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Here's what I wrote the other day for Complete Growth Investor and RealMoney.com. Hewitt


Someday the deflationary pressures caused by the Great Unwind of 2008 will subside. And then we will confront the next headwind: inflation. And it'll be nasty.

Do you know the U.S. has borrowed an extra $1.4 trillion during the last 12 months, an annualized growth rate of 15.9%. A week ago gross public debt grew was 14.0%. Two months ago gross public debt rate was growing at "just" 7.1%.

Where is all this money going to go? It will chase real assets, the kind FCX owns.

Here's how I look at FCX. It owns 41 million ounces of gold. At $684 an ounce, the pretax in-ground value is $28 billion. Assume for illustrative purposes only that FCX mines all of its gold in one year and mining expenses are 51% of revenue (the average during 2003-2007). Thus, gross profit are $14.4 billion. Deduct $460 million for overhead (actual, 2007) and you have $14 billion of EBIT, $9 billion after-tax. Meanwhile, FCX's market value is $9.6 billion. So at $25 a share, you buy FCX's gold mine at market value and get 93 billion pounds of copper and another 2 billion pounds of molybdenum for free.

FCX won't be Miss November, but she will reward patient investors.
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