate very substantially in 2010 and could even crash."
Marc Faber
Bloomberg Television
11/02/10
According to Jack Rodman, of Beijing Law firm King & Wood, 500 million square feet (46.5 million square meters) of commercial real estate has been developed in Beijing since 2006.

That's more than ALL the office space in Manhattan, New York City thrown up in less than four years!

Rodman says it would take 14 years to fill the vacant offices provided occupancy rates returned to what they were in the peak years of 2004-2006.

Now get this: in spite of the fact that half the office blocks in Beijing are empty, the Chinese authorities are adding a further 1.2 million square metres of NEW commercial space to the CBD this year!

Rodman says this 'defies logic'. He warns of a 'massive amount of oversupply' and is convinced the Beijing real estate market is about to tumble because of it.

Hedge fund manager Jim Chanos warned in January, after the Dubai debt crisis came to light that "China is Dubai times a thousand" and that "the [China] bubble could burst sooner rather than later..."

Which prompts the question:

What will happen to the Aussie firms supplying these resources to China if this real estate bubble bursts?

Right across China, vast areas of land are being made available by authorities. Construction firms are winning lucrative contracts to build new cities, communities and commercial centres. Investors are sinking massive sums into these firms and those who supply them with raw materials.

Property speculators are piling into these brand new developments in their millions. The New York Times reported in March that one Shanghai investor recently bought 54 properties in a single day that's two and a quarter every hour!

Shanghai advertising executive Andy Xiang says: "the speed you buy a house here is faster than you buy vegetables..."

This buying fury has pushed land prices up fast. According to Standard Chartered, the average land price in China increased by 106 percent last year. That includes more than 200 percent in Shanghai, 400 percent in Guangzhou and 876 percent in Wenzhou.

"Last year a record $560 billion of residential property was sold in China, an increase of 80 percent from the year before, according to government statistics that are widely considered reliable."
David Barboza
The New York Times
March 4th 2010
Right now, apartments in the luxurious Tomson Riviera development in Shanghai sell for US$2,300 a square foot.

By comparison, the average luxury apartment in Manhattan sold for around US$1,900 a square foot in the last quarter of 2009.

This all looks impressive on paper.

But if there's no real economic need being met isn't this just inflating a huge real estate bubble?

Professor Yu Yongding, recently retired director of the Institute of World Economics and Politics believes so. He says:

"Chinese demand just cannot keep up with the supply being created by over-investment". Worse, he says that "the Chinese government response has been to invest more money in projects that will only create even more over supply... this is an unsustainable process... [the authorities are] producing too many things the population is not demanding."

This fake demand has also pushed
Aussie stock prices up and up

Earlier I showed you the 10-year share price charts of BHP Billiton, Rio Tinto and Woodside Petroleum. You could overlay the performance stats of a hundred other Aussie resource firms and you'd see exactly the same picture over the same period huge growth. You may have benefited from this.

Look at the bar chart on the right. Over the same period, Australia's exports to China have rocketed almost FOUR-FOLD (Source: Australian Government Dept of Foreign Affairs and Trade).

There is no coincidence here.

The Aussie economy is joined at the hip, waist and ankle to China.

Sales of raw materials to China alone are worth around $42 BILLION a year to our economy, according to the government.

The Australian resource sector provides hundreds of thousands of jobs (mining alone employs 107,000 Aussies)... good returns for shareholders (to date)... tax dollars for the government... it keeps the currency strong...

"Coal royalties paid to the NSW government have already more than doubled in the past three years, helping to push the budget back towards balance. Mining royalties now rival gambling taxes as a source of NSW government revenue, expected to boost state coffers by $1.41 billion next financial year. Coal royalties make up 95 percent of that."

Jessica Irvine
The Sydney Morning Herald
March 17th 2010

"Any reduction in [Chinese] growth will have significant implications for the Australian economy and share market. Any faltering in China's growth would exacerbate the risk to export income,"

Lonsec
March 1, 2010
Over the past 20 years, the mining sector alone has contributed over $500 billion directly to national wealth. According to The Australian, one commodity (iron ore) from one state (Western Australia) to one market (China) accounts for an incredible 10 percent of our total annual merchandise exports.

China will use this iron ore to create an estimated 880 million tonnes of steel per year by 2015, according to ABARE. That amount of steel would make 16,666 Sydney Harbour Bridges every year!

