Tuesday, December 19, 2006

Gold Price Bottomed on the 18th of December

(Click the image above to enlarge)

The GOLDPRICE.ORG Gold Price Sentiment Indicator is based on a number of variables related to website traffic on goldprice.org and other popular gold and silver websites around the world.

You can see in the chart above that the Sentiment Indicator (the blue line) spiked at almost every major top and bottom in the gold price during the past year. Its last spike occured on November 30 when the gold price reached an intermediate top at $650. Since this time the gold price has been falling.

GOLDPRICE.ORG Sentiment Indicator Suggests the bottom is in for the gold price and that now is a good time to buy gold.

On the 19th of December 2006 the GOLDPRICE.ORG Gold Price Sentiment Indicator spiked which suggested an intermediate bottom occurred when the gold price bottomed on Friday the 18th of December at just under $612 per ounce.

We expect this will be the last correction before the gold and silver price rockets. This is one of the best buying opportunities in this gold bull market.

Even with reliable indicators like this one there are never any guarantees. There is always the possibility of a lower low, like occurred in October after the September low. That is why it is prudent to buy physical gold that you own 100% and why you shouldn't buy gold on margin.

Richard Russell of dowtheoryletters.com who has been publishing his newsletter since 1958 says:
"I don't buy gold futures. I don't buy gold on margin. I don't buy gold puts or calls. I don't trade gold. Therefore, when gold ran up to $540 on December 12th (2005), I didn't get excited. And then when gold dropped to just above $500 yesterday I didn't get depressed. You see, on a daily or even weekly or monthly basis, I don't give a damn where gold goes. I don't care because I'm holding gold in terms of years, not months or weeks or days. And I own it outright. I don't own it the way half of America own their homes -- namely, on (mortgage) margin."

GOLDPRICE.ORG highly recommends GoldMoney as an excellent way to buy 100% pure gold and silver bullion online, stored in a secure vault.

Set up a free GoldMoney account to buy gold and silver in minutes!

Wednesday, November 08, 2006

Gold Price Sentiment Indicator Suggests Intermediate Top on November 5th

The GOLDPRICE.ORG Gold Price Sentiment Indicator is based on a number of variables related to website traffic on goldprice.org and other popular gold and silver websites around the world.

Our previous update on October 8th suggested a major bottom had occurred on October 4th 2006 at $562. We recommended our subscribers buy gold at this time. This turned out to be spot on. As you can see in the chart above. The gold price (the red line) has been rising steadily since then. You can also see our sentiment indicator the blue line spiked exactly on the October 4th bottom in gold. You can also see that it spiked at almost every other major top and bottom in the gold price during the last 6 months.

GOLDPRICE.ORG Sentiment Indicator Suggests an Intermediate Top in the Gold Price occurred on November 5th, 2006

On the 5th of November 2006 the GOLDPRICE.ORG Gold Price Sentiment Indicator spiked which suggested an intermediate top occurred on that date. The gold price closed at $628.1 on the 5th of November and has been falling since then.

The next update to the GOLDPRICE.ORG Gold Price Sentiment Indicator will be provided when it spikes again suggesting a bottom in the gold price. We expect this will be the last correction before the gold and silver price rockets. This will be one of the best buying opportunities when it occurs.

Subscribers to the GOLDPRICE.ORG Gold Price Sentiment Indicator will be alerted via email on the day it takes place.

If you would like to subscribe to the GOLDPRICE.ORG Gold Price Sentiment Indicator, please email goldprice AT gmail.com. Our yearly subscription fee is 5 grams of gold payable via goldmoney.com

Sunday, October 08, 2006

GOLDPRICE.ORG Gold Price Sentiment Indicator Suggests Major Bottom on October 4th

The GOLDPRICE.ORG Gold Price Sentiment Indicator is based on a number of variables related to website traffic on goldprice.org and other popular gold and silver websites around the world.

The chart above shows a history of the gold price versus the GOLDPRICE.ORG Gold Price Sentiment Indicator going back to 2005.

As you can see the sentiment indicator spikes have correlated amazingly well with most of the major tops and bottoms in the gold price during 2006. Over time as the website traffic has increased and the sample size has grown the sentiment indicator has become more accurate.

Sentiment Indicator Suggests Major Bottom in the Gold Price on October 4th, 2006
On the 4th of October the sentiment indicator spiked which suggested a major bottom occurred on that date. The gold price closed at $562 on the 4th of October.

Buy Gold Now!
If the sentiment indicator is correct as it has been for the recent major bottoms in the gold price, right now is an excellent time to buy gold. The next update to the sentiment indicator will be provided when it spikes again suggesting a intermediate top in the gold price.

goldprice.org highly recommend goldmoney.com as a safe and convenient way to buy physical gold online.

Friday, August 04, 2006

You Can't Eat Gold - Self-Sufficiency Is The Secret

Your Can't Eat Gold!
by David Andrews

Or, The True Nature of Wealth, and Its Sustainability

Defining Wealth

Recently I was speaking to a couple of friends about the gold market and the US economy in general, and one of them startled me when he said, "You can't eat gold, you know!" Of course not, I thought, it would just break my teeth! On the other hand, I couldn't think of anything more sickening than eating the usual tattered, filthy Federal Reserve Note. But the comment did get me thinking.

Anyone who considers the US dollar (Federal Reserve Note) to be in any danger of collapsing, or losing purchasing power at all, should be thinking right now about dealing with that eventuality. And the comment about eating gold brings up the question, just how would we pay for food - not to mention the other necessities of life? We take it for granted that everything from aspirin to D batteries to new socks will forever be on store shelves, just awaiting purchase with Federal Reserve Notes, which will always buy anything.

What if that premise is false? What can we do when FRNs will not buy much (if anything) at all, and perhaps the merchandise will not be available for purchase with any type of money? Can we really expect that sitting on a pile of gold will magically fill the store shelves for us? We won't be able to bring silver and gold coins to the stores without being robbed or even killed. Could some exogenous event bring down the whole house of cards, leaving Americans to scramble for the last available goods?

This brought up another question: what is real wealth? If it isn't FRNs and if it isn't gold or silver, what is it? Money, whether hard cash or paper fiat, may be a store of wealth, but it isn't wealth itself. We can't eat it, wear it, live in it, drive it, or use it for much of anything. Wealth comprises all the goods on store shelves, including food, clothing, fuel, matches, auto parts, flashlights, blankets, children's cough syrup, and everything else that provide the comforts of life. It also includes a roof over our heads, some working form of transportation, and perhaps most importantly, the freedom to enjoy the privacy of family life. Wealth also includes the ability to sustain this standard of living, to be self-sufficient, to be able to provide more of all of these things, even in the absence of a common currency. To depend on a currency - any type of currency - involves a loss of control over what will be accepted in exchange for real wealth.

Too many of us think of wealth as consisting of assets falling into one or more of the asset classes - stocks, bonds, commodities, cash, real estate, and so on. If it brings income or growth, we count it as an asset. With the possible exception of real estate, all these assets are not wealth per se, but a means of investment of money (which we would hope could be trusted as a store of value). Real estate, if held as a family home owned free and clear, ceases to be just an investment, and becomes an item of real wealth. If it carries a mortgage, it is simply a liability.

