Adviser Soapbox

When something like a handwritten song sheet by John Lennon sells for nearly half a million dollars, you know that the U.S. dollar is no longer worth hanging on to. The buyer of that sheet music may end up regretting his purchase, or he might be able to trade the music for even more worthless dollars in the future. Who knows? I do know that tangible assets are better than dollars, which lost 20% of their value in 2003. This is where we have been directing your investment efforts over the past two years. There is no change in that advice for 2004.

Technically, once the dollar broke the 92 support level in November, it had nowhere to go but down. We have to reach back to 1992 to find the next downside support, which should be at 80. Below that, there is no support.

The weak dollar has pushed the price of oil and gas higher, and we have found a further benefit by holding energy producers valued in appreciating Canadian dollars. Those gradually increasing monthly dividends don't hurt either. If you were to put some money into energy right now, my pick would be Shiningbank ( SHNUN) . Purchases under C $19 are recommended. If you already have some and are looking for a downside support level where you might steal more shares, put open orders in at C $17.

As the U.S. dollar continues to fall, you will see Canada come into its own as a major natural-resource supplier, especially to the U.S. market. Its resource business is going to continue to grow, and the Canadian dollar may approach parity with the U.S. dollar within two years.

I have already outlined the energy avenue, but you should also own some gold. Gold bullion has solid support at $400/ounce basis February futures. I have said that I think gold will eventually reach $2,000 to $2,500. This elicits some surprise. If you think back at the house you bought 20 or 30 years ago, this number is not surprising. In 1971, I bought the house we still live in, which is modest by modern standards. It cost $37,000, and I had no idea how I would pay for it.

I also owned an XKE Jaguar roadster, which I had purchased a couple of years earlier for $2,000. I was more naive then, but I joked that when the Jag was worth enough to pay off the mortgage, I would sell it and do just that. I still have the house, and it would likely sell for some $350,000, maybe more. I still have the Jag, and once the current restoration is finished, it could sell at auction for perhaps $80,000.

If anyone had suggested 30 years ago that either the Jag or the house would be worth this much, I would not have believed them. The secret to this is not that the value of the house has gone up that much. I have to live somewhere. The secret is that the value of the house is the same. The value of the house in dollars is greater because the dollars are slowly becoming worthless. Gold at $2,000 will be no big deal. You should not be surprised at the value of gold this time a year from now, but you will be surprised at the value of the dollar.

Try to accumulate positions in Goldcorp (nyse: GG - news - people ) at $15 or less. I like the dividends, and GG is the cleanest operation I have seen in the gold mining business. They have no debt, and they own the richest gold mining property on the planet. I also like Newmont Mining (nyse: NEM - news - people ), but I would like to see it settle back to $41.50 or less first. I am adding another gold stock to my buy and hold list: Barrick Gold (nyse: ABX - news - people ). Barrick has no debt and $1 billion in cash. It does have a hedge book, but it is adamant about eliminating its hedging activities entirely. In the last 18 months, it has reduced hedges from 24 million to 16 million ounces.

One big change I see coming in 2004 is a serious correction in the stock markets. I believe that our energy and precious metal investments will weather the storm just fine, as they will profit from one of the basic causes of the next market decline. That is a weak dollar and its ramifications.