Exports grow, money flows back, and it makes Aussies feel rich. The Rudd stimulus that helped us avoid a recession... new roads... healthcare... state budgets...

All of these have been funded by Chinese money.

Robert Gottliebsen in Business Spectator says that the Federal Government's May 2010 budget "has behind it the simple assumption: that the China boom will continue for the foreseeable future..."

He goes on:

"We have a simple blind faith in the China growth story. So far we have ignored most China warnings and we may have been right.

May it continue because we are totally unprepared for the disaster that will befall Australia if the China doubters turn out to be half right."

Michael Stutchbury, writing in The Australian, adds:
And I get especially nervous when I think back to what happened to the ASX in the immediate aftermath of the 2008 global financial crisis...

The warning shot that nobody heard

Most Aussies were oblivious to the 'GFC'. Australia was the only country in the western world that didn't enter a technical recession, thanks largely to Chinese demand for our resources. Basically, China bailed us out and as a result, Australia is now entering its 19th straight year of economic expansion.


GFC Causes 37% Fall in AUD
But guess what? This did not stop investors fleeing the ASX in their droves as soon as the full extent of the financial crisis became clear.

You may not have realised this mass exodus was happening.

The Aussie dollar certainly did.

In August 2008, as the full extent of the sub-prime crisis was being realised, the AUD fell from US$0.98 almost parity to US$0.60 at the end of October. That's a 37% drop in the Aussie dollar in four months.

Look at the chart above right. The top line at the furthest left point represents the Aussie dollar (AUD) Vs the US dollar (USD) The chart tracks this relationship from May 2008 through August 2009. (Source: www.goldprice.org)

See what happened to the Aussie dollar at the height of the financial crisis in 2008? It fell off a cliff.

Aussie resource stocks got shellacked too. Remember that 'significant blip' I told you about earlier? This was the GFC wreaking havoc on ASX stocks including the three I showed you before.

Mining blue chip BHP Billiton fell from $50 to almost $20 over the same time frame a 60% loss.

The Aussie dollar is what's called a 'commodity currency'. It's strong when investors are bullish on resource stocks and weak when they lose confidence even temporarily and for whatever reason as you can see clearly on the chart on the previous page and the three charts I showed you earlier in this letter.

I'm getting to my point but first, take another quick look at the chart again. See the bottom line at the furthest left point? That's the gold price in Aussie dollars. Look at its almost perfectly inverse relationship to the AUD...

That should give you a bit of a clue about one strand of my urgent China hedging strategy... details coming up...

Right, here's the rub: this 2008 meltdown happened regardless of our dependence on China and regardless of the resource story. The problem was not related to Australia at all which is a big reason why the AUD and stocks have (pretty much) returned to pre-crisis levels.

It was a 'flight to safety' reaction to the global financial crisis and it gave our economy a fairly nasty short-term jolt.

What's my point? Simple: if an unrelated panic can have this kind of impact on our currency and stock market...

What effect would a sudden collapse of
resource exports to China have?

We're so hooked on the China growth story and so frightened we might miss out on making a shed-load of money - we invest heavily in the Aussie firms who supply China with raw materials without really paying attention to the story behind the headlines.

Many of us have made huge 'all-in' bets on China sustaining rapid building and economic growth... either intentionally because we see a bull market we want a piece of, or unwittingly as passive investors in the share market.

We think it's a simple story about a developing country striving for prosperity... we believe demand for our resources is just going to keep going up and up... and that there's no simpler case for investment on the planet.

We can't throw our cash down quickly enough. But this is money you may be counting on to help you out in retirement.

That's why I hope you'll forgive me for being blunt:

If I am only 'half right' that this growth is politically motivated, jobs will disappear, the ASX will plummet, the Aussie dollar will nosedive and any investments you had in resource stocks could tank quickly.

"Anything that is dependent on Chinese investment demand would obviously be the most vulnerable to a Chinese growth disappointment"

Pivot Capital
It will DWARF what happened to our economy after the global financial crisis. Put simply: If resource exports to China collapsed we don't have much else to fall back on. That's why you don't want your investment cash solely in Australian stocks in the event of this kind of slowdown.

Bubbles always burst when too much money piles into the same investments at the same time. Markets overheat. They become 'overbought'. When that happens, investors can get cleaned out in the mass selloff well before they realise what's going on.

