$600-$800 Gold Forecast
$563 gold... $9.73 silver... $1064 platinum... China's "Year of the Dog" begins...
Growth slows to 1.1%... Davos warnings... "The Rule of Gold" now available!
By David Bradshaw, IdeaFactory News
Jan. 30, 2005
Friday's :60 "The Golden Minute" -Listen-

Gold futures rose early Monday, with political uncertainty surrounding Iran's nuclear ambitions, the surprise victory of Hamas in last week's Palestinian elections and violence at oil installations in Nigeria all creating safe-haven demand. Gold was last trading up $4.80 to $563/oz in New York.

Friday gold closed down $1.20 to $558.50/oz on profit taking while silver resumed it's upward trend adding $.03 to $9.57 an ounce. Platinum rose $5 to close at $1,060/oz on renewed fund buying, geopolitical concerns, high energy prices and uncertainty about the economy.

Growