Feb. 20 (Bloomberg) -- Gold rose to more than $1,000 an ounce for the first time in almost a year in New York as investors, spooked by plunging stocks and a deepening recession, sought to protect their wealth.

Gold futures for April delivery rose as much as $23.80, or 2.4 percent, to $1,000.30 an ounce and traded at $999.30 at 9:04 a.m. on the New York Mercantile Exchange’s Comex division. Gold, the only metal to advance in 2008, has rallied every year since 2000.

By Pham-Duy Nguyen

Jan. 29 (Bloomberg) -- Gold rose, erasing earlier losses, after a slide in U.S. equity markets sparked demand for the precious metal as a store of value. Silver also gained.

U.S. stocks halted a four-day advance as more companies posted poor earnings and jobless claims rose to a record last month. The U.S. House passed an $819 billion stimulus package to help ease the recession. Gold rose 5.5 percent last year as Standard & Poor’s 500 Index lost 38 percent.

“We’re seeing a bit of bounce in gold because of what the equity markets are doing now,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “Investors are backing out of equities and going to gold and other assets that are viewed as safer.”

Gold futures for April delivery rose $7.30, or 0.8 percent, to $897.30 an ounce at 10:34 a.m. on the New York Mercantile Exchange’s Comex division, after earlier touching $875.70. The contract fell 2.3 percent in the previous two sessions.

Silver futures for March delivery rose 5.2 cents, or 0.4 percent, to $12.015 an ounce. The metal slumped 24 percent in 2008 while gold gained 5.5 percent.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Last Updated: January 29, 2009 10:39 EST

Stocks ended higher Friday, leaving the market with monthly losses but posting strong gains in a holiday-shortened week that saw investors increasingly confident that much of a dire economic outlook is already priced in. The Dow Jones Industrial Average gained 102 points, or 1.2%, at 8,829, with 23 of its 30 components ending higher. For the week, the blue-chip average jumped 9.2%.

The S&P 500 index rose 8 points, or 1%, to 896. The broad index gained 12% for the week & is up an astounding 144pts (16%) from Friday's intraday lows.

The Nasdaq Composite gained 3 points, or 0.2%, to 1,535. The technology-heavy index jumped 11% for the week.

In Toronto, the Toronto Stock Exchange shook off a sluggish opening to extend gains for a 6th straigh session. As of 1:38 pm, the composite index added 213 pts, or 2.44%, on the strength of consumer staples and financial stocks.

Meanwhile, the TSX Venture Exchange gained 8.82 pts to 757.05, a 53 pt increase on the week.

As you've seen through our industry bulletins, George's blog (http://blog.agoracom.com/) and Peter Grandich's commentary on gold (http://grandich.agoracom.com/), AGORACOM is not surprised by the snap-back rally this week, and in particular the strength in gold stocks. AGORACOM continues to believe there is long term value in the market, and encourages everyone purchasing shares to utilize our online hubs in your due diligence activity.

Dear Investors,

Last night at the AGORACOM sponsored Roth China/Vegas Conference, keynote presenter Jim Rogers stated that “Gold will hit its inflation adjusted high of $2200.”

George Tsiolis, President of AGORACOM was in attendance at this exclusive event and reported on the Jim Rogers speech live via his cell phone to his twitter account. For a recap of Jim Rogers’ speech, follow the following link to George’s twitter account and/or his blog.

Follow George’s Twitter

George’s Blog

AGORACOM remains very bullish on Gold, as outlined within George’s extensive “Gold $1,000” blog entries

Regards,
AGORACOM

By Graham Summers
Nov 5 2008 10:50AM

www.globalstockmonitor.com

Since July 2008, the dollar has staged its most dramatic rally in years. However, from a fundamental standpoint, the dollar’s position has worsened significantly.

Let’s start with the bailouts.

The US already had $9 trillion in debt on its balance sheets before the Federal Regulators started nationalizing the mortgage and banking industry. When they took over Fannie Mae and Freddie Mac, they added an additional $5.2 trillion worth of potential liabilities in the form of mortgages to this mess.

Now, obviously not all of Fannie/ Freddie’s mortgages are junk. However, both companies’ managements have already admitted that at least $1.2 trillion worth of these mortgages were subprime or Alt-A (garbage).

If anything, they’re probably understating the amount of junk they own. During the housing boom, smaller, regional financial firms typically kept the best mortgages to themselves. The junk¾ or lower quality mortgages¾ were usually pawned off on Fannie/ Freddie. Because of this, I believe it’s safe to assume $2 trillion worth of their mortgages are no good.

That puts the US debt at around $11 trillion: close to its total GDP.

Then there’s the $85 billion nationalization of AIG, the insurance giant. Most people think this was a one-time deal for $85 billion. However, the government has already loaned AIG an additional $37.5 billion, which puts the tag at over $100 billion.

Aside from this, AIG has over $441 billion worth of credit derivatives on its balance sheets. If you’re unfamiliar with credit derivatives, these are the unregulated, opaque financial instruments that got Wall Street into trouble in the first place back in July 2007.

The reality is no one knows whether any of these are good or bad. But considering the fact AIG had to be nationalized in the first place, it’s highly likely a considerable amount of them are garbage. By nationalizing AIG (or at least 80% of it) the US government has taken on the burden of these securities. So add another half a trillion dollars in liabilities to the US balance sheet.

And then there are the money printing presses…

If you annualized the rate of money printing the Feds have maintained during the last four weeks, the total US monetary supply would more than triple in the next 12 months. Eventually¾ and I cannot tell you when because it’s impossible to know¾ banks will stop hoarding this money and it will spill over into the general economy. When it does, we’ll enter a period of hyper-inflation never before seen by the US. When this happens, dollar’s rally will not only end, the dollar will hit new lows never before seen.

In light of this, I strongly urge you to buy physical gold now while the paper gold markets are keeping the price low. As you know, there are two markets for gold: the “paper” market and the bullion market. The recent drop in gold prices has everything to do with the former and nothing to do with the latter¾ the bullion markets are extremely tight due to demand. “Paper” gold has been hammered because of two trends:

• Institutional liquidations
• The dollar’s rally

Funds have to liquidate their positions in order to meet these redemptions. And mutual funds have been hit with $967 billion in redemptions since the beginning of 2008. Gold¾ which the stock-centric crowd never really believed in anyway¾ was one of the first items to go. And since the “paper” gold market is relatively small¾ the total value of gold on the Commodity Exchange in New York (COMEX) is only $5 billion¾ it doesn’t take much capital to crush gold in the “paper” markets.

As for the dollar’s rally, I’ve laid out precisely why this will be short-lived at the beginning of this piece ¾ the Fed’s interventions AND the hyperinflationary money printing. I don’t know when the dollar rally will end, but looking at its recent action¾ it staged its largest single one day drop against the euro since 1999¾ it may be coming sooner rather than later.

Simply put, the dollar will eventually roll over. When it does, gold will erupt higher. The bullion market is already red hot. The dollar’s rally has been the last obstacle to a renewal in the bull market in gold.

Best Regards,

Graham Summers

Fear Factor

	By Jon Nadler Oct 9 2008 9:21AM
	www.kitco.com

Good Morning,

The global credit blaze raged on overnight despite signs that additional central banks joined the worldwide rate cut campaign. The intense heat melted Iceland - its banks, stock market, and currency dissolved into a sorry-looking puddle. The financial ramifications of the collapse raised tensions with the UK as it prepared to sue Iceland over lost depositors' savings. On the other hand, it seems like if Icelanders could paddle hard, they might choose a N/E course, and start heading closer to their new savior: Russia.