If I were you I'd urgently move some of my money out of Aussie stocks and into investments that will be largely unaffected by a China slowdown... I'd give myself an insurance policy so that the money I'm trying to grow doesn't get wiped out when this starts to unravel.

And I really do think it will happen this year.

Morgan Stanley reported on March 2nd that iron ore contract prices for 2010 are to rise by 60 percent... and it's now looking like BHP Billiton has secured an even larger rise of 100 percent! That's INSANE when you consider China is basically building ghost towns and theme parks. How many more can it build?

Mark my words: when this crash comes, it's going to hit Australia hard.

So should you sell all your mining stocks?

No. The point of this letter is not to persuade you to dump all your Aussie resource investments. Some of the best and most promising mining firms in the world operate here you ought to have some exposure to them.

Ideally, you should keep some of your better resource investments ticking over. But you should also look to hedge your portfolio against the bursting of the Chinese real estate bubble and any resultant damage to the Aussie economy.

I've picked out a couple of investments you can make straight away that should give you just such an insurance policy. I've already given you a big clue as to what one of them is. I'll give you more detail shortly...

Follow my strategy (you won't be investing any NEW money) and I guarantee you'll be better protected against a China collapse than you are today.

The urgent and central priority of my hedging strategy is to reduce your exposure to the Australian dollar.

While the AUD has become stronger due to higher interest rates here than in other economies, its 'commodity currency' status has been its main driver. That's because most of the foreign cash used to buy our resources is eventually converted from US dollars, Japanese Yen or Chinese Yuan into Australian dollars.

In the event that China slows its buying of raw materials, demand for the Aussie Dollar will fall.

In a nutshell: you simply have to look at contingencies which reduce your exposure to the Aussie dollar. All the best investors in the world have hedging positions. In a moment I'll give you the details of mine for free.

But first I'm guessing you have a fairly obvious question...

Who the heck IS this bloke?

My name is Dan Denning. I founded and edited a U.S. small cap investment newsletter in 1998 and ran the Strategic Investment advisory service from 2000 to 2006.

Dan Denning
I came to Australia four and a half years ago because I was really excited about the Aussie stock market, and had heaps of ideas I wanted to explore with Australian investors.

Today I'm Editor-in-Chief of the Australian Wealth Gameplan service, which I'd like to tell you a little more about in a moment. I also write The Daily Reckoning email from my St. Kilda office, which is read by around 60,000 Australians every day, and by more than half a million investors worldwide.

I love it here.

What I love most is that tens of thousands of regular Australian men and women have made a lot of money from the resource boom over the past seven or so years... many by betting on those tiny homegrown mining stocks that (for reasons I still don't understand) never seem to get the analyst coverage they deserve.

These are the companies I came here to fi nd, investigate, and reveal to the wider public. I fi gured, with nine percent of your monthly salary headed into your super fund, you'd want to know where to get the best return, right?

Maybe you've made money from investing in Aussie resource stocks over the last decade. I hope you've cleaned up.

My advice:

Take some of your profits off the table now

The China boom has been nothing but good news for Aussie resource investors up to now. But it's time to re-evaluate. I know a bubble when I see one.

When I saw the shocking pictures of those Chinese ghost towns my worst fears were confirmed: Australian resources are going to build entire cities no one wants to live in. Whatever you think about the reasons behind it (and I'll give you my two cents in a second), this cannot continue.

The problem is, many Australians have made high-stakes bets that it will continue without being in full possession of the facts.

Unless you take a moment to read the facts as I've presented them in this letter mark my words: you will lose those bets.

How can I be sure?

I've seen the warning signs before

Outstanding
Investments,
September 2007
Back in September 2007 I edited the resource stock newsletter 'Outstanding Investments' from our old office just down the road in Elwood.

I was becoming increasingly alarmed about what was happening back home in the U.S. with the sub-prime lending boom and growing fashion for complex investment vehicles such as mortgage backed securities and credit default swaps.

I knew this bubble wasn't based on anything tangible. And I feared, if it all went south as was looking ever more likely - the whole world would suffer.

Here's what I wrote to my Aussie readers, two-and-a-half years ago:

"It's a strange time in the markets right now. Everything appears normal. But that is not the case at all. Conditions could not be more abnormal or dangerous for individual investors. So what do we do?"