The Problem of Sustaining Wealth

Let us imagine a family that is fortunate enough to have a home, owned free of encumbrances. Perhaps they had enough foresight to stock the pantry very well, and have enough food to carry them for a year or more. If they had accumulated "stuff" at anywhere near the rate that most of us have, they would own enough clothing, medicine, household furnishings, tools, and vehicles to last for at least several years. Let us also assume, as this family seems to be very wise, that they are debt-free and have some cash savings, perhaps even a little gold, bought as an investment.

Along comes the "exogenous event" - war, hurricane, terrorist attack - we have been through all of that in the past few years and survived, therefore it may be a totally different type of event, or a more devastating event. It will be unexpected by most, although many of us know that something, some trigger, must eventually level the imbalances in American and global finance. Perhaps it would be an oil or energy crisis. It may be a dollar devaluation, or both. Our well-prepared family finds itself suddenly thrust into a world where their cash savings buy little, if anything. The transportation system breaks down, and goods disappear quickly from store shelves. If you live in an area that has been recently ravaged by a hurricane, you know just how quickly this can happen!

What can this family do? One or two of them are employed, but the currency in which they are paid buys virtually nothing. Soon, even the employment is lost. They have a good deal of wealth and security in the form of a paid-off home, stockpiled food, and other goods. But let us suppose that winter is coming on, and the home needs to be heated. Perhaps the property taxes are coming due. Or maybe medical care is needed for a family member. None of these things can be purchased in the currency that they have used all their lives.

It could correctly be stated that even a family that starts out with a good deal of wealth, may not be able to sustain it. Anything that requires an output begins to erode their wealth. They may be able to barter with a neighbor for firewood, or find a doctor willing to accept investment-grade gold coins for medical treatment. Then what? They won't be able to turn to FEMA for anything!

If this wise family lacks the flexibility and the know-how to sustain the wealth and the living standard that they have worked so hard for, they will begin to lose that wealth and way of life pretty quickly. If the property taxes cannot be paid, they may lose their home. If they run short on food, they will not be able to re-stock at the supermarket. They may not be able to find the fuel they need for heating and cooking. If this situation persists for any length of time, for perhaps a few years, they would end up destitute.

Unlikely Survival of The Unfit

By now it should be apparent to the reader that having dollars or Euros or gold or stocks or bonds, is not a foolproof method of sustaining wealth. Whichever currencies or assets that survive the financial meltdown that appears inevitable, will be good to save for re-building when the period of devastation is over. There won't be much available to purchase with them in the interim. What is our imaginary family to do during the crisis years, between now and then? How can they stem the flow of wealth out of their pockets, recapture it, extend it, and survive to re-build when the time comes?

Our ancestors had the answers to these questions, but today, we have become fat, lazy, and complacent. During the Great Depression, there were far more family farms in America than there are now. What happened? Oil is what happened! Americans began buying cars and commuting to jobs in the cities, and suburban sprawl was born. Supermarkets stocked the shelves with a far greater variety of foods than could be found locally. Cheap oil enabled all of us to enjoy a culinary abundance, shipped from all over the world as well as the most fertile areas of the United States. We could make more money spending 8 or 10 hours a day in a factory or office in the city than we ever could on a farm, milking cows and hoeing beans. As family farms disappeared, agribusiness took their place. Using cheap petroleum-based fertilizers and pesticides, American farmers were able to supply the world with food. The money we earned in the cities enabled the phenomenon of discount retail to flourish, raising the standard of living for any American who wished to take part.

Today, we have become so accustomed to this way of life that all save the oldest among us knows no other. During the craziness of the recent real estate boom, prime farm acreage was worth more to sell to a developer than it was to use as a farm. Certainly nobody wanted to pay the rising taxes on it. As the old folks passed on and their baby-boomer kids inherited the baby boodle, such large tracts of acreage were sold off to become more suburban sprawl.

That leaves us in quite a tough spot, as oil threatens to reach $100 and more per barrel, as tensions in the Middle East begin to explode. Suddenly, the daily commute to work is getting expensive. Prices of virtually all goods and services are rising too fast for Americans to keep up, as most of those goods and services are dependent upon inexpensive oil in some way. Monetary inflation shares a great deal of the blame here, but not all of it. Our soft lifestyle is also a culprit. At this rate, America is increasingly in danger of losing her middle class, the backbone of the nation. Our wealth is flowing fast out of our hands into foreign ones. And the real crisis has not yet started.

Self-Sufficiency Is The Secret

When goods become scarce, or too expensive to purchase, we must re-learn how to provide the necessities for ourselves. If we are living in a $400,000 home with a mortgage that breaks the budget, the easy answer is to move to something that can be owned outright with whatever equity is left after the sale of the McMansion. Often, there is no equity in it, and other assets may have to be liquidated to get into something - anything - that will provide shelter for no cost beyond property taxes and insurance.

When supermarket shelves become empty because big-time agribusiness can no longer afford the petroleum-based fertilizers needed to grow food or the gas to run the big combines, we will have to grow it again ourselves. If gasoline becomes too expensive to commute to that city job that no longer supports us, we will have to leave that sort of employment for another that does.

Self-sufficiency involves the abandoning of a market economy while turning to a use economy. In other words, rather than going to a city job to earn the money to purchase the goods we need, we produce them directly, for ourselves. This has far greater implications than hard-core survivalism, or hoeing a row of beans. It means that we will have to take a step or two back in time, perhaps to take a lesson from the Amish or Mennonites. We will need a system that will work for us, when the one we have used for so long begins to fail.

And fail it will. We will not be able to depend on the government to step in and do something about it. For all intents and purposes, our government is bankrupt and may not survive in its current form. That in itself is a grave danger to all of us, and a return to a simpler and more self-sufficient lifestyle may become a matter of life and death. Those individuals and families who are unwilling to face this reality will find little sympathy from their more nimble and open-minded neighbors. If America is to survive, it will need citizens willing to do whatever is necessary to survive. The clock is ticking, and we may have a few years - very few - to prepare for a big change. This is how real wealth is going to be defined on the foreseeable future. Don't expect much in the way of a warning. As I have already stated, it will take most by surprise.

Gold Price Sentiment Indicator

A Brief History of GOLDPRICE.ORG Proprietary Gold Price Sentiment Indicator in 2006.

How the Sentiment Indicator Works

In its most basic form provided in the chart above, the sentiment indicator suggests a top or a bottom in the gold price or a major change in direction of a trend line when the sentiment indicator spikes. The sentiment indicator is based on a number of variables related to website traffic on goldprice.org and other popular gold and silver websites around the world.

The previous spikes in the sentiment indicator correlate well with the last five major tops and bottoms in the price of gold during 2006. We have displayed a chart of one component of the sentiment indicator that is quite accurate, although the sentiment indicator has many components, which help to determine if a spike is associated with a top in the gold price, a bottom or a signal of an approaching break out to the upside or downside.

Below is a brief history of the major signals provided by the GOLDPRICE.ORG Gold Price Sentiment Indicator in 2006.

Top 1. Occured on the 16th of April 2006, when the gold price broke out to the upside above $600 US. You can see that the sentiment indicator registered $600 as being very significant and it forecast the start of the major run up in gold prices from $600 to $730.The gold price ran up the next few days and had an intermediate top on 20th of April at $645 then fell back to $607 US on the same day before proceeding sharply higher to $730.

April 10th, 11th and 12th appear as the smaller peak proceeding Top 1 and hinted at the move that lay immediately ahead. It appears that continued elevated levels in the sentiment indicator without a spike are associated with the days prior to a major break out to the upside in the gold price.