Cryptic words from Henry Paulson gave some the jitters, and others some hope. The Treasury boss said that he " will use all of the tools we've been given to maximum effectiveness." For now, the translation of "tools" has resulted in one interesting bit of news: Uncle Sam will (temporarily?) 'nationalize' some, or many US banks, to the tune of about a 30% ownership stake. Now that's some capital 'injection.' Welcome to Amerika. One thing Mr. Paulson was not cryptic at all about, was to forecast additional US bank failures. As certain as night following day, that.

Gold prices fell back overnight, as more investors ran to cash (go figure) following Wednesday's widespread rate cuts. Fears persist about the effectiveness of what appear to be desperate acts by desperate men and thus the flight to safer havens continued. However, bullion appears to rotate in and out of phases of liquidation and accumulation. This, despite ultra-confident previous forecasts that the metal was going to rise and only rise, bailout plan or no bailout plan. Does not quite work that way, evidently. High prices have once again put a damper on critical Indian demand - this, at a time when it ought to be roaring ahead. The Dussehra-Diwali festival window is now open, but India's soon-to-be in-laws are not exactly beating a well-worn path to their nearest gold purveyor.

New York spot prices opened under liquidation pressure this morning, quoted at $888.00 - off $18 from yesterday's finish. The decline came despite a marginally weaker greenback (off 0.29 at 89.21 on the index) and a small gain in crude oil (up one quarter at $89.21). Stock futures indicated a positive open for a change, on this, the one-year anniversary of its all-time high of 14,164 - nearly 35 percentage points ago... Unhappy anniversary.

Silver slipped 15 cents to $11.62 while platinum finally found some firmer ground and rose by $26 to $1026.00 per ounce. Palladium added $4 to $197.00 per ounce. Hopefully, gold will find some support near $875 and try to get back to above $900 in short order. Given the amalgam of current conditions across all markets, and the fact that some have now stopped trying to tally the total size of this most serious financial event, gold should inherently be some 50% higher than the price levels with which it is wrestling at this time. At least, that's what we've been told ever since...oh, 1979 or thereabouts.

At the end of the day, most of what we are witnessing today is a product of human emotions and ambitions. Irrational exuberance has been replaced by lucid panic. The extreme of the latter has not yet been reached. You may wish to avert your vision at the time it does. Bloomberg's Matt Benjamin dove into the psychological aspect of the current episode of "Global Fear Factor" and found some interesting angles to ponder. Herewith, excerpts from his article:

"Greed and fear are the emotions that rule markets. Fear is winning.

"People are driven by images of the best and worst that can happen," says George Loewenstein, a professor of psychology and economics at Carnegie Mellon University in Pittsburgh. "The image of the worst is much more vivid in their minds right now." The widespread fear of losses has taken John Maynard Keynes's so-called animal spirits, "a spontaneous urge to action rather than inaction," out of the markets.

Normally, a little fear is a good thing, economists say. For decades after the 1930s, memories of the Great Depression tempered optimism and kept asset bubbles from growing too large. Today's fears, however, have reached an intensity that magnifies every additional piece of information and creates a vicious circle, according to Hersh Shefrin, professor of behavioral finance at Santa Clara University in California. Wall Street's so-called fear index, the VIX, measures the cost of using options as insurance against stock-market losses. It reached an intraday record of 59.06 today.

"When we are panicked we misread signals, we misread mild threats as catastrophic threats and we become unduly conservative," says Shefrin, author of a 2000 paper, "Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing." That's one reason why, even as the Fed made $1 trillion available to banks, lending fell off a cliff. Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, sees a parallel to 1932, with credit markets bad and the stock market falling just ahead of the presidential election that put >Franklin D. Roosevelt in the White House.

"But I'm not sure anyone is FDR this time," says Geisst, author of "Wall Street: a History," who puts the possibility of another Great Depression at 50 percent. "I don't think either candidate has a clue what they're dealing with here. This is more than a political problem that's going to blow over."

When experts and authority figures are uncertain, it's especially crippling, says Paul Slovic, a professor of psychology at the University of Oregon in Eugene and founder of Decision Research, which investigates decision making and risk. "It makes people feel vulnerable and leads to greater anxiety," he says. Within days of his inauguration, Roosevelt declared a bank holiday and held the first of his "fireside chat" radio addresses to try to reassure Americans. In the days after Lehman and AIG melted down last month, President George W. Bush was nearly silent, uttering a total of 160 words about the worst financial crisis since Roosevelt's time.

Another large component of fear is ambiguity, psychologists say. Investors simply don't know what is going on, making them even more anxious. Faced with an unfamiliar situation, humans, like other animals, retreat into "fight or flight" mode, Shefrin says. It's simply going to take time for investors' fears to subside. With asset prices plunging, greed will eventually make a comeback.

"An important aspect of greed is to avoid a situation where others are doing better than you because you remained conservative," say Baruch Fischhoff, a cognitive psychologist at Carnegie Mellon University in Pittsburgh who studies decision making. Some investors are concerned about not being conservative enough, says Stefan Greenberg, a managing director at Lenox Advisors in New York, which counsels high net-worth individuals. His clients are calling to ask if their money-management firms are still solvent and whether they should sell their holdings, moving 100 percent into cash.

"We hear a lot of emotion, we hear a lot of fear" Greenberg says. He is urging clients not to liquidate their portfolios. "Of course there's panic," he says. "The next few months will take a strong stomach."

And so, the "Fearnami" rolls on. No headlines can offer shocking surprises anymore. Like the one about California falling off the cliff unless it receives a $7 billion defibrillator shock application. We are talking about the seventh largest economy in the world if placed into the proper context. When it comes to bulldozing, the current crisis make no distinction between hot (California) or cold (Iceland), or big or small. Find one weak balance sheet, and the entity it is attached to, instantly turns into a potential domino.

Fret.

Jon Nadler

Senior Analyst
Kitco Bullion Dealers Montreal

Gold is up $64 to $844 as of 12:15 PM EST. I could end this post here and that one sentence could be the entire story.

However, like a good infomercial, “there is more!”. Specifically, Bloomberg is running a story that gold may hit $950 by the end of the year “as central banks and miners hold back sales and investors buy the metal as a haven against falling stock prices.”

The good news for gold bugs is that a $950 price isn’t tethered to simply a shaky stock market. Otherwise, a market turnaround on its own could quell the gold rush.

Rather, London-based researcher GFMS Ltd. states that Central Bank sales will drop 46 percent in 2008, while mine supply will decline for a third year. Specifically, with respect to mine supply, global mine production will drop 2.3 percent this year to 2,422 tons, the lowest since 1996 That is going to put great pressure on an already string tight supply issue.

Moreover, GFMS believes demand from investors worldwide will soar 38 percent to 778 metric tons, with purchases in east Asia more than doubling.

GRANDICH HITS THE NAIL ON THE HEAD AGAIN

If I didn’t know any better, I would think that Peter Grandich single-handedly sets the price of gold. For about the zillionth time over the last 3 years, Grandich once again pegged an overextended gold price (oversold or overbought) when he made this statement just 5days ago in his newsletter:

Courtesy of www.adenforecast.com

The markets have been extremely volatile over the past few weeks. Investors have been spooked and many are wondering what to do, if anything.

