Where Is Gold Going?

By David Vaughn

 

Though many of you may find this hard to believe but I believe gold is preparing to take out new highs.  Nothing has changed concerning the fundamentals and the Federal Reserve is not going to be successful in fixing the many problems at the moment.  Oil will continue to stabilize and find its own price platform.  The housing mess has not finished yet.  There are still so many adjustable rate mortgages that have not been triggered as of yet. 

“Americans, jolted by a credit crisis, job cuts and soaring energy costs, in February turned in the weakest spending performance in 17 months, while a measure of consumer confidence slumped.” “…the poorest showing since September 2006 and further evidence that the risks of a recession were increasing.A separate measure of consumer confidence fell to the lowest level in 16 years.”  "Consumers are facing bad news on all fronts…”    "Food and energy prices are climbing ever higher, the labor market is slowing, credit is becoming tighter and household wealth is declining as house prices drop." International Herald Tribune, 3-28-2008

We still have no idea what type of leadership we will have in a year.  And while the dollar continues to sink lower and lower our Fed is pumping more and more money into the system and lowering interest rates.  The lower rates and growing inflation guarantee that gold has not ceased its dramatic price rise.  And consumer confidence is dropping. 

Martin D. Weiss, Ph.D. - “A few months ago, our world was stable and your retirement was secure. Today, suddenly, all heck is breaking loose and your future seems like a role of the dice.” “Today, inflation is devouring our buying power at the fastest pace in nearly 30 years — and it's accelerating.”  3-31-2008

The lower consumer confidence proves that people are not fools but realize that the economy is going in the tank. 

 

“How did we get into this foreclosure mess?” “I have lived through three foreclosure crises, although I missed the big one during the Depression, when in 1933 the country was facing 1,000 foreclosures a day. In the 1980s, the problem was fed by the savings and loan scandals; in the late 1990s, the scourge known as "flipping" was to blame. The present crisis is the result, in great part, of the explosion of subprime mortgages.” Baltimoresun.com, Vincent Quail

And to top everything else off our population continues to skyrocket helped by advancing technology.  Angioplasty may be coming to a close as newer medical technology allows doctors to treat heart problems easier and more effectively. 

 

“One day last week, three doctors here reached inside a man's leaky heart and plugged a hole that threatened his life. They did it without slicing open his chest or splitting his breastbone. They did it without touching him much at all.”  “Half of the patients in the study were given angioplasty and medical therapy; half were given drugs alone. Over the next four years, more than 17% of angioplasty patients died, had another heart attack or developed heart failure, compared with 15% of patients on the best available medicines.”  USA Today

 

As gold rose to 1,000 a week or so many emails poured in claiming this was the top for gold and it could go no higher.  Those who make those kinds of statements refuse to look at existing overall market conditions.  And all the actions by the Fed will do nothing more than cause the inflation rate to climb higher and higher. 

Dudley Pierce Baker & Lorimer Wilson  -  “I repeat - it is most important to realize that nothing of consequence has changed with the fundamentals. The magnitude and scope of the current credit crisis remains unparalleled.” “You know that the 1980 peak price of gold was $850 which today using official, not real, inflation rates would be over $2,275.  Clearly gold under $1,000 today has a long way to go.”   Kitco, 3-25-2008

Where I live in Greenville, South Carolina is supposed to be the least affected area in the country from foreclosures.  If you ask a realtor they will reply that everything is fine.  But if you talk to a contractor or builder you will get the true story.  Even tiny Greenville is being plagued by a large number of foreclosures.  I was riding down the street with a contractor and he pointed to me a home builder that had built 600 homes in one year two years ago.  The home builder was presently bankrupt.  No one is buying homes like they were a short time ago.  But regardless of these crises the humble public carries on like nothing has happened.  Except for those whose homes are presently in foreclosure.  Are commodities soon to collapse?  I don’t think so as we have not seen the bottom of this mess yet. 

James Sinclair – “The action in gold, although scary to those that are new, is down right PERFECT for a next assault and penetration of $1024. The rub of all this is this reaction normal to wild markets, like gold presented this and last week, is the greatest and probably last chance for the short investors in the juniors to cover profitably.” “All will be well, I assure you. Gold is going to $1650. I know this and I put my money where my mouth is.” 3-28-2008

We have still a long way to go.  So, you may just want to continue to hold onto those quality gold and silver shares.  Other than investing in commodities is there anything else you can do to protect yourself during this crisis? Yes, you can get out of debt.  That all by itself will free up a lot of additional income in your personal finances.

 

Think long term, always longer term.  The price of gold in the short term will move in extremes in every direction but gold will be overall strong for the rest of this decade and beyond.  It’s not too late to invest in gold related equities to take advantage of their wealth generating attributes.  We are living in the last days of cheap resources and cheap commodities.  Gold Letter, Inc. reviews undervalued gold stocks poised to rise in this time of increasing demand.  

 

Click here to order Gold Letter

 

Don’t forget to email.

 

David Vaughn

Gold Letter, Inc.

David4054@charter.net

 

4-11-2008

 

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2007, Gold Letter Inc.