Top 2. Was the biggest spike in the sentiment indicator since its inception and it occurred on May 10th and 11th, it provided a clear indication that the gold price was about to reach a major top, and that top took place on May 12th when the gold price hit a high of $730 per ounce.

Bottom 1. The major bottom in the sharp downtrend from the May 12th high was suggested by another major spike in the sentiment indicator which occured on June the 13th. The gold price hit a bottom of $542 on June the 14th and has been rising since then. The size of this spike in the sentiment indicator gave a clear signal that a major bottom had occurred.

Top 3. Was another spike in the sentiment indicator marking an intermediate top in the gold price. The sentiment indicator was showing a spike on July 13th, the intermediate top in the gold price came a few days later on July 17th at $676 US.

Bottom 2. The sentiment indicator spiked on July 24th marking another bottom in the gold price. The gold price bottomed at $602US on the 24th of July.

Top 4. The sentiment indicator was at an elevated level on the 31st of July but did not form a spike. We have interpreted this as an intermediate top but its possible the sentiment indicator is alerting us to a possible break out in the gold price from its current triangle formation in the near future, as its pattern is similar to the days before the break out above $600 prior to Top 1, which occurred in Mid April 2006, when gold ran from the break out above $600 up to $730.

August 1st, 2nd and 3rd have all showed elevated levels in the sentiment indicator, this level of continued strength in the sentiment indicator without a spike is generally associated with a break out in the gold price ahead. We shall see.

Thursday, August 03, 2006

Gold Price Intermediate Top

The GOLDPRICE.ORG Proprietary Gold Price Sentiment Indicator is suggesting an intermediate top in the gold price occured on the 2nd of August at $656US.

We will provide a chart of the sentiment indicator in the near future.

Wednesday, July 26, 2006

Gold Price Bottom on the 24th of July 2006

The GOLDPRICE.ORG Proprietary Gold Price Sentiment Indicator is suggesting an intermediate bottom in the gold price occurred on the 24th of July 2006 at $602 US per ounce.

The sentiment indicator is suggesting the gold price will rally from the $602 US it hit on the 24th of July 2006.

The next update on the sentiment indicator will be provided when the indicator suggests this gold price rally is about to top or has topped.

Monday, July 17, 2006

Gold Price Intermediate Top

The GOLDPRICE.ORG Proprietary Gold Price Sentiment Indicator is suggesting an intermediate top in the gold price in the very near future having just hit $676 US per ounce.

This sentiment indicator has been developed over the past several years and this is the first public forecast to be provided to goldprice.org visitors.

However, this gold price forecast is for the short term and in the longer term the price of gold and silver is going much higher. It is wise to buy gold and silver on a dollar cost average basis. Set a budget for buying gold coins or silver coins each month and keep accumulating physical gold and silver month after month irrespective of the price and you will do very well in the long term.

In addition to buying gold and silver coins from your local gold dealer, you may want to also consider the Gold Accumulation Plan provided by goldmoney.com which allows you to buy gold automatically each month.

Here is some information from the goldmoney.com website about their Gold Accumulation Plan(GAP):

"GoldMoney's GAP is the easiest and least expensive way to accumulate gold.

  • Determine the amount of gold you want to purchase monthly: $50, $100, $250, $500, $1,000, $2,500, $5,000 or $10,000 per month in either US or Canadian dollars

On the 15th of each month goldgrams will be purchased on your behalf at only 1.9% above the spot gold price. The cost of your purchase is automatically debited from your checking account. And you have the convenience of 24/7 online access to check your goldgram balance plus the security and safety of allocated storage* in an insured vault."

Tuesday, April 11, 2006

Why Gold Prices, Oil Prices, Inflation & Interest Rates will Sky Rocket!


by Andrew McKillop of newsgateway.ca

Late 20th and early 21st century monetarism played gold-averse for quite a while: from about 1985-2005 almost any finance minister of the International Community, those hands-on former business chiefs or party hack politicians who have become their nation’s Mr Money, would go out of their way to say that gold was fading away. It was no longer needed, it really was a barbarous relic, it interfered with the public’s appreciation, respect and adoration of the national money – and behind all that, their adoration of the US dollar. High gold prices in New Economy newspeak were destabilizing and inquieting, harbingers of inflation, messed around with trade growth and transparent markets, and gold is not only produced by dependable and well-managed South Africa, but also by some pretty barbarous countries that Nice People don’t like dealing with.

Gold prices are also linked with oil prices. In the early 1980s when really vintage monetarism came back out of the mists of time to rule for a 20-year eye blink in human history, the world was coming down and out of the 1979-1981 frenzy. In that time of fear and loathing, as Khomenei’s mobs chanted anti-Western slogans in Tehran, gold prices had racked their way up with oil prices to exotic, scary highs. In 2006 dollars, the gold price achieved about 1400 USD-per-ounce in that time, when oil cost well above 110 USD-per-barrel. Of course inflation was high: any hands-on businessperson could profit from the ambient hysteria, rack up their own prices, borrow at negative real interest, speculate on anything, and make a killing. This was bad economics. Speculation is only for the nicest and best speculative instruments, like home purchase and rental prices, or mobile phone operating licences, and other socially-approved inflation, which somehow don’t appear in the official inflation numbers. Beating inflation is a bugaboo that goes back a long, long way.

Monetarist Madness

The monetarist creed goes back so far in history that explaining its fascination for modern, hands-on finance ministers whose personal business experience can extend to running pizza franchises or football teams, is more than difficult. The story goes back to the 1560s, and the grave threats to monetary stability posed by massive inflows of cheap gold into Elizabethan England, and elsewhere in royal Europe. The coins of Elizabeth’s realm, some of them gold, just couldn't compete. Gold from the Caribbean, Central America and South America, brought by Spanish, Portuguese, English, Dutch, French and Italian sailor heroes, and also by international pirates, flowed all over Europe. People quickly started minting their own coins, official moneys wilted, and prices went haywire, that is down, up and sideways.

Most of all, the assured profit from producing official money, which at the time was only coins (paper money appeared for the first time in the early 1700s) was seriously threatened. When other players bust the cosy monopoly of official money they reduced, sometimes eliminated the mark-up on the coin value against what it cost to buy the metals and make coins from them. This was bad news to the elites, who ran on on what they got from controlling official money production. Their rake off on national – that is royal – coin producing came from buying the raw material metals, including gold and silver at a cheap price, and selling the output manufactured products dear, that is coins with nice pictures of the Queen, King or other fine persons on it. Whenever times were tough and the raw material metals were in short supply, older and heavier coins would be called-in, scraped, and new lighter ones produced from the scrapings - with the same money number stamped on them. This is monetary inflation.

Called seignorage in England, the royal rake off from the monopoly on producing money financed the Royal Treasury, and the entire system of noble privileges, paying the royal revenue of soothsayers, priests, soldiers, thugs and other bodyguards that any self-respecting royal has to have. By 1571 the situation was grave enough in Elizabethan England for the Royal Mint to be set up, its total monopoly secured, in theory, by draconian laws punishing any person minting their own coins and undercutting the official money. The gold kept on flooding in. One estimate of total inflows of New World gold and silver to Europe through 1550-1600, by the cycle economist Nikolai Kondratiev, was of 50 000 tons of gold and 400 000 tons of silver. No national bank in Europe, today, has more than about 1000 tons of so-called ‘fiduciary’ gold in its vaults.