I was clear and unequivocal in my advice:

"We are at the end of the longest, largest and most irresponsible credit bubble in history. That's why I'm putting sell recommendations on the all the North American and U.S. stocks [in the Outstanding Investments portfolio]. It's time to say goodbye to them. The fallout from the credit bubble could wipe out many years of gains in solid resource stocks. The only way to prevent that is to take profits now."

I don't really want to dwell on what happened next. Suffice it to say that ALL of the stocks I sold from our portfolio took huge hits in the succeeding months as the Global Financial Crisis bit down.

We got our money out of there in the nick of time

I was hugely relieved. But not quite as relieved as my readers...

Colin Raabe wrote in to say: "I just want to thank you as you may have saved/made me a lot of money. What I read prompted me to put my entire Super in the cash option. If I'm patient this could really work for me. Thanks again, I am truly grateful."

DR emailed: "I cashed out of almost all my investments in equities and bought 130Kg of gold back in October-November of 2007. [You] were one of the major factors that influenced my decision and I am happy every minute of my life now."

Paul Foye sent me this note: "I have profited from your advice and ideas. More importantly I have avoided losses by liquidating every possible asset back Nov '07. You have made me a better investor and a wiser person."

Between you and me: I might have sounded cool and together when I wrote that article back in September '07. Deep down I was worried. Really worried.

But here's the thing:

I'm even more worried now for Australian Investors

Listen, I don't want to frighten the hell out of you. But I do want to spur you into action.

We'd all love everything we invest in to go up and up forever. But, simply, the real world isn't like that. The China boom has been great for Australia, and it probably will be again, but we're due a correction. Soon.

"China is a growth economy, but we need to be careful we are not being played as part of a longterm strategy."

Dr Manny Pohl, Managing Director
Hyperion Asset Management
Bottom line: it could prove costly for you if you aren't prepared.

If you want to be prepared, take some of your cash out of Aussie stocks ASAP and lock it away until the storm has blown over.

That's regardless of whether you invest privately or through a retail or industry super fund.

I can show you where your cash should be well protected.

I've prepared an urgent briefing which sets out two very clear points of action you need to take now to shield your money in the likely event that China decides to buy fewer Aussie resources any time soon.

It's called "Exit The Dragon: How To Invest For The Coming China Collapse" and I'll send you a copy for free.

All I ask in return is that you agree to review my Australian Wealth Gameplan service for 30 days with no commitment whatsoever. I'll explain exactly how this will work in a moment.

Before I do, let me reveal what's really behind the China bubble... why it's about to burst... and why you need to shift your investments urgently...

Here's why China is building huge
cities no one wants to live in

The simplistic argument would be to say that China is obsessed with GDP growth. In 2009 China posted whopping GDP growth of 8.7 percent. Simply put the more a country spends and the more it builds, the higher its GDP.

This growth has been prolific. Analysts predict China will overtake Japan as the world's second largest economy by the end of 2010. That just leaves the United States to topple. And U.S. GDP shrank by 2.4 percent in 2009.

But China's motivation isn't economic growth.

It's political stability.

China's rulers believe that if they move people from the farms to the cities and give them prosperity, they won't rise up and revolt. The authorities see economic growth as a necessary condition for political stability.

This is about the communist government hanging onto power.

A draft discussion paper, produced by delegates at the 2nd Berlin Conference on Asian Security (4/5th Oct, 2007) backs this up:

"The most important political goal of the Chinese Communist Party (CCP) is to maintain its leadership and survival as long as possible. To do so, 'economic development' and 'political stability control'... are necessary conditions"

They also report that: "[The] Chinese people support the Communist Party's rule as long as the Chinese economy improves."

That's why the ruling clique in Beijing commissioned hundreds of new housing and commercial developments, transport and infrastructure networks, even brand new cities...

"The nation's "massive monetary stimulus" risks triggering large asset-price increases, a housing bubble, and bad debts from the financing of local-government projects."

World Bank
Quarterly Report on China

"Regulators are in control of the banking industry, and have the ability to curb lending as needed."

Michael Geoghegan
CEO, HSBC Holdings Plc
That's why it poured US$585 billion into its economy in the form of a stimulus package last year. Most of this has gone into yet more infrastructure and construction projects, creating more jobs and business for building contractors and suppliers of raw materials...