For now, based on our analysis, gold’s bull market remains in force. That’s the bottom line. Even though there have been some wild swings, the major trend is still up and as long as that’s the case, we recommend holding your positions.

To briefly update you on what we’ve even watching, following are our last two alerts…

Aug 18, 2008

After reviewing all of the technical, economic and fundamental factors over the weekend, these are our latest thoughts on what's currently happening.

On Friday, gold broke clearly below its 65-week moving average, which is at $819. As you know, this average has been very reliable, identifying the major gold trends since the late 60s. If gold now stays below $819, it will signal that the major trend has turned down and gold is going lower.

But equally important, gold is extremely oversold. This means it's fallen too far, too fast and it's poised to rise in the weeks and months ahead. The same is true of silver, and gold and silver shares. Gold's D decline is also near maturity based on timing and gold's percentage decline. In other words, gold is at an extreme and the downside is limited. That being the case, we recommend the following.

Stay put for the time being and keep your metals related positions. It's still too soon to know if this is just a temporary, extreme break, which seems the most likely, or if this marks the start of a new bear market decline. We need to see more.

Since gold is so oversold, the extent of its rebound rise is now going to be very important. If gold, for instance, rises back above $819 during the rebound, then the break below the moving average would've been a temporary aberration rather than a major trend change. In that case, we'll continue holding our metals related investments.

On the other hand, if gold stays below $819 during the rebound rise, it'll mean that an important trend change is taking place and we'll either sell or lighten up on our holdings at a better price during the rebound. We'll then plan to buy gold again once it turns technically bullish.

As we've always said, we'll let the markets tell us what to do. And for now, they're telling us to sit tight. It's still too soon to act and today's $15 upmove may well be the start of the rebound we're referring to.

AN EXTREME SITUATION
Aug 20, 2008

Even though it's still early, we're starting to see some signs that the worst is probably over, or nearly over. For example, gold, silver, oil, the base metals, and some of the soft commodities and currencies are either stabilizing or beginning to bottom at extreme lows.

The same is true of some of the gold and silver shares, natural resource and energy stocks. They are all bottoming at extremely oversold levels (see Agnico Eagle as an example on the Chart 1). Several currencies are similar. At the same time, the U.S. dollar's short-term leading indicator is extremely overbought, the most in 16 years. These are further signs that these markets are now either poised to rise, or they're already starting to move up in the rebound rise we've been referring to. Keep your positions.

The gold price, for instance, is bouncing up from its extreme low posted on Friday. And while it's still below its 65 week moving average, now at $820, gold has reached an extreme D low in both time and price. Gold's fallen 21½% from its March record high to last Friday's low, and it's taken 22 weeks to do this. This is close to the worst decline in gold's seven year bull market, which happened in 2006 when gold fell 22% from its May high (see Chart 2). Gold then declined for 23 weeks and it formed a double D bottom. For now, if December gold closes back above $820, it'll reinforce that the fall was an aberration and the bull market is fine.

As we write, gold is indeed back above $820, signaling that the major bull market that started seven years ago remains intact. That’s the big picture and it’s most important.

by Mary Anne & Pamela Aden

The following five year chart illustrates how far these stocks have fallen.

As you see the RSI above is below the 25 level (black circle) for the first time in five years which is proof that this is a deeply over sold sector. Note: the Australian XGD (gold index) is weighted and dominated by the heavy weight gold miners and this tends to hide the true state of the rest of the sector. Thanks to Nick Laird at Sharelynx for this chart series which are available for reference at the Gold Index page in GoldOz and in much greater depth / variety at Nicks site.

Looking back gold was $US 347 back at the beginning of this chart but more importantly the AUD gold price was $533 at that time (at 65c to the USD). This provided little room for profit margin for most companies.

Cost of production at $500 provided a $33 margin which was not exactly robust or safe to invest in. The lending institutions insisted on hedge books and stock prices were poor. Things have changed dramatically and even with a new cost of $600 per ounce there is now a margin of $AUD375 an ounce which is over 11x the $33 margin of 5 years ago in this example. This example of a new indicative profit margin is now wide enough to provide a safe margin for a reasonable variation of price and cost.

There is another significant factor at play on the positive side. These mining operations have been making great strides in terms of understanding their ore bodies and ground positions. They have also made great progress in improving the JORC (Australian reporting standard) status of their resources. Then you have to consider the operational improvements along with key operational stages which are advancing. By this I refer to movement from development ore to stoping (underground mining method) operations with a corresponding increase in volume and grade. It also means a shift from open pit to underground ore in other cases. As production increases for these smaller stocks their own leverage to the gold price escalates as unit costs are lowered and capacity to unlock hidden resources is liberated by the additional cash flow.

I have long stated that the business of mining is quite separate to the trading that occurs in the shares in these stocks. This has not been as obvious for several years as it is right now. Many investors have written to me asking why the price of companies are not reflecting the current price of gold - so the best way to cover this is to put my answer in an article for anybody to read.

Share transactions are essentially a derivative of the business of mining. The ownership shares in these stocks fluctuate on news, sentiment and aggregate perception of future or current earnings. Therefore fundamental analysis is not the only answer – hence the current lack of correlation to the gold price. Technical analysis is not the only answer either and especially for smaller turn over circumstances. For T/A to be more accurate you need large volume in the same manner that predictive statistics used in surveys need population size to get a more accurate picture.

Many of these smaller producers do not have large cash reserves or highly solid balance sheets however they do have cash cover and prudent management with a clear understanding of risk management and how to run on the “smell of an oily rag” – cheaply. They have had to be savvy to survive and grow their businesses. Many have greater potential than most investors can imagine due to two important factors – leverage and organic growth off a low base. Much easier to get a ten bagger out of a perfectly sound stock with a market cap of $40M - $100M that has all these right elements going forward. Links to editorials that link to the web sites of two examples of this type of situation are included at the base of this article however the list is not exhaustive and your own DD is essential.

Sovereign Risk and More on Global Sentiment

You have to be mindful of risk and this is also a lesson learned and repeated over and over by the banking industry over time as they move from over easy credit and greed to restricted credit and fear along with the business cycle. An important aspect of risk is Sovereign Risk which is measured by political stability, business climate and currency / repayment risk. This is not effective as a predictive mechanism however because crisis events manifest quickly even if they do evolve slowly. The Asian and sub prime crisis events are perfect examples of this point.

The mechanism of Sovereign Risk Rating does offer useful comparison on a country to country basis (also across time) and provides an easy to measure quantitative approach to measure safe investing regimes. However such rating systems can also be over simplistic and the weightings of the various factors do not necessarily reflect their individual influence on risk. This is not to invalidate this rating process – merely to recognize its efficacy (or ability to be effective, produce the desired result).

A combination of many of these types of analysis however can be combined to form a more useful and accurate picture of Country risk and potential compatibility for your hard earned investment capital. From an institutional risk rating system in 2007 - a score of 1 being the highest ranking down to 100 being the lowest - Australia scored a rank of 18 which was highly credible.

Australia also has asset backing in terms of our mineral wealth which is comforting, like a strong company balance sheet – and an optimum A1 Coface Credit Rating for 2008 which is the top rating. Another index that essentially measures the integration or interface of a Country into the global market place is called the Globalization Index and Australia ranks highly again at 13th in the world.

On a Competitive Scale Index Australia ranked 12th in the world and in terms of doing business here the World Bank rates us at 9th from the top position. An Economic Freedom Index rated Australia at number 4 ahead of the USA, Canada, Chile, Switzerland, the UK and Singapore. The UNDP Human Development Index which essentially measures quality of life and purchasing power parity rated Australia at number 3 in the world only behind Iceland and Norway. Source: MH Bouchet / Ceram – Global Finance.

Australia is a great place to live in and invest capital by all of these standards and this is why I absolutely question the validity of the international investment sentiment in our gold and broader mining industry at present, particularly the mid cap and emerging gold producers.

As corporate activity, technology and resource demand continue to shrink the meaning of sovereign boundaries between nations we will gradually move towards equilibrium of all sorts of things. The financial world moves the fastest (usually) and I refer to international stock markets following the Dow, banking regulations, broad contagion of sentiment particularly, even fashion and diet (and weight problems) as the Corporate machine moves forward towards One World.

Of course resources are internationally priced, varied only by exchange rates and price rises in commodities have outpaced any and all currency strength as a trend and I for one believe this trend will continue. Equities have been out of favor and financial conditions precipitated by the sub prime debacle have forced stocks out of many weak or unfortunate hands. This is going to be regretted as the savvy have accumulated the soon to be coveted Australian precious metals sector.

What to do and how to do it – and when?

I cannot predict the beginning of this event for you at this time although I do currently see signs of absolute bottom for many of these stocks – the rally is getting closer and it will most likely start with mini waves. For the less able, financial and or risk tolerant you may wish to wait and watch for confirmation of the turn over the coming weeks or months. You will miss the powerful leverage gained from being the first on the scene which can only be enjoyed by the liberated true contrarian.

From experience I notice that this current share price behavior is just now beginning to resemble pre-rally traits. Stronger mornings led by pull backs to early morning levels and mixed cross sections of rises sufficient to notice that all is no longer falling. This went on for several weeks at this time of the year in years gone by – years that eventuated in strong rallies. But the question is what do you have to do to find the right investments?

You have to get data and do the research – there are many sources of this type of data and we cover Australia as a specialty. We have been busy preparing a treat for our public visitors and subscribers, both extant and new over the past few weeks and many will not have noticed due to the lack of interest in this sector – a good sign actually.

You have to have a broad knowledge of the sector. We have created a guide to the Australian mining industry by grouping the key producers that specialize in gold, the developers of new mines and the leading explorers into separate pages at the site. A separate page lists many of the more advanced companies involved in PGM and silver activities. This investment research tool also links to stock prices for international investors or those that want a simple Company guide and access to share price data.

You have to understand the currency implications of your investment. We have also added currency conversion facilities to assist offshore investors to evaluate value in terms of their own currency. You have to understand the ground positions of Companies and profitability of the operations so we created a monster mines guide and links to Australian mining authorities for deeper research.

We added links to Australian brokers and other educational sites including the international gold sites that have done so much to inform about and alert investors to this bull market to date. We are all (gold industry writers, miners, analysts) working hard to bring you the message and cover the topics and provide prudent analysis.

We will be locking many of the more specialized pages away for the eyes of subscribers only in the near future as we add greater levels of data but for now it is all accessible and free. Readers at this site are welcome to stop by and search through our resources if they wish. Global financial conditions are still in favor of gold, silver, PGM’s, new cleaner energy solutions and all commodities.

Good trading / investing.

Regards,

Neil Charnock
GoldOz is currently developing a Member area and building further resources for free usage. Gold mines and gold province pages just added and being expanded.

It's not easy watching your portfolio erode on a daily basis. The Dow is down 16% for the year, the Nasdaq is down 15%, and the Russell 2000 Small-Cap Index is down 12%. Consumer confidence is near the lowest level since 1980.

It's at this stage that many investors will reach a tipping point, the point where they throw in the towel to stop the pain. It's called capitulation.

The problem with capitulation (the act of selling your investments and walking away from the market for safer investments) is that you do it when you're in an irrational state of mind. Fear and greed drive the market and right now fear is in control. In times like this, one would do well to remember the old saying "Buy into fear, sell into greed."

Oil and gas prices are at record highs, banks are facing insolvency, there is war in the Middle East with possible escalation, a housing crisis, inflation, et cetera. Given the current predicament and the consistent doom and gloom outlook. We would like to take this opportunity to present the contrarian approach.

Conventional wisdom almost always makes the most sense just before it is proven wrong. Just as the night is darkest before sunrise and as sure as night turns to day, this economic storm will pass.

Oil Returns to Market Value

Is the world economy going to continue its growth? Sure, but we believe new energy technologies will offset this growth, even more so as technologies previously thought too expensive become price efficient. Many economists now believe oil is fairly priced for 2020 assuming the world continues to grow at its current pace and no new technology is brought online.

Oil is a cyclical commodity that traded for less than $20 a barrel just ten years ago. While the market may be susceptible to short term manipulation, in the long term the market will ultimately deal with price inefficiencies, which is what we currently have.

The panic buying you are seeing in the oil industry can only lead to one result, the same result whenever you have rampant speculation regardless of the commodity in play: a total bust. For those that would argue that this time it's different - it's never different!

These speculators will abandon the oil play just as fast as they created it. They created and abandoned the dot com bubble. They created and abandoned the housing market. The speculation in oil, which has come at great cost to the average citizen, will soon subside. Think in cyclical terms and it's much easier to understand.

It's the nature of the beast; you can only run a market up so far, so fast, before another exchange becomes more rewarding. To those buying into oil futures after a 1000% increase in ten years and expecting another 1000%, I say good luck.

So what happens when the oil bubble pops? Gas prices return to around $2.50 a gallon only because elasticity has taken place. The dollars rises (or vice-versa, the dollar rises and gas returns to $2.50 a gallon), inflation is held in check, the economy grows, and housing makes a comeback. Throw in the recent stability in Iraq and Afghanistan (which is already occurring if you read the foreign press) and you have the makings of a large scale economic recovery. A domino effect to the positive side.

Raising interest rates to strengthen the dollar will expedite this scenario. "An ounce of prevention equates to trillions in market cap."

Why Small-Caps Now?

Consider the eventuation coming out of the 1974-1975 recession. Small-cap stocks gained 53% in 1975 compared to 37% for large caps. Small-Caps again beat large caps in 1976, 57% to 24%. In fact small-caps beat large caps for eight years running from 1975 to 1982. Market cap aside, both categories rewarded investors who stayed the course or invested when others were selling.

It is our opinion that the current sell-off represents an exceptional opportunity in small-cap stocks, both in the short term and for investors with a 3-5 year time frame to invest their money.

A final reminder, you don't get rich by doing what everyone else is doing. Think contrarian, there will always be overlooked investments that are undervalued by the market.

But do you know which of these commodities have done the best between 1999 and 2007? Do you know which ones have been the brightest stars so far in 2008?

Below is a “periodic table” that shows both the absolute and relative performance of 14 key commodities.

We put this table together to show how these commodities perform over the long term and how dramatically that performance can change from year to year.

So which of the 14 turned in the top overall performance?

The answer, by a wide margin, is crude oil. For anyone who drives a car, this should come as little surprise.

The price of crude went up nearly 700 percent between the beginning of 1999 and end of 2007. This works out to an annualized return of 26 percent over the nine years, although oil’s returns ranged from a positive 112 percent in 1999 to a negative 26 percent two years later.

The No. 2 performer was nickel, which is primarily used in the production of stainless steel and other alloys. Nickel rose 543 percent between 1999 and 2007, with its best year coming in 2006 when it was up 154 percent.

Third-best on the list was lead at about 410 percent, followed by copper at nearly 360 percent. On the soft side, wheat and corn have tended to move together – in recent years, they’ve done quite well.

At the bottom of the heap was palladium, which rose only 10 percent over the nine years, or barely 1 percent per year on average. That doesn’t mean it didn’t have some good years – palladium was up 113 percent in 2000 and 36 percent in 2005 – but these were pretty much offset by a string of down years.

Coal and aluminum were among the worst performers among the commodities, but even their returns far exceeded those of the Dow Jones Industrial Average (up 44.5 percent), the Nasdaq Composite (up 21 percent) and the S&P 500(up 19.5 percent) over the nine-year period.

Here’s the complete list:

For the first six months of 2008, most of the talk has been about oil, but crude’s 46 percent rise leaves it well down the performance list.

Coal, up 88 percent between 1999 and 2007, is 140 percent higher so far this year, natural gas has climbed nearly 80 percent and corn 59 percent. Palladium, the long-term laggard, is up 26 percent, while long-term standouts lead and nickel are down 30 percent and 16 percent, respectively.

Commodities have gained stature in the eyes of investors in recent years, and we’re among those who believe that they should be considered a permanent asset class.

We’ve long suggested that investors consider an asset allocation approach advocated by prominent portfolio manager and author Roger Gibson in which investments are divided among four broad classes: domestic equities, international equities, fixed-income securities and hard assets (commodities, precious metals, real estate, etc.), and rebalanced annually. A long-term study by Gibson found that equal allocations among the four asset classes provided a good way of balancing risk and return.

And while commodity prices have been volatile, we believe that they will continue to offer excellent opportunities for investors. The strong growth trend in the BRIC countries and other large emerging markets are the result of voracious demand that is outstripping new supplies.

This trend is the key driver of commodities markets, not the “speculators” being demonized by election-year politicos on Capitol Hill. We would not be surprised by a short-term correction in resource prices, particularly for oil, but long-term we see prices going even higher.

by Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors, Inc.

*****

Frank Holmes is CEO and chief investment officer at U.S. Global Investors, a Texas-based investment adviser that specializes in natural resources, emerging markets and global infrastructure. The company’s 13 mutual funds include the Global Resources Fund (PSPFX), Gold and Precious Metals Fund (USERX) and Global MegaTrends Fund (MEGAX).

By David Bond
Jun 27 2008 11:46AM

www.silverminers.com

Wallace, Idaho – Forgive another rant about China, but this one's kind of important, because if what we heard from a well-placed China guy (WPCG) in Vancouver the other day is to be believed – and he's not in the habit of making things up – North American mining shares are about to rock. The conversation was of a backgrounder nature, so we're not going to toss out any names. But here is the gist of what transpired:

WPCG: China has a problem. What it would most like to do is convert its huge holdings of U.S. dollars and U.S. Treasuries into gold.

WSJ: Then why not start buying gold?

WPCG: We can't. The minute that word gets out that China is unloading all, or any part, of its $1 trillion in U.S. paper to buy gold, the game is up. Two things happen: the price of gold goes to $10,000, and the current value of the U.S. dollar falls to about 10 cents.

WSJ: There are some people in the U.S. who wouldn't mind such a thing happening.

WPCG: Yes, but the perspective from China is different. China has spent 30 years building a trading relationship with the United States, and China needs the U.S. as a trading partner because we need our manufacturing sector to continue to grow and provide wealth to Chinese workers and families. If the dollar falls to the point where the U.S. can no longer afford to purchase Chinese goods, then China will suffer as well.

WSJ: But the current situation is untenable. China can't lend money to the U.S. forever to keep Americans buying Chinese stuff at Wal-Mart, can they?

WPCG: Of course not. But we need to engineer a soft landing for the U.S. economy, one that will not hurt Americans and will not hurt the Chinese people as well. The current situation was created over a 30 year period and it will take another 30 years to correct it.

WSJ: But in the meantime, no gold. What about silver? China and silver go back to the start of recorded history. Couldn't China buy silver to get itself out of U.S. paper? Nobody pays any attention to the silver price.

WPCG: Silver is too small a market. You could buy all the available silver bullion in the world for about three and a half billion U.S. dollars at $10 an ounce. In the course of doing so you'd drive the silver price crazy and China would still be holding a lot of devalued U.S. paper. China is still a poor country – poor in terms of natural resources. We need basic commodities. So we need, naturally, to invest in commodities without upsetting any of the markets unduly. If we were to buy up 5 percent of the world's silver, that would cause problems. If we were to buy up 5 percent of the world's gold, that would also cause problems. If we were to be seen cornering the world's oil market, that would also not be good. And in any case the dollars China holds would be worth less than they are now, and our U.S. dollar holdings have already dropped by $300 billion in terms of real purchasing power over the last couple of years.

WSJ: So you've figured a way out of this Hobson's choice?

WPCG: We have. There are other ways to own resources without owning the physical commodity. And that is by buying resources by buying resource companies.

WSJ: But China tried that with Unocal a few years ago, and a bunch of racists and grandstanders in Congress chased you away.

WPCG: That's right, and that was a difficult lesson for China. A hurtful one. But China could buy 4.9 percent of Unocal, and nobody would have been the wiser. It is not until you buy 5 percent of a company that you have to declare yourself and your intentions to the U.S. Securities and Exchange Commission and go public with that information.

WSJ: So . . . ?

WPCG: Because we want gold, we can buy 4.9 percent of Newmont. or Placer Dome, or Gold Fields, or Freeport, or if we really want to blow our money, Barrick, without consequences. If we want base metals, we can buy 4.9 percent of BHP Billiton or Rio Tinto. We want silver, so we buy 4.9 percent of Hecla, 4.9 percent of Pan-American, 4.9 percent of Silver Standard, 4.9 percent of Apex. China could buy 100 percent of a Pink Sheet U.S. company with good resource values, without reporting the purchase to anyone. That way we convert our U.S. dollars into real assets, and nobody's the wiser. Or the poorer. You get the picture. It's a hedge bet.

WSJ: And the U.S. economy . . .?

WPCG: Stays afloat, and has a soft landing. A 30-year soft landing. That is in our best interest.

WSJ: So neither gold nor silver is going to go crazy anytime soon?

WPCG: They have already gone crazy, but nobody noticed. [He grins.] There will be unforeseen circumstances. But the world needs to understand that China seeks value, not speculation. We are not like you. We have generations to answer to, not quarterly reports.

WSJ: Is there any timetable?

WPCG: Certainly, but I am not privy to it, except to point out the obvious, that it will be later on this year. Resource stocks have never been cheaper. They are acting as though silver were still at $5, and gold at $350. We will discuss all this with you at the Silver Summit in Idaho in September during a pre-conference workshop.

WSJ: So you think this is the bottom for mining shares?

WPCG: We can call the top. Don't you think we can call the bottom, too?

David Bond

Have we Bottomed Yet? The Structure of the Fall

	By Przemyslaw Radomski Jun 16 2008 1:19PM
	www.sunshineprofits.com

The vast majority of e-mails that we get from our Readers lately contains the question mentioned in the topic of this commentary, or it expresses the concern regarding the overall market trend. 'Should I buy gold now or wait for the bottom?', 'How low will the HUI go, what’s your best guess?', 'Should I purchase gold and silver stock now or wait for them to go lower?' are all repeated in the messages we received in the last several days. This itself usually proves to be a quite good indication that the bottom is near. After all, 'concern' might be just another word for 'fear'. It is typically best to make purchases, when fear has become really ubiquitous. It seems this might be the case right now.

Analyzing our correspondence is one thing, but since we want to examine the topic more thoroughly we will have to refer to charts. This essay features two HUI charts (courtesy of www.stockcharts.com). On the first one we take a closer look on the previous declines and try to extrapolate the tendencies to the current one. Understanding the structure of the previous falls might give us clues regarding the shape and the bottom of current one.

Please note that the downlegs are usually characterized by the 'ABC' (also known as zigzags) patterns. What is the most important aspect of this fact, is that the 'C' fall tends to be very similar to the 'A' fall. There are two ways to look at the first decline. The first is to take into account only the initial, fast and very steep plunge. As such it is usually followed by at least a small rebound, after which the 'A' decline tends to end slightly lower than it was prior to the small rebound. This local bottom marks the end of the 'A' decline, as it would be viewed in the second way.

As mentioned earlier, the 'C' decline is usually similar to 'A' decline, but at which version of 'A' one should look for clues? The answer is simple – the one that works. It occurs that one time the 'C' bottom materialized closer to the extrapolation of the first, initial version of the 'A' decline, whereas the second time it was rather closer to the second version of the 'A' decline. This is why we decided to mark whole areas which cover the range and time frame between extrapolations of both interpretations of the 'A' decline. The rectangle that is created in this way is the target, for the end of this decline in the gold stocks.

Please note that we used one day space between drawing both lines from the last top. Intraday highs are really very similar in both days and either of them could be used for this analysis. We would rather have a relatively less precise target but with greater probability that is will contain the bottom than the other way around.

The second chart that features additional techniques used to confirm (or prove wrong) our initial target for this decline along with the last rectangle from the previous chart.

First, we would like to draw your attention to two support lines that could stop the decline somewhere near the 390 level. There are two lines, since one (solid) is created using intraday lows, whereas the second (dashed) one is drawn based on the closing prices. Using each has its own reasoning and supporters, so we are just going do use both of them. The general tendency is that the trend line drawn using intraday lows provides support for future intraday moves. The line drawn using closing prices provides respectively support for future closing prices. These lines are very close to the rectangle, meaning that they seem to confirm the 390 level as really important resistance.

Last tool featured in this commentary and on the chart above are the Fibonacci retracement levels. Please note that they are not used here as the retracement levels. They are applied on the chart above, as they are very convenient way to use the Phi (1.618...) number in the technical analysis. There are several reasons why this level is important in analyzing charts, the crucial one being probably that it often really works.

Here, we decided to use this number to check for similar patterns in the falls with regard to the beginning of the 'A' decline and the local 'B' top. We found that the price level calculated by multiplying the 'B' – 'A' difference by 1.618 has one particularly interesting characteristic. The day the price broke down below that level marked either the bottom or the beginning of consolidation at very low levels. This means great buying opportunity. If this pattern is to be repeated in the future, then one might expect this opportunity to emerge shortly, as at the moment of writing this commentary, the price of the HUI is exactly on that particular level. This also corresponds to the conclusions one might have drawn after reading earlier part of this commentary.

Can you use the Fibonacci retracement level in this way? It worked in the past, so why not? The Phi (1.618) has multiple properties and uses. Nobody said that its only use in capital markets is to calculate retracement levels. On the contrary – investors, speculators and analysts continuously try to find new uses of this particular ratio. Each market has its own unique properties. We are on a constant search for those on which we and our Readers can profit. This type of price behavior proved correct in the past and it usually pays to take into account the fact that the history might repeat itself at least to some extent.

There are more patterns in the last several days (head and shoulders, lower trend line of the current trend channel) which seems to confirm the above analysis, but we didn’t include it in the chart above as it would make the whole picture too unclear.

Summing up, our best guess is that we are very close to the bottom and it makes a lot of sense to make at least your long term purchases right away. Timing the exact moment is speculation and should be viewed as such. This means that if you decide to wait for the bottom and try to catch it with some of your capital, make sure that this speculative position is not too big. Please refer to our Website for further details.

Of course the market might prove us wrong, as nobody can be right 100% of the time. Should our view on the market situation change substantially, we will send an update to our registered Users along with suggestions on how to take advantage of it. Register today to make sure you won’t miss this free, but valuable information. You’ll also gain access to our Tools section. Registration is free and you may unregister anytime.

P. Radomski
Editor
Sunshine Profits

****

All essays, research and information found above represent analyses and opinions of Mr.Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

By Roger Wiegand

Jun 11 2008 11:42AM

“The economy is in an inflationary recession denied by most central banks and in our market manipulation capitals of Washington and New York. Traders and investors need to pay attention to actual stats not those with a mainstream, Keynesian agenda. We find their goofy defense stunningly remarkable and replete with nonsense. Jawboning (shoveling you know what) has become the greatest indoor, totally imperfect sport for Chopper Ben Brenanke and Hank Paulson. We are not calling them liars but perhaps they are fibbing slightly more than usual around the edges. Benny hides it as he appears half asleep most of the time. Paulson on the other hand cannot hide his appearance of naked fear and desperation. On one occasion, we thought he would have a heart attack.” - Traderrog

Keeping Score On Nonsense Is A Full Time Job

• We should have been building a file on market reporting nonsense over the past few five years but it would have been a full time job and we don’t have the time. Instead of a librarians list, we summarize today some critical reasons as to why traders and investors should not give-up on gold and silver. We simply lost control while producing this list and wrote 20 instead of 10. This list took only 15 minutes and we do have time and space constraints.
• We had a credit crunch caused by derivatives but now it’s structurally contained and mostly over. Greenspan’s give-away cash in the US spread to other nations through origination of derivatives. The contagion has only begun to spread and the 10% pittance of acknowledged bad paper allegedly managed at the banks leaves 90% lurking, hidden in banks’ balance sheets.
• The American banking system is sound as a dollar. Bear Stearns was a one time event. We are in the early stages of an enormous rolling bank-credit crash. Questions on Lehman Brothers have recently surfaced but the larger hidden mess is the regional banks holding portfolio majorities in real estate loans. Thousands of banks are at risk including construction loans failing next. Stress in banks has barely started. There will be thousands of bank failures.
• The U.S. Dollar has stopped selling, has formed a new base and will now rally. Technically, the dollar has mini-rallies on the way down to oblivion. Bernanke has only one card left to play and that is to keep printing dollars. His rate cutting bullets are near the end and he is cornered. Big financial players the world over are tossing out dollars and tiny business people on the street in foreign nations are refusing to take them at all. The Euro is the new choice; FOR NOW.
• Bond holders can breathe a sigh of relief as corporations are back on track to recovery. Bonds are the next contagion and prices are crashing everywhere. US paper is preparing to sink in price and rise in yield much to the chagrin of Benny and Hank. Corporates are being down-graded with new acceleration. Bond traders are now in charge of interest rates not Benny. Largely unnoticed is the impending failure of municipals as cities, towns and counties financially go under. You’ll know their end is near when fire, police and trash haulers are laid-off.
• The housing industry in the USA and other western nations had some overbuilding but new buyers have emerged and we are on the road to recovery. Some new buying has emerged in those states and regional locations most advanced in the housing downturn. This buying is primarily bottom-fishing to purchase at drastically reduced prices. These huge discounts must be acknowledged and acted upon in many more markets before the housing crunch is over. Meanwhile, foreclosures and walk-aways are accelerating at a faster pace dumping millions in new empty inventory on the markets driving prices down even faster. Builders enter bankruptcy at a faster pace and now some of the formerly well-financed national builders are in danger of failures, too. Housing is in a shambles and gets much worse until 2011-2012.
• Since the number of home buyers is slightly down, there is plenty of cheap mortgage money available. Lenders have been so burned-off in these nasty markets even those buyers with stellar credit are having difficulty finding a mortgage. Most are not looking to buy or take a loan and those that are suffer unusual scrutiny. The majority of prospective new buyers are simply waiting for lower prices ahead. This takes years not months to play out.
• The mortgage and housing industry had some tough times but things are fine and you can now buy their shares for some splendid gains. Countrywide, the largest mortgage originator in America formerly writing 20% of all loans is under investigation and is technically bankrupt. It remains to be seen if Bank of America will close on their purchase of Countrywide as this deal is fraught with immeasurable liability. The mortgage industry has lost thousands of jobs with more losses ahead.
• Consumers have some small unemployment issues but joblessness is only 5.5% and therefore is manageable. The help wanted index is the lowest since the Truman Administration telling us jobs are not only scarce but nearly impossible to find. Michigan unemployment is officially just above 7% when in reality it’s more like 16-17% unemployed with thousands in more losses just ahead. Nationally, the posted unemployment rate is 5.5% but the true rate is 11-12% and rising fast. We forecast a 1930’s national jobless rate of 25% or WORSE WITHIN THREE YEARS.
• The global auto industry and more specifically the U.S. Big Three have plenty of cash and credit and are in the midst of reformation taking them back on track to new profits. Ford has $29 Billion in cash and is burning through it at a high rate. Their sales are in the tank with almost none of their products deemed desirable. Chrysler might go down faster with only $10 billion in cash on-hand, and new reports say GM is at risk to BK on a pile of valueless derivatives. Watch Toyota, the proxy for the global auto industry’s health. They are off -10% on new sales reports.
• Energy costs have gotten expensive but the top is in and crude oil is going back to $50 and gasoline is plentiful. Oil supplies are 2-3mm barrels per day short of demand. Gasoline will rise even faster even if oil stays static. Refinery bottlenecks guarantee this as crude is backing- up in transport ships waiting for refinery manufacturing. Iran has 18 ships waiting, fully loaded with sour crude, the most difficult to refine. Four larger supplying nations are avowed enemies of the US with declining production for several reasons. Oil is going to $150 this summer and $200 within 2-3 years. An Iran attack could temporarily seize-up the markets driving prices to the moon.
• The U.S. Government is sound as the dollar. Money supply is growing at a modest 2-3%. The US Government is currently printing dollars (digitally) at a rate of 16-17%, which is simply not sustainable. Even if this rate were constant, (it is not) the dollar’s valuation would be cut nearly in half in one year. Over-burdened with social program costs’ and politicians pouring on the pork along with the forever war, there is zero chance the government’s credit can be maintained. We have seen new and open discussions telling us the credit of the largest economy is the world will be down-graded from AAA. This eventual down-grade makes all borrowing more costly in America.
• Inflation is contained and next year we might have to fight deflation. We have stagflation right now with insolvency on the horizon in several sectors of the global economy. Food and energy with some services are sky-rocketing with inflation while durable goods and expensive discretionary purchases are shelved with no savings, cash or credit available. Hyperinflation in our view is a sure thing.
• The highs are in for gold and silver. The market will be over-run with central bank gold selling should these markets get out of hand. Technically, we forecast gold at a minimum price of $2,960 with a probability of much higher prices. Silver is near $17 and $50 is a sure thing with our expectations of $176 to $256 within five years. Markets ebb and flow with cycles and profit-taking. Do not be fooled with hollow selling bearish news and threats by those who prefer gold sell-off to lower prices. Gold is the only real money in the world and its rally has barely begun. Also, keep in mind the adjusted for inflation gold and silver prices have farther to go.
• The USA Gross Domestic Product (GDP) is manageable and should be lessening this fall. America’s GDP is getting worse after lingering in the minus column near $55 Billion per month for some time. Latest news tells us GDP is now over -$60 Billion per month and worsening.
• The US Consumer Price Index shows no inflation with energy costs and CPI unchanged. The CPI is a rigged price and energy costs are flying higher. While these phony numbers can still move markets this is only because the media and the herd still attributes some value to them. Smart traders go immediately opposite jaw-boning speeches and government reported numbers. They are pure fiction.
• Food costs are up slightly but supplies are sound and we should manage without too much trouble. Grains and other foods are sinking in production as demand skyrockets. Rice prices are double, corn should exceed our forecast $7.48-$8.00 per bushel price and soybeans are doing the same thing. Wheat in the bins for immediate delivery is at shocking 40 year low in the face of unprecedented global demand. We fully expect grain rationing in the USA later this year or early next year. An overly hot summer will expand prices even more, which we forecast.
• The US Federal Deficit is manageable. Our national treasury and finances are way beyond any hope of covering all the costs. The budget is a joke, more expense is being piled on and social security is toast within 5-10 years, despite reports saying its ok until 2040. The war is super expensive and a broadening of the war seems probable. These bills will never be paid as there is no hope of paying even a tiny portion. Now the Federal Reserve has given itself new powers to COVER ALL THE GLOBAL INVESTMENT DERIVATIVE DISASTERS, WHICH ARE SO LARGE THEY ARE IMMEASUREABLE. THEY CLAIM THESE NEW POWERS TO SAVE THE BANKS.
• Retail Sales are soft but we think they have bottomed and the consumers buying power continues. Retailers are tanking with breath-taking speed. Hollowed out shopping centers are everywhere and several large restaurant chains are filing BK. There is no discretionary cash to eat out any more. The cheapest places to eat and buy stuff are McDonald’s and Wal-mart, which continue to do well as the others are disregarded.
• Durable goods orders are a little soft but by this fall we should be on the come-back trail for new orders. Durable goods are the worst sector for financial performance other than credit. Furniture, appliances, cars, and other non-essential toys are in the dumpster. The only sector on the upscale temporarily is television sets. This is because there is a major change-over to High-Definition Television and more importantly, families are shunning expensive forays to restaurants, movies, and malls. Nesting and savings are the growth industries.
• Consumer Confidence is a little worrisome but once some of these indicators recover so will the consumers. Consumer confidence is terrible. John Williams of Shadow Government Statistics, tells us “The Reuters/University of Michigan Sentiment measure fell by -4.5% month-to-month in May to the lowest level since 1980 and it collapsed to an annual contraction of -32.3%, the steepest annual downturn in the history of the series.” Not only is lack of confidence rising but new horror stories of hungry families losing homes hit the news with increasing frequency.

Statistical Market Manipulation Fine-Tuned

Government numbers dudes cranking out funny statistics have lots of tools at their disposal.

1. They have formulas in place that have been used regularly for years to control CPI, M-3 money growth and inflation. These are mandated to keep a lid on heavy government pension and social security obligations. Further, these phony stats imbue an all-is-well ambiance.
2. The jobs reports are so outlandish, jerking up and down with the wind and continuous re-adjustments, some reporters are now openly mocking them on big business television.
3. Construction is a huge US business and stats are difficult to define and prove. Consequently it’s fertile ground for openly lying on those unemployed. The largest jobs growth is in government for buying votes.

Be an independent thinker and focus on debt reduction, stock-piling of personal needs, and most of all get busy trading and investing in gold and silver. You will not be disappointed and could earn some splendid gains.

Spring Buying Cycle Has Arrived

Watch for new rallies in most all commodities markets in late August. We should see channelized mini-rallies in gold and silver this summer. The bloom is off the rose and the off-schedule, nasty “Sell-in-May-And-Go-Away” arrived. However, our summer forecast is a mild haircut in most stock shares including precious metals. The only action to prevent selling is our stunningly time-worthy Plunge Protection Team who had multiple recent failures to prop shares. Will they win during the June push-‘em-up event? We think with all the other market dangers they will prop their little hearts out and not permit the Dow and S&P 500 to get out of control. In our newsletter, Trader Tracks, we provide weekly guidance and extra e-mail alerts to report our best new trades and offer suggestions for trade management.

Whatever you do, make a concerted effort to stay with the trend and hang onto your core holdings of preferred shares, cash, and coins. Physical gold should never be sold or, traded but rather accumulated steadily on a monthly savings plan and squirreled away. Big traders are always ready to buy on the dips and normally never sell their gold and silver. You would be amazed how quickly your physical gold and silver will accumulate using this strategy.

Dear CIGAs,

Nothing happens by chance! Please consider the following:

An excerpt from the below Reuters article:

"Small and medium-sized miners and juniors who are still in the exploration stage, are the easiest targets for bigger companies, but the acquisitions wave won't likely stop there, THEY SAID.”

Why is it that amongst companies active in minerals, it is primarily and almost only precious metals shares that are under severe selling pressure?

Why is it that companies active in other mined products or co-products as below have their shares in major demand?

Did gold not rise from $248 to a high of $1033, yet even then the hammer was being applied to gold shares, especially those that hold the potential and promise of new production, as production declines?

Is there not a glaring example of a mined product in the form of potash this week? Did not an IPO in a mining company specializing in potash used as a fertilizer open up above its issue price by 58%?

Chemically, potash consists of potassium carbonate, but also might contain potassium oxide or potassium chloride, depending on how pure you consider the mixture. Usually, potash takes the form of powdery salts. Modern methods of extraction almost all rely upon deposits mined from ores, like sylvanite.

Nowadays our potash comes from mining and goes toward inorganic fertilizer rich in potassium.

Why are other mining entities acting so well, especially those with the following significant products:

• Antimony
• Beryllium
• Cadmium
• Chromium
• Cobalt
• Manganese
• PGMs
• Rhodium
• Tungsten
• Vanadium

How about simple iron ore and all those involved in all the criteria of exploration and development of crude oil? That is an extractive industry as is precious metals mining.

Your answer may be that gold is different but it is not. You might say others think that gold has topped, but it hasn’t.

The stimulants economically are the same for potash, iron ore and the other items listed above as it is for gold. It is the growth in Asia, the consequences of the effort to maintain the social order as the financial order implodes, and the condition of the US dollar.

Nothing happens by chance but for argument sake lets call it an opportunity to be seized. Many junior gold companies are so depressed that they are worth more dead than alive.

Gold and other metals shares are depressed so that they are selling well below their “Asset Vale.”

Asset Value is something that 3.7 generations have not taken into consideration where price is concerned. You may recall that I suggested to you that one major company would consolidate the industry. Keep that concept in mind. Major gold producers are in need of new production. This is FACT.

South African companies are in need of major projects OUTSIDE of the RSA. For the RSA gold producer there is no expansion of reserves in RSA because, even if they have it, they cannot produce it as the energy situation is already stressed beyond demand. This is a long-term problem unfortunately.

The major consolidator of the Gold mining industry may have gotten too greedy in waiting for future reserve properties to become ever cheaper and cheaper for acquisition or joint venture.

The game being played by design or serendipity is to depress the juniors or to take advantage of the decline in the juniors as a result of the poor share price action through starving the junior or explorer of financing.

Depressing the price of the shares of most junior situations results in starving precious metals juniors of financing and their shareholders would be ripe for a bid for the company at a price much lower then their highs when gold was at $600. It may also make the smaller company eager to make deals at less than advantageous conditions for their investors.

The key here is that the gold producing industry is in need of new resources as present resources are depleting. That is fact about which there is no question whatsoever.

It is much cheaper to pick up a property or entire company in a financially stressed condition because it cannot publicly finance for continued operation.

Let’s call the situation the taking advantage of a serendipitous development. To others it looks like the consolidators are holding a smoking gun. The weakness in this strategy is the advent of new competition for minerals internationally, primarily from Asia and the Middle East.

The Saudis and the Chinese are actively looking for mineral prospects from industrial to precious metals, from strategic metals and material to rare earths and beach sands, having publicly said so at top executive levels.

The major industry consolidators now have competition from companies with more liquidity and NO need for debt to take any property to production.

The advent of this new competition may well trump the western companies some feel are holding the smoking guns.

This competition from Asia and the Middle East may accelerate the consolidator, whose timing is a greed driven desire to get properties so cheap they might be considered free, to move sooner than later.

To call attention to the factual nature of this analysis please read the following article posted here April 11th this year regarding the stated interest of a major Chinese company given publicly at a recent professional mining conference and quoted therein.

Please note the all-important statement given by a top executive of the Chinese company:

Gold prices could move sideways in the near term and may not make much of a move in the next two quarters, but they should turn upward after that, according to Martin Murenbeeld, chief economist at DundeeWealth Economics.

“These projections may be considered somewhat bearish by some readers, but we assure them that the medium and long-term outlook remains quite bullish indeed,” he told clients in a note.

Mr. Murenbeeld said several issues remain for gold such as the market’s focus on the euro-dollar exchange rate that may “keep gold in check” when the euro declines against the greenback.

Then there is the U.S. recession. He noted that commodities, in general, do not do well during U.S. recessions, and nobody can be sure there is a complete decoupling in the global economy. Mr. Murenbeeld also sees a pause in gold and commodity prices developing as the middle of this long cycle arrives.

Both another financial crisis or a geopolitical disaster could alter things dramatically, but given the willingness of the U.S. Federal Reserve and other central banks to step in, equity investors may be feeling more confident these days. And this could lead to gold underperforming versus stocks in the near term. Nonetheless, Mr. Murenbeeld considers gold equities depressed and recommends investors overweight them.

Meanwhile, the large amounts of liquidity entering the financial system and pressure on other commodities should ensure that gold rises significantly higher, he predicted, adding that the supply argument for gold is becoming even stronger as mine output has not looked like it will rise before 2010 or so for quite some time. However, he added that there “remains a small possibility that miners will respond faster to the higher gold prices of recent times than they have in the past.”

Among the scenarios Mr. Murenbeeld laid out for gold prices, the “most likely” one is where the U.S. dollar index falls about seven points from the first quarter of 2008 through the third quarter of 2009. And this suggests gold prices will be in the range of US$850 to US$950 per ounce at the end of that period, he noted.

Another scenario where the dollar plunges around 10 index points during the next six quarters is much more bullish for gold, with prices expected to rise to US$1200 in early 2009.

Both scenarios assume speculative buying of gold will continue in 2008 and beyond.