The pirates had their anarchic fun by paying trivial purchases by banging down solid lumps of gold – enough to make gold coins paying a dozen times the purchased article. Today’s equivalent is new wealth sheep and camel herdsmen from the Saudi deserts banging down fistfuls of petrodollars to build a plastic-and-concrete instant city using the nicest possible Western expertise. Back in Elizabethan times, scheming nobles set up their own back-country mints, organized local money systems, recruited private armies and waited for their chance. Wannabe rivals of European royal heads increased in number, threatening the heads of incumbents. In the official money system things went from bad to worse. More and more nobles became disloyal. The church complained, loyal nobles complained. Trade and guild leaders also complained because the ‘false money’ based on stolen gold and silver from the New World was everywhere, and thicker, and better than the official. Whether in fact this was what we call inflationist today, or deflationist, is a good question but what counts is the official reaction.

Reasonable-priced Gold and Reasonable-priced Oil

In the period of about 1600-1650 the grave threat to established, royal money systems in Europe was countered by what we call vigorous and robust action, that is military. Pirates were hunted down, and muscular monetarism set a strategy of rapid reaction overseas. Colonial implantations of soldiers-plus-miners were set up in gold producing regions, and the hunt for gold in ‘new’ regions like Africa started in earnest. This was therefore a supply-side strategy: get to the gold before the others, grab the resource, and prevent the others from getting their hands on it. Controlling the resource assured supplies to royal mints, and also deprived the rivals of gold for their mints, weakening their money. Not only was this good for loyal traders and nobles, but it was also bad for the other side, who could not recruit and pay mercenary soldiers for rebellious projects.

The 1991 Gulf War was very close to that spirit: get to the source of black gold, ensure a free flow of reasonable-priced oil to the home side and its allies, and deprive the bad guys of both oil and money. Also, we can note, the leader clans of today’s globalizing economy, recycled from running pizza parlors to becoming great men of state, are brought up to believe that the 1979-1981 shakeout and meltdown of the economy, with gold and oil prices reaching terrifying heights, was caused by the vertical upward movement of oil and gold prices. Their PhD toting soothsayers told them what they wanted to hear: verily, oil and gold price rises were the sole, root cause of inflation at that time. The idea that base or high street bank interest rates at 25% or 30%-per-year can or could be inflationary was irrational to them, and simply did not figure on soothsayer radar screens. Interest rates are hiked, by monetarists, with the firm belief they counter inflation and come after inflation. They in fact come before, cause and intensify inflation, but no amount of Nobel economics prize rhetoric will work. Monetarism is an age-old dogma, and needs no facts and figures.

Thus it was that gold prices were cranked down, inch by inch and dollar by dollar through the 1980s and 1990s. To help the process, finance ministers who were always proud to say their experience of running a football team immensely aided their deft running of the economy, would periodically sell big slabs of fiduciary gold. The word ‘fiduciary’ is itself a relic from the 17th century, but means the stock of dead gold held in national bank vaults ‘just in case’. That is, just in case The Enemy starts trying to undermine our good and nice money, these days with printed paper notes and bills carrying cute pictures of Kings, Queens, presidents, prime ministers and great war heroes. National bank gold stocks can be used to prevent that, it is believed. But if you want gold prices to fall, to bolster the value of the paper stuff, or for some other reason (and monetarists have them), then you sell the national gold. This was done regularly through the 1980s and 1990s. Buying it back from the free market after about 2003 is not proving too easy – that is it works out very expensive, using those taxpayer funds the ex-football team heroes love to spend.

The reasoning path of latter-day monetarists is a baroque thing: high gold and oil prices are inflationary, so if gold price can be levered down then oil prices could or should follow, and inflation will be low forever. Amen. Another cut on this is the monetarist belief that high gold prices undermine confidence in money of the paper variety. Money of the paper sort is a vital thing. For a whole lot of reasons we cant go back to gold, silver, copper, aluminium and iron coins, so we have to keep the paper stuff. Ergo monetarists defend their paper money with the same gung-ho fervor their ancestors defended the value of gold and silver coins – of the right type, from the right manufacturing centre, that is. Trifling details such as the energy cost of gold, which is nowadays often mined from 4500 metres underground, followed by sifting through a ton of ore to grub out 3 grams of gold, takes rather a lot of energy. In the case of reworking tailing's from old gold mines the process needs huge quantities of cyanide, to grapple a few grams of the yellow stuff here and there. This all costs a lot of energy, a lot of it oil. So if the oil prices rises, then gold prices rise. The other way round, which is official monetarist logic, is not so sure.

Waiting For It

A quick check through US national economic and financial accounts shows the vast need to maintain confidence in paper dollars. In normal logic the US dollar should be completely worthless, but the same also applies to the Euro, the Yen or most any other money you care to name. Oil exporters have to accept these paper moneys, like you and me. Every so often, and Kondratiev claimed that ‘every so often’ is cyclic and relatively predictable, and is not purely stochastic, confidence melts down and paper money, along with even more papery share actions and derived financial instruments has a very rough ride. This is what happened in 1979-1981. No amount of gold selling by national banks, today, will or can halt the upward rush of gold prices – or oil prices.

Back in 2004 or 2003 it was not so sure. Brave, respected and stout-minded defenders of the New Economy and strong money of the paper sort could get up their hind feet and proclaim that ‘quite soon’ the world would come back to its senses. Being monetarist minded and sharp enough to run a pizza parlor, even two pizza parlors, they had numbers to go with their sure and certain pronouncements. The London-based N M Rothschild private bank, with its age-old seat on the London bullion price fixing committee – dating from the 1770s – pulled out of the gold price fixing arena in 2003, in a fanfare of financial media attention. It announced that gold could never exceed 270 USD-per-ounce, or oil 35 USD-per-barrel. Of course the Rothschild spokespeople added that these ideal, reasonable prices were ‘in the long-term’. Just for the short-term, therefore, we can and will have 600 and 700 USD for gold, and 75 or 90 USD for oil, but don’t worry folks, that isn't long-term reality. In any case the N M Rothschild bank makes nice dosh on shuffling paper stuff like swaps and derivatives so what the worry for them ?

We can have an awful lot more than 700 USD-per-ounce for gold, and 90 USD-per-barrel for oil. All kinds of experts, that is former dotcom analysts with hands-on experience of good financial management, are falling over themselves to forecast 125-dollar oil: with that price for oil, gold should easily crash through the 1000-dollar ceiling.

This will very surely lead to classic knee-jerk response from the monetarist guardians of what they call economic orthodoxy: that is massive interest rate hikes, further raising inflationary pressure – this of course being denied as even possible in monetarist newspeak. To them, hiking interest rates into the stratosphere only causes other people to lose their businesses and lose their jobs, not the Nice People. Strong money must come back, and that needs cheap oil and cheap gold, in half-baked monetarist logic. So getting back to the happy state of money stability needs a heavy dose of misery, but course for other people and not the government and bureaucratic elite, nor the financial and economic elite.

We can almost count down to this coming struggle. Surely, our great democratic and economic leaders will reason that all they have to do is repeat the 1980-1983 recession through cranking interest rates ever higher, showing immense courage as they watch the economy fall apart as a result. But this time around the strong money medicine is going to be harder to sell than 25 years ago - and is also not going to work because of Peak Oil and the end of cheap energy. Back in the 1980s it was still possible for Saudi Arabia’s anxious-to-please rulers to hike their oil output by 25% in a pumping frenzy that more than covered depletion losses elsewhere. Today Saudi Arabia cannot hike its oil production by even 10% - in fact its likely at flat out peak right now. Oil prices will be hard to swat back down to ‘reasonable’ levels, and will bounce back any time the economy starts growing. So unless our monetarist rulers decree and organize a permanent, that is really permanent economic recession their crawling desire for ‘strong money’ will not be assuaged.

Sunday, April 09, 2006

Where is the Gold Price Headed After $600US?

The gold price for June delivery rose to a high of $601.90 in electronic trading Thursday morning, the highest price since January 1981. The contract closed at $599.70, up $7.20 for the session.

So where is the gold price heading from here now that it has reached the $600US level.

We can expect some resistance at this round number level as was the case when the gold price reached $400 and $500.

However, don't be fooled by many in the main stream media or by friends and family who would have you sell your hoard of gold coins and bars at this level. The gold price has not even begun to get started when you consider that the previous high in 2006 inflation adjusted dollars is around $2200.

Lets take a look at what some well regarded experts on gold have to say about where gold is headed from the $600US level.

Bill Murphy of the Gold Anti Trust Action Committee and author of the gold commentary website lemetropolecafe.com says to understand where the gold price is headed from $600 and why, you must deal with where gold has been and why:

"If you don’t deal with the manipulation issue and how gold was ARTIFICIALLY suppressed for many years by The Gold Cartel, it makes it much harder to understand why the price will soar from here. Gold is JUST getting back to the price where it should have been many years ago. Most of the clueless in the mainstream gold world and on Planet Wall Street think $600 is a high price for gold, when it is pitifully LOW!"

Dan Norcini who writes for Jim Sinclairs website jsmineset.com has suggested that the gold price could be heading over $600 in the near future. Norcini points out a possible break away gap at the end of March, which may have marked the start of a strong upward leg in the gold price. See the gold price comex futures charts below:Dan Norcini suggests that a bullish pennant formation can be viewed in the gold price chart below, which indicates a potential gold price target of $625-$630 or $650.James Turk the Founder of GoldMoney.com, (where you can buy gold and silver online at very low premiums and sell gold or silver at any time at the current spot price), reminds us what happened from March 20 to April 24 in 1987:
The price of silver nearly doubled. Will history repeat? If it does, the silver price would be $17.83 at the close of trading on April 24 th. Is that possible? Of course it is – it would just be replicating the gain of that magnitude that already happened in 1987. Will it happen? Well, there’s the rub – no one knows. But it never hurts to focus on what ‘could be’ to keep us on the right side of the trend, which is clearly up for both gold and silver.

Monday, February 20, 2006

When Gold Flies to the Moon

When Gold Flies To The Moon
by David Andrews

Fabulous Wealth In Paper Money

Just this weekend, all the talk around my office centered on the record $365 million Powerball lottery jackpot, the largest in history. And who would not jump at the chance to become a multi-millionaire? It seems to be everyone's dream. What occurred to me was that this was also the dream of most gold and silver bulls. Sure, we all know that gold is real money, has been for 6,000 years, and when it takes its moon-shot, it will make us fabulously wealthy. Our chances are much better than the 1 in 146 million odds for Powerball. Then we will all live like kings!

Or will we? In order to realize those profits in the millions (should we be so fortunate), we believe that we will have to trade our precious metals back into paper money. Federal Reserve Notes are not what has been real money for 6,000 years. That distinction belongs to gold and silver. There seem to be some assumptions here that don't make a lot of sense. One of them is that precious metals are just an investment, to be cashed in - if one is nimble enough - as close to the blow-off top as possible. Another is that large gains in paper dollars are the ultimate objective. Throw in the uncertainty that paper money will even be around in another five years, or that the US dollar will remain the world's reserve currency.

In financial matters, one is best advised to deal with reality, not idealism. All the talk about gold being "real money" means nothing, if it isn't backed up by facts. It is clear that most people don't really care which is the real money, as long as they have plenty of it.

Too Late For Paul Volcker

The situation with the US dollar is much more precarious now than it was in 1980, when the price of gold rose to $850, and silver to $50 per ounce. Paul Volcker was brought in as Fed chairman in 1979 to deal with the last real dollar crisis, when the US economy was still strong. Exports were vigorous, there was full employment, and the consumer was flush with savings. However, inflation was out of control. Volcker rolled up his sleeves to manage the money spigots while letting the interest rates rise north of 20%. He later expressed regret that he did not control the price of gold.

Could Ben Bernanke do the same today? Not without collapsing the system. There is too much debt in the US now. The economy is far more fragile. Employment is not as strong, the consumer has negative savings, and the yield curve is about to invert. Gold has been sold short, loaned, swapped, and heaped on a mountain of derivatives that threaten to unwind if hit with so much as a strong breeze. It is far too late for Volcker's strategies.

Given the fundamentals of the US dollar today, who would want to trade precious metals for this paper? Apparently, even the most ardent "gold-is-real-money" advocate would do just that. It is also one reason why so many are so willing to invest in the various forms of "paper gold", and to take their profits in paper. This implies a return of confidence to fiat money. Is someone expecting the dollar to turn around and become strong? Too much liquidity has flowed under the bridge for that outcome.

"Nervous Nellies" and The Great Speculation

While pondering this seemingly contradictory state of affairs, it dawned on me that Hugo Salinas Price of Mexico had addressed many of these concerns recently in a presentation for GATA's Gold Rush 21 symposium. A DVD of that historic Dawson City, Yukon conference is now available on-line for a modest fee and is well worth the time spent viewing the speeches given by some of the most prominent international advocates of sound money.

Silver and gold, argued Salinas Price, must be monetized from commodities to legal tender status before they will cease to be a speculation. "Money" cannot be something that can go down in value. Yet, gold and silver have done just that, after the last top in 1980. Altogether too many investors were burned the last time, and are determined to get out before the same thing happens again. Nobody wants to be left holding the gold bag next time. This type of thinking leads to many analysts and gold commentators jumping the gun to call a "blow-off top" before the bull even gets started. Utilizing such warning calls, investors hope to return to the "safety" of paper dollars before the gold bear market resumes.

This trigger-happy mentality causing investors to leap in and out at the slightest sign of market volatility - or the other bane of precious metals bulls, long range-bound behavior - leads to the very real possibility of missing the boat altogether. What the precious metals investor needs to understand is that jumping back into paper dollars is no longer a return to safety. There is no safety in paper currencies. We are truly on the threshold of a world where, if you don't have some physical precious metal, you won't have any money.

How High Is The Moon?

Adam Hamilton of ZealLLC.com has recently provided us with two excellent analyses of the real 1980 tops in gold and silver prices, in terms of 2006 dollars. His inflation-adjusted charts (five in each article) reveal that all is not what it seems. According to Adam, gold has reached only a 13-year high, and has not retraced its 50% price level. In 2006 dollars, gold would have to rise to $2,176 per ounce, and silver to $122 per ounce, just to reach their 1980 highs! We can't be certain that the precious metals will exactly match their 1980 highs. It is likely that they will rise much higher, for reasons outlined above, and due to their lower stockpiles now than in 1980.

A primary driver of this current bull has been the willingness of western central banks to sell their gold into the market to depress its price, only to watch with chagrin as the Russians, South Africans, Asians, and Arabs buy it hand over fist. Americans have seen their jobs exported to China and India. Now, our real wealth is following those jobs, in the form of our gold.

The possibility exists, then, that the height of the moon will never be determined. When (not if) the US dollar reverts to its intrinsic value - zero - how can we measure the price of gold? We can't. We either will have it, or we won't. It is likely that the wealth of the Powerball jackpot winner(s) will be short-lived. Why invest in gold, when you are already a multi-millionaire?

Paper To Paper: To Dust It Shalt Return

Of all the ways to invest in precious metals, paper is the most common. Futures, ETFs, certificates of ownership in pool accounts, derivatives, loans and swaps...what the imagination can conceive, paper dollars can buy. Why would an investor care that his gold or silver is no longer in a pool account - that it has been lent out to be sold into the market and used against him? He may still make a profit on it when prices rise. He doesn't worry about taking physical delivery. Who needs the expense and hassle of storage fees and moving heavy bars of metal from one place to another?

It is perhaps this aspect of gold and silver investment that is most disturbing. The ease and speed with which paper is traded today can be a blessing or a curse. It goes right back to the idea that the whole purpose of trading in markets - any market - is to bag a quick dollar profit. Nothing wrong with that, if that's all you want. You take the risk that your paper will end up worthless.

But for those who claim that gold is real money, that silver is real money, that honest money is the only way to build a truly strong and enduring economy, this is not the way to invest. This is not the way to prepare for an uncertain future. We are dealing with bankers and thieves here, with crooked politicians who would sell their souls down the river for re-election. We are up against collectivists who would tax us to oblivion to further their socialist agenda.

The true Patriot always fights with strong weapons. Time is running out. Buy some physical, and never give it away for paper.

And the cat's in the cradle with the silver pool,
Little Boy Blue when gold hits the moon.
When you taking profits?
Son, I don't know when. I'll pay the taxes then.
You know I'll be a rich man then.

(from Guns'N'Roses)

David Andrews
Glastonbury, CT USA

Thursday, February 02, 2006

Cheuvreux - Credit Agricole Report on Gold Price Suppresion

Cheuvreux, the equity brokerage house of Credit Agricole, the huge French bank, this week distributed a 56-page report that completely endorses in detail the findings of the Gold Anti-Trust Action Committee (GATA) that the gold price has been surreptitiously suppressed by Western central banks and that those banks do not have the gold they claim to have.

This is possible one of the most important reports since this gold bull market began.
It is a historic document and will have enormous consequences.

Credit Agricole is the equivalent of a Bank of America in the US. The ranking of their research department in Europe is as follows:

The 2005 All-Europe Research Team ranking Credit Agricole:
No. 1 in France
No. 2 in the Netherlands
No. 3 in Belgium
No. 4 in Spain and Nordic countries
No. 5 in Germany

The 2005 All-Europe Research Team ranking
Cheuvreux is ranked No. 2 for Western European country research, with 6 rankings in the Top Five

Here is a quote from the Press Release put out by GATA regarding the Cheuvreux/Credit Agricole report:

The report, written by Cheuvreux's mining sector analyst in London,
Paul Mylchreest, is titled "Remonetization of Gold: Start Hoarding."
It repeatedly cites GATA by name and foresees an "unprecedented"
rise in the gold price, possibly accompanied by a spike to as much
as USD2,000.

The report's executive summary says:

"We are raising our mid-cycle gold price estimate to USD900/oz from
USD750/oz and see the possibility of a spike to USD2,000, or higher.
Covert selling (via central bank lending) has artificially depressed
the price for a decade."

"Central banks have 10,000-15,000 tonnes of gold less than their
officially reported reserves of 31,000. This gold has been lent to
bullion banks and their counterparties and has already been sold for
jewelry, etc. Non-gold producers account for most and may be unable
to cover shorts without causing a spike in the gold price."

"There is a supply deficit in the gold market of around 1,300 tonnes
per year before any central bank selling and perhaps 700 tonnes per
year after 'official' sales but before covert selling. This compares
with world gold mine output of only 2,500 tonnes per year. Some
central banks, notably Russia, are starting to buy gold.

"Gold acts as an early warning of potential crisis such rising
inflationary/deflationary pressures and general confidence in paper
currency, especially the U.S. dollar. A strongly rising gold price
could have severe consequences for U.S. monetary policy and the U.S.
dollar. History suggests that gold always wins against an inflating
paper currency (that is, one subject to excessive supply growth)."

"Gold and gold mining stocks are poised for an unprecedented rise in
prices and profile. Investors in UK/European equities need to assess
the implications for their portfolios. ..."

The Cheuvreux/Credit Agricole report details GATA's findings in
Chapter IV, "Analysis of the Gold Market," and concurs in them
as "broadly correct."

"No financial house in Europe could be more part of the
establishment than Credit Agricole," GATA Chairman Bill Murphy said
today, "and now its endorsement of GATA is circulating among other
big financial houses in Europe and around the world.

"This evokes what Adam Fleming, former chairman of Harmony Gold, now
chairman of Wits Gold, said at GATA's Gold Rush 21 conference in
Dawson City, Yukon Territory, Canada, last August, just hours before
the current sharp rally in gold began: that just a little investment
demand could take the central banks out of their gold 'in the blink
of an eye.'

"A LITTLE investment demand? Credit Agricole's brokerage house has
just declared: Start hoarding!"

Gold Rush 21, Murphy said, "was truly historic and decisive. It
gathered the world's top experts on gold to spell out, explain, and
publicize the gold price suppression scheme, and the conference
issued the Dawson Declaration, an appeal for free markets in the
precious metals as a matter of basic human rights."

A two-DVD set of the proceedings of the Gold Rush 21 conference,
including a dramatic 25-minute video summarizing the conference,
produced by the brilliant Vancouver videographer Trevor Johnston,
can be obtained through this Internet link:

Gold Rush 21

The Cheuvreux report on the gold market can be obtained at GATA's main Internet site here: http://www.gata.org/CheuvreuxGoldReport.pdf

"As for gold itself," Murphy said, "you can get some from coin and
bullion dealers, but as the Cheuvreux report gets around, there may
not be much left."

Source: GATA press release via Business Wire Thursday, February 2, 2006

Wednesday, February 01, 2006

Ten Reasons Why Gold is Going Higher According To JP Morgan

Ten reasons why the gold price is going higher according to JP Morgan:

* Falling supply

* Continuation of strong fabrication demand from India

* China might surprise as the dog chases the rooster away

* The Dollar's godfather has retired after 18 relatively stable years

* When baby boomers cash out, where to invest?

* Inflation-maybe; but currency uncertainty-absolutely

* Gold still at moderate levels vs. the historical real level

* Paper gold gaining popularity globally with ETFs in India

* Gold market remains small vs. other investible assets

* Terrorism: The risk that the unthinkable becomes reality

Source: Ten reasons why gold is going higher Reported on Jim Sinclairs jsmineset.com

Monday, January 30, 2006

Tocqueville Gold 2005 Year-End Review & Outlook

Tocqueville Asset Management
Tocqueville Gold 2005
Year-End Review & Outlook

John Hathaway

In the last 90 days, the price of gold increased 25%, from around $440 to $550. In contrast, it took three years from its bear market low in 1999 for gold to sustain a 25% rise. The shrinkage of time from three years to 90 days to muster a 25% move signifies that the gold market is evolving. The advance is becoming more dynamic and it is certainly making a lot more noise than those early days, when if I recall correctly, it was more interesting to watch the grass grow.

Bull markets can be divided into four phases: the beginning, the end of the beginning, the beginning of the end, and the end. In terms of the road map for gold, I believe the current phase marks the end of the beginning. The "stealth" phase of the gold bull market ended with the fireworks of the last 90 days. The elapsed time of that first phase was the five years from August of 1999 to August of 2005.

Noisy and dynamic market behavior is necessary to attract new money flows. That is what is taking place. More people are talking about it. Media awareness has increased. What is curious is that few can offer explanations as to what is propelling the advance. Many are still on the side lines, frozen in place for fear that it is "too late". Not to worry, many of these will become buyers as the price advance continues and the reasons become more apparent. Finally, when everyone knows the reasons and it becomes obvious why gold is advancing, it will be mark the final days of the bull market. In my opinion, those days are still well ahead of us, both in terms of time that must elapse and the magnitude of price appreciation.

It is ironic that many who had been invested in gold for years cannot stand this new-found prosperity. They see current strength as a fleeting opportunity to cash in.

When I first started writing about the gold market, I thought the gold price could eventually reach four digits (The Investment Case for Gold-January 2002; archived on www.tocqueville.com). That seemed incredible at the time, because, if right, gold would triple. With gold trading at $560/oz as of this writing, $1,000 doesn't seem so far-fetched.

As the bull market has evolved, so has my thinking. Four digits no longer seems like a stretch to me. Rather, it would seem that gold would be correctly priced at $1,000, just to catch up to other commodities like oil, base metals, natural gas, and platinum. We calculate the market cap of all above ground gold, including central bank reserves, equals about 1.4% of global financial assets. In 1934 and 1982, when investor stress reached extreme readings, that percentage was between 20% to 25% (see graph).

The current very low ratio indicates complacency and suggests that gold could double even if worst case macro economic and geopolitical scenarios fail to materialize. If they were to materialize, the potential for gold would go well into four digit territory. Macro and geopolitical nightmare scenarios are probably motivating some capital flows towards gold. However, we estimate these represent a small fraction of what is driving the price. In terms of investment rationale, it is still possible, and in fact quite commonplace, to make a benign, even Panglossian, case for gold's advance: global asset rebalancing towards "hard assets", of which gold is only a bit player, an incidental subset; continuing prosperity in Asia where there is a cultural affinity for the metal; high cash flow to oil producing countries, many of whom don't particularly like dollar assets; the resounding success of the gold ETF (GLD-NYSE), which enables risk averse investors to buy the financial insurance that gold represents cheaply and efficiently (and in a little over one year has become the 14thlargest holder of gold in the world); and the recent disappearance of the central banking community as sellers.

With respect to global capital markets, it is possible to say that complacency reigns. Eventually, gold will advance for reasons that few are will to talk about: a resumption of the bear market in equities, a slide in the US dollar, and a credit squeeze that could deflate the world economy. In the US, a slowdown in housing is just beginning to materialize. Consumer spending is poised to weaken. How will the Fed respond? One can be certain that their actions will not comfort foreign holders of US dollar denominated reserves.

Our portfolio contains optionality to gold that has yet to surface. With significant exposure to small cap exploration and development companies, we stand squarely in the path of an impending takeover frenzy as large cap producers decide to reprice the economic potential of reserves assuming $500 gold. When they do so, they will abandon their timid ways and become voracious acquisitors of small to mid cap companies. We are seeing early signs of this, and expect this change in behavior to become more evident as the year progresses.

John Hathaway is portfolio manager of the Tocqueville Gold Fund.
[email protected]

Wednesday, January 25, 2006

IMF Chief Economist Warns of Run on the U.S. Dollar

A run on the U.S. dollar that would see investors rushing to dump the currency is a possibility, although it's difficult to judge how likely an outcome that is, the International Monetary Fund's chief economist said Monday.

With the U.S. current account deficit running at close to 7% of gross domestic product, economists have long expected the dollar to depreciate against other major currencies, and feared the dollar could go into free fall if that prompted international central banks and investors to flee the greenback.

"We are in a risky situation," said Rajan. "You cannot discount a run on the dollar. But you cannot fully quantify that risk at the moment."

"The first action will come from foreign private investors, who have no motives other than returns," he said.

Read the Full Story by Andrew Peaple and Emily Barrett of Dow Jones Newswires here: Run on the U.S. Dollar

Learn more about the coming collapse of the U.S. Dollar by reading the first chapter of The Coming Collapse of the U.S. Dollar and How to Profit from it.

Monday, January 23, 2006

J.P. Morgan Predicts Gold Price of $600 in 2006

In a report put out on Monday by J.P. Morgan Securities, J.P. Morgan predicts that gold prices may reach almost $600 an ounce by the end of 2006 on gold mine supply worries, firming jewellery demand, geo-political concerns and favourable currency environment.

However, J.P. Morgan expects that gold prices might even jump to $800, if Iran's nuclear issue heated up and oil hit $100 a barrel.

"For gold, event risks are surfacing at a time when mining supply was already inadequate and jewellery demand firming. Fundamentals alone justify prices near $600 by year-end, while a meltdown in Iran/spike in crude could see $800 gold," the J.P. Morgan report said.

J.P. Morgan said the gold price was likely to increase from a favourable currency environment, with the dollar seen range-bound in the first half of the current year, while weakening later.

"The recent pullback in gold from its record highs should not be interpreted as a peak, rather we see it as a stage in a longer rally," J.P. Morgan said.

"Gold's bullish hues are based on a stagnant supply profile, rising investor interest in real assets and the influx of petro-dollars from the Middle East," the report said.

Source: J.P. Morgan sees gold near $600/oz by year-end

Bill Murphy of Gata.org had this to say about the J.P. Morgan Report:

"After missing the move up for many years, Morgan turns bullish and calls for $600 gold by the end of the year, or a roaring $46 per ounce from here. Only world shaking events could take gold to its old high. What hogwash!

*No mention of investment demand, only jewelry.

This sort of drivel is why GATA’s Gold Rush 21 DVD is so critical. The most important aspect of the gold market at the moment is the short position and the increasing focus on gold as money. Neither is discussed by Morgan, Barclays or any other report on Planet Wall Street.

What is constructive about this report is it signals how dire the situation is for The Gold Cartel. They are doomed and they know it. This report tells me these bums know their scheme is falling apart. This is nothing more than a cover their butt drill."

Dow Jones Industrials Ratio to Gold

As for the see-saw battle between the gold bugs and the Wall Street bulls, it is interesting to note that the Dow Jones Industrials fell to a seven year low, compared to the yellow metal. The Dow lost half of its value to gold from the September 11th terror attacks until the conquest of Baghdad in March 2003, during the second phase in the war on terror. After gyrating in a tight sideways trading range between 24 and 26, for almost three years, the Dow to gold ratio began to break down again in November 2005, falling below the February 2002 low of 21.88.

So while the recovery of the Dow Industrials since the end of the Iraqi war in March 2003 looks very impressive on paper, in "hard money" terms, the US stock market remains in a long term bear market. The latest breakdown in the Dow to gold ratio coincided with Iran's rejection of Russia's compromise proposal for averting a confrontation, and thus, possibly signaling the beginning of Phase three in the war on terror. But this time, with the EU on board the American side.

Author: sirchartsalot.com

Friday, January 20, 2006

James Turk Interview about Investing in Gold

James Turk has appeared in an interview with Julie Watson the senior editor of forbes.com. Mr Turk is the co-founder of goldmoney.com and the author of the Freemarket Gold & Money Report.

James Turk talks about the gold market, his forecast of $850 for this year and how to invest in gold. Turk also talks about paper gold, physical gold and mutual funds and the advantages and disadvantages of investing in them in this gold bull market.

Click Here to watch the short video interview on forbes.com

Monday, January 16, 2006

2006 Gold Breakout Looks Like 1979

Lars Lingren has published a very interesting set of charts which compare the gold price break out in the last gold bull market to the one taking place right now.

Lingren has shown how the gold charts in January 2006 look the same as the gold charts looked in August 1979, just before the gold price increased from $320 to $870.

The Gold Price Breakout in 1979

From 1976 to 1979 the price of gold rose within a well defined trend channel until August 1979, when gold broke above the trend channel twice hitting the $320 level. Soon after the double break out, the gold price rose to $870 US in a period of just 5 months.

From 2001 to 2006 gold has again risen within a well defined trend channel, until NOW!

Lingren points out that we are seeing the same double break of a well defined trend channel as we had in August 1979.

On December 12th, 2005 the gold price broke out of the current trend channel and it has just done it again, only this time the price of gold has broken considerably higher.

Compare the gold price charts of 1976 to 1979 and 2001 to 2006.

Get ready for the gold price to rocket to at least $850 in 2006.

Thursday, January 12, 2006

Gold Price going to $850 before the end of March 2006

With gold prices hitting 25 year highs, perhaps you are thinking now might be a good time to sell those Krugerrands, Canadian Gold Maple Leafs or American Gold Eagles you have tucked away.

Before you call up your gold dealer and get a price for your gold coins you might want to read what James Turk the author of the Freemarket Gold & Money Report is telling his readers in his most recent newsletters.

James Turk made this gold price prediction in his January newsletter:
"I do not anticipate gold will again trade below $500 ever. In other words, gold prices in the $400s are history, just like gold prices in the $300s are history."

Since the gold price broke above $500 it has risen almost 10% in a few short weeks.

James Turk's forecast comes at a time when many other so called experts on gold are calling for a top in the gold price. No doubt they will be proven wrong, just like they were proven wrong when they called for a gold price correction many times before, at prices much lower than today's gold price.

James Turk's gold price prediction for 2006 is for a new record high for gold above $850. However, what is even more interesting is what Turk said in his most recent newsletter, "I am now thinking that we might see that new record high before the end of March." wrote Turk.

So perhaps now is not such a great time to sell those gold coins after all. As James Turk told his readers "get ready for some huge and exciting fireworks."

Tuesday, January 10, 2006

John Embry of Sprott Asset Management

There is an excellent interview with John Embry, Sprott Asset Management's chief investment strategist, on a Canadian television show today called "Market Call with Jim O'Connell".

John Embry, is an industry expert in gold, he has researched the gold sector for over thirty years and has accumulated extensive experience as a portfolio manager since 1963. Sprott Asset Management now manages over half a Billion Dollars of investor funds.

When asked at what stage of the gold bull market we are in, John Embry said "we are in the early stages of the 2nd phase of a 3 phase long life bull market, and this one I think you are going to see people will finally realise why gold is a good idea."

Why is the gold price going up?

When asked why is the gold price going up? Embry said " The biggest driver which you don't see in the press at all, are the short positions. A lot of people who have been on the wrong side of the market that have been going along with the cartel are getting real uncomfortable... and starting to unwind some positions, that is against an excellent macroeconomic and geopolitical backdrop, there is a lot of things going wrong in the world that are beneficial for gold."

Bill Murphy of the Gold Anti Trust Action Committee (GATA), says the gold cartel is short as much as 10,000 tonnes of gold! Murphy believes they are panicing to cover those short positions at the moment, and that is why the gold price is taking off.

The gold cartel is losing control of the gold price.

Embry believes the achilles heel to the manipulation of the gold price by the gold cartel is their shortage of physical gold.

Embry says "The central banks have spewed a lot of gold into the market over the last 15 years, they do not have nearly what people think they have and now you have a lot of other central banks particularly China and Russia looking to add to their holdings."

Embry doesn't believe that western central bank selling is going to be a driver for gold in the next few years, simply because he believes they are running short of gold to sell into the market to suppress the gold price.

Israel, Iran and the Gold Price

John Embry was asked what would happen to the gold price if Israel decided to take out Iran's nuclear facilities. Embry said "In the old days when the gold cartel was in full bloom they would squash the gold price in this type of event just to show that gold had no impact on anything but now they are getting short on physical gold they would be overrun."

Embray predicts $100 moves in the gold price are conceivable at some point in the future. Embry says we will see moves of $20 and $30 in the gold price as the gold bull market picks up steam.

When will gold hit $600?
Embry says he expects the gold price to pass $600 in the next few months and $1000 in the next few years. Although he doesn't rule out the possibility of Bill Murhpy's prediction of $5000.

You can find John Embry's Interview at the 12:30 p.m. segment of the Tuesday ROB-TV archive here:


You will need to watch this interview with John Embry in the next 7 days, as it will be removed from the archive at ROB-TV after that.

Tuesday, January 03, 2006

Biggest One Day Gold Price Increase in this Gold Bull Market

Today was the largest single intraday increase in the gold price that has taken place (during the regular pit session) since the gold bull market began in 2001. The gold price closed up a huge $13.30. The second biggest increase in a single day was on May 18, 2001 when gold closed up $12.65.

What makes todays gold price increase different?

When the gold price hit $543.00 on the 12th of December 2005 the gold price increased $12.80 before falling back to close up only $1.30.

Dan Norcini pointed out in Letropolecafe.com the reason why this move was different to the gold price increase on the 12th of December. Norcini said "What makes this one look different is that the big move up on Dec. 12 last year occurred with the RSI already well into overbought territory above the 80 level. We are still beneath 70 on the 14 day RSI – no where near overbought based on RSI readings for the gold market."

There has only been one day that has beaten todays gold price increase in the last 21 years which was on September 27, 1999 due to the announcement of the Washington Agreement, the gold price increased $14.20.

The difference with todays move was that there was no market moving news. The gold price is increasing on its own supply and demand fundamentals.

Sunday, January 01, 2006

2005 Gold Price

2005 will no doubt be viewed in the coming years, as being a pivotal year for the gold price. Particularly if the gold price rockets to over $750US in 2006, as many experts we wrote about in 2005, forecast it will.

The gold price surged 25% last year when it hit its highest level in nearly 25 years of US$540.90 in December 12, after spending the first eight months in a US$410-US$460 range. The average gold price in 2005 was US$444.75.

The Average Gold Price in 2005 by Quarter

2005 Q1 $427
2005 Q2 $427
2005 Q3 $439
2005 Q4 $485

Notice that nearly all of the gold price rise in 2005 took place in the last quarter, when there was an average price increase of $49 per ounce.

Annual Gold Prices for the past 5 years show that in 2005 the gold price had the biggest annual dollar increase, with an increase of over $80. This is the biggest increase since this gold bull market started in 2001. Although it was only the third largest increase in percentage terms.

Annual Gold Prices for the Past 5 Years
Year StartCloseAnnual Percentage ChangeChange in US$

Euro Gold Price was up 34.93% in 2005
Japanese Yen Gold Price was up 35.93% in 2005

Important Gold Price Milestones in 2005

- The gold price, which traditionally moves in the opposite direction of the dollar, increased, even though the US$ climbed 15 per cent against the euro.

- The gold price broke out in in all major global currencies.

- The gold price broke above $500, for the first time in 24 years.

- Gold futures Open Interest has shown a contraction with a rising gold price. This has not occurred so far in the past 4 years of this gold bull market and may suggest the shorts are leaving the market.