That's why these eerie 'ghost-towns' are springing up all across China... And,

That's why Chinese demand for Aussie resources isn't economically motivated.

And if it isn't economically motivated, it's bogus. It can't last.

Remember the performance of roughly 39 percent of the stocks on the ASX is hinged on China's continued economic growth. When you buy these stocks with your money, that's what you're betting on.

But this growth is not organic. It's manufactured, stage-managed and heavily controlled. The Chinese authorities can turn it on and off like a tap whenever they please to suit their political aims. That's pretty worrying if you're investing with money you're going to need in your retirement.

Yes, I know it sounds a bit 'out there' but...

On 12th February 2010 I knew my theory was right

The significance of this wasn't widely understood, but on 12th February, China's authorities quietly increased reserve ratios in its banks to 16.5 percent. According to Colleen Ryan in the Australian Financial Review, this action effectively removed US$300 billion from the Chinese economy.

You read that right: the authorities REMOVED $300 billion...

"Recent heated investment on stocks and estates among Chinese people provide another source of threat on social and political stability. Recent enormous price increase of estates worsened income and regional disparity problems and placed an enormous pressure on the living costs of ordinary people. Skyrocketing stock prices already became a political burden. If the stock market collapses... it will certainly provide a window of riots against government."

On China's Internal Stability
2nd Berlin Conference on Asian
Security, 4/5 October, 2007
This is after they'd poured $585 billion IN last year.

Why would the Chinese do that?

Well they're worried, believe it or not, about inflation. Yes, we are talking about the same country that's seemingly obsessed with rapid economic growth!

In January alone, Chinese banks loaned US$203 billion dollars. That was more than the previous three months combined and 20% of the annual target.

January producer prices were also up 4.3% over December prices... all of this sparked fears in Beijing that the economy may be starting to overheat.

The government moved swiftly. It immediately raised the capital holding requirements of Chinese banks.

This knee-jerk reaction bought the picture into sharp focus for me.

This is the skittish behaviour of a bunch of control freaks. A government that acts this quickly and decisively to keep an iron grip on its economy sends a worrying signal to anyone with a stake in China's growth.

Why is this worrying for Aussie resource investors?

Raising capital requirements means banks have less money available to lend to businesses. Yes, this is a pretty effective way to curb inflation.

But it also slows demand for credit by real estate speculators. That, in turn, puts the brakes on commercial property and fixed asset investments... and that slows demand for Australian iron ore and other resources.

That can pull stock prices down, quickly.

Bear in mind the Chinese lending boom pushed the value of some commodities UP hugely from their 2008 lows. Between March 2009 and March 2010, zinc rocketed 120%... copper soared 165%... and lead shot up 152%...

So why wouldn't the opposite be true when lending is reined in?

That's a huge concern for Aussie resource investors. But the bigger concern by far is that this secretive, paranoid, power-hungry, one-party dictatorship has Australia's prosperity over a barrel.

Do you want your future financial security determined by the irrational political whims of an overseas government?

I sure as hell don't.

That's why you need to put a hedging strategy in place quickly. I don't know when the effects of a China collapse will be felt by Aussie stocks and reflected in the value of the Aussie Dollar... I don't know how long it will take for the real estate bubble to fully deflate...

But mark my words: like all bubbles and winning streaks, this one will end.

When it does, you'll need to be prepared. Luckily for you you will be...

I've put together a briefing detailing two investments you should move into now. I'll explain how you can get a free copy of this report in a moment first here's a preview of what's in it...

'Exit the Dragon' Play 1: make the
RIGHT kind of gold investment

My first recommendation is that you immediately get some exposure to gold.

This shouldn't really come as a big surprise. Gold is the ultimate hedge against a drop in the value of paper currencies in this case AUD.

I'm sure you know that in times of economic uncertainty investors flock to gold as a protective measure. Gold tends to do well when stocks fall, and vice versa, as investors take their money out of one and put it in the other depending on the prevailing market sentiment.

Here's the gold vs. AUD chart I showed you earlier. You can see below: Aussie dollar collapses; gold rises. Aussie dollar strengthens; gold falls.


Gold to Rise on Falling AUD?
So it stands to reason:

If I think the AUD our 'commodity currency' is going to fall in the event of a China collapse (or even slowdown) I would expect the value of gold to rise.

That's hardly groundbreaking news.

What IS news is that there's a right way and a wrong way to invest in gold with a view to protecting your cash in the event of a China slowdown...

My report, "Exit The Dragon: How To Invest For The Coming China Collapse" will show you how to avoid the wrong kind of gold investment one that could see your cash just as badly exposed as it would be in any other kind of stock and pick the right one: an investment that gives you good exposure to the metal itself with none of the hassle and added cost of physical ownership.

I reckon this is the perfect kind of gold investment for our 'Exit the Dragon' portfolio because it isn't leveraged like small cap gold miners are, and it's not hinged on gold shooting to the moon.

Even though I believe gold is in a long-term bull market, that's not the main point of this hedging strategy.

Capital gain on this investment would be a welcome (and fairly likely) bonus.

To get full details on the best gold hedge to make now, claim your free copy of "Exit The Dragon: How To Invest For The Coming China Collapse" yours when you take a 30- day risk-free trial of the Australian Wealth Gameplan service. Details on how to do this coming up, right after...

'Exit the Dragon' Play 2: stash your
cash in this snubbed economy

When the China buying boom slows down, one of the first currencies investors will abandon is the AUD. That's because when you take away resources there's little else of interest here to international investors.

We already saw what happened to resource stocks the last time investors dumped the Aussie dollar after the financial crisis hit. There is an even bigger risk to those stocks in the event of a China collapse.

Step number two of my hedging strategy should neutralise it...

The economy I think you should invest a portion of your portfolio in is in an entirely different position to Australia: it imports raw materials rather than exporting them. And unlike China, it uses those resources to build things people actually need. It has a HUGE manufacturing sector.

The way I see it; if China stops buying our resources, Australia has nothing to fall back on. We have precious little manufacturing we don't even make enough to satisfy our own demand.

The country I think you should invest in makes things. In the event of a China slowdown the demand for this country's currency won't get hit like ours because people will still buy its goods. If things get really bad, it can import fewer raw materials to cut costs, but its ability to make goods is unaffected.

Now this economy has hit the skids recently; equities and property haven't gone up in twenty years in fact its stock market is down 80 percent since its peak. But the investment I'm recommending is not a bet on this economy taking off again anytime soon (even though I think it could...)

This is simply about moving some of your money out of Australian stocks and into what is essentially a (100% legal) offshore wealth haven.

It's about reducing your exposure to the China / Australia relationship. Take my advice and your capital won't be as exposed to a China collapse as AUD denominated resource stocks. And even if the investment I'm recommending doesn't go up in price terms, a falling Aussie dollar means this asset should rise in value relatively.

Aussie investors tend to follow a 'home country bias' when considering possible destinations for their cash. This is largely thanks to narrow-focussed advice from the highly ineffective luddites in the funds management industry.

Take it from me if you're to stand any chance of protecting yourself when the China bubble bursts, you need to ditch this way of thinking - QUICKLY.

And here's how easy this is: you can get all the exposure you need to this beaten-down economy right here in Australia. You can buy this investment as easily as you'd buy any ASX listed stock, through your regular broker.

I'll show you exactly what to do to set up this hedge, including recommended buy price and all-important trailing stop level, in my special briefing: "Exit The Dragon: How To Invest For The Coming China Collapse".

Here's how to get your copy

I'd like to send you a free copy of my China hedge report so you can start protecting your wealth straight away. All I ask in return is that you take a 30-day trial of my Australian Wealth Gameplan investment advisory service.

You can do so, right now, by clicking here.

I created the Australian Wealth Gameplan with Investment Director Kris Sayce because we couldn't believe what the funds management industry in Australia gets away with!

You trust these people with your super fund contributions and they're supposed to have your best interests at heart but it's obvious they're only concerned about two things: the commission they make on your account and how they can use you as a stepping stone to higher-networth clients.

They pour your cash into stocks without much thought given to whether these investments are right for you. Once they've spent your money they'll leave you in a position for as long as it suits them to do so.

That's not really acting with your best interests at heart.

Prior to signing for us, Kris worked in the Australian wealth management industry for 15 years so he knows full well what some of the more unscrupulous 'managers' in the business are really up to. He could tell you stories that would make your hair stand on end...

And here's the real kicker: you're no better off
using a fund manager than just leaving your
money in the bank: OFFICIAL

According to ABC news, Between March 2000 and February 2010 the average interest rate for term deposits in Australian banks was 3.92%. The median retail super fund delivered just 3.7% in the same time! What does that tell you?

The aim of the Australian Wealth Gameplan service is to give you properly-thought-out, practical and profitable ideas about building wealth you CAN rely on in retirement... to show you proven investment vehicles that pay you a guaranteed income... and to warn you of any imminent threats to your wealth like the coming China collapse.

And unlike retail fund managers, I'm completely independent.

I don't take advertising, don't pander to special interests and most importantly, I'm not after one single cent of your retirement cash: I get no kickbacks, commissions or sweeteners from any of the investments I recommend.

That's how you can be 100% sure I'm working for you and you alone.

Listen, I'd love you to take a closer look at the gameplan for the next 30 days to see if it's the kind of thing you'd be interested in. Click here to start your trial.

There's absolutely no commitment required from you at all. If you're not convinced I can help you achieve the kind of wealth you aspire to, you can walk away at any time in those 30 days and you won't owe me a cent for my time.

You can also keep everything I send you during your trial subscription.

Talking of which...

Here's what you'll get with your
30-day trial subscription

The first thing you'll get is a copy of my urgent report: "Exit The Dragon: How To Invest For The Coming China Collapse".

Just give me your email address and I'll immediately send you a link so you can download it and take the evasive action I recommend without delay.

Then, each month you're a member, you'll receive, via email, a downloadable 8-page briefing taking you through the Australian Wealth Gameplan step by easy step...

You'll get heaps of proven income generating strategies, tips and ideas... techniques to protect your money from scammers and inflation... and 'hidden' ways to build a decent sized nest egg you can actually retire on!

Each week I'll also fire you an email bulletin to update you on our strategy, keep you in the loop about developments to our gameplan positions, or brief you on any new tactics to help you build, safeguard and grow your retirement cash.

That's the Australian Wealth Gameplan service in a nutshell.

I genuinely believe the time has come for Aussies to take greater control of their money particularly with regard to how much they have invested in the China growth story through their ASX resource stock holdings.

This service can help you take care of those tricky decisions.

But don't just take my word for it take a risk free look, for the next 30-days, and see for yourself.

And if you sign up today I'll also send you two bonus wealth-generating reports completely free of charge...

FREE REPORT 1: How to Get On the
'Secret Payroll' Of 6 Companies

One easy way to invest for income is to buy stocks that pay a regular dividend. Pick the right dividend stocks and it's like getting a pay cheque from them. Pick six good dividend payers and it's like getting 12 extra pay cheques a year for no extra work!

That's why I call this idea 'the secret payroll': you get paid a second salary just for investing in the right stocks!

Luckily for you, I've found them. Follow the simple steps in your first bonus report and you'll receive 12 cash payouts from these firms in the next 12 months and the payouts won't stop there...

These 6 firms will send you money twice again next year... and again the year after that. In fact, once you're on the 'secret payroll' those cash payouts keep on coming until you decide you don't want them anymore!

Each of the firms you'll read about occupies a strong position in their industry. By my analysis they are virtually certain to send you dividend cheques twice a year, every year, for the foreseeable future.

You also benefit from any capital gains for as long as you hold these stocks. You can reinvest them and boost your 'secret payroll' payments... and potentially get an even bigger return on your cash!

Standard & Poor's found that over a 20year period, capital gains on S&P500 stocks in the U.S. were 381.9%... That's pretty good but reinvesting dividends would have turned that into an eye-popping 905.1% windfall!

You can get set up on the 'secret payroll' of these six companies really easily with one quick phone call to your broker. You can even do it in a few minutes online. All the details are in your free report "How to Put Yourself on The 'Secret Payroll' of Six Big Companies" which I'll send you when you take a 30-day, no obligation trial of Australian Wealth Gameplan.

And there's another bonus briefing I want to send you...

FREE REPORT 2: How To Make Money
From Shares That Never Go Up!

The strategy revealed in your second free report is DEFINITELY not something you'd get from a regular broker. It's a really clever way to 'bet' on a share price moving in a certain direction over the course of a month.

Don't worry there's not a great deal of risk involved here, and the mechanism used isn't complicated. I'll talk you through it stepby- step. The way I do it is to look for the most OBVIOUS bet to make on a particular share.

But here's the beauty: you get paid whatever happens. If the share goes up, you take the profit. If the share goes down you get paid by your broker AND you get to keep the shares so you can do the same thing again.

You won't have to figure this out yourself.

I'll select companies for you with solid share prices and I'll monitor everything for you, telling you what to do and when. I've put all the detail into your free report "How to make money from shares that never go up"... all you need to do to get your hands on a copy is take a 30-day risk free trial of my Australian Wealth Gameplan service.

Here's how your 30-day trial subscription works

First things first, let me tell you that the regular price for an annual subscription to the Australian Wealth Gameplan service is $299.

If you're wondering whether it's worth that kind of outlay, let me ask you:

What would you pay right now to learn about a hedging strategy that could save you thousands even tens of thousands of dollars this year?

I guess the answer to that depends on how much you stand to lose by having all of your cash in Aussie resource stocks when the China slowdown hits...

And what if I threw in details of a monthly gameplan that could help you make several thousand dollars additional income a year... end your money worries after two of the most turbulent years in stock market history... and help you build a retirement to really enjoy?

Would it be worth $299 then? Think about how much you pay your super manager in annual fees and commissions now for a return on your cash that's LESS than you'd get from leaving it in a term deposit!

I'd say that $299 is starting to look like the bargain of the century.

But sign up today for your trial subscription and you won't pay that.

Click here now to begin your 30-day risk free trial and you'll pay just $199 for the year on the proviso that if the service performs as well as you expect it to, the price will revert back to $299 should you decide to continue into year two of the gameplan.

Listen, you don't know me; I don't know you. But I do know this is far too important for price to be an issue. That's why I'm prepared to guarantee your peace of mind...

Put me to the test for 30-days RISK FREE

Sign up today and you can take 30-days to review all the materials I send you. I want you to be as cautious as you like. Take a good look at what I'm offering you before you make any decision to stay on as a subscriber.

Here's the deal: if your expectations aren't matched by the ideas, tips and strategies you read about in Australian Wealth Gameplan call up my customer services team on 1300 667 481 within that 30-day period and they'll cancel your subscription and refund your $199 without question or quibble.

I don't want any of the reports back, they are yours to keep.

Does that sound reasonable to you?

Well then let's get cracking. We've not much time. I remind you: the last major financial bubble to burst had nothing whatsoever to do with Australia our banks weren't too exposed to the U.S. mortgage-backed securities disaster.

Yet it still caused investors to flee the ASX and traders to ditch the Aussie dollar in their thousands.

When the China bubble bursts we're screwed. The effects on the Australian economy will be 1,000 times worse. Investors who aren't prepared will lose a lot of money, quickly. And it WILL burst: the whole thing has been built on bogus demand created by a government hell-bent on staying in power at any cost.

I don't know about you, but this is not something I want to stake my future financial security on...

Click here now to go through to our secure reservation form. I'll send your free reports and begin your 30-day risk free trial of Australian Wealth Gameplan right away.

Sincerely,

Dan Denning
Dan Denning
Australian Wealth Gameplan



Click Here Now to Find Out How to Protect
Your Cash from the Coming China Collapse


P.S. I'm pretty sure the Australian Wealth Gameplan service can help you protect your wealth and even profit as everyone else comes undone. But don't take my word for it...

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"You bring such economic wisdom to the table. You challenge us and our preconceived ideas on many levels... it's exactly what I love and think we all need. I have profited from your advice and ideas. More importantly I have avoided losses by liquidating every possible asset back Nov 07. You have made me a better investor and a wiser person. So a really big thank you. Thank you for being so honest, thank you for taking a stance, thank you for being so open about your ideas, thank you for bringing complex economics to simple fundamental terms that just make so much sense." Paul Foye

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Click Here Now to Find Out How to Protect
Your Cash from the Coming China Collapse


Calculating Your Future Returns: The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose. Please seek independent financial advice regarding your own situation, or if in doubt of the suitability of an investment. While useful for detecting patterns the past is not a guide to future performance.

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sorry about that I couldn't find a link so I posted the whole thing.


caught part of a news bulletin on ABC news radio Friday, some broker was advising his clients to move out of resource stocks because of the implications of the mining rent tax(Henry tax review)..most of his clients must have been holding KZL.But take a look at all the miners on Friday most were down quiet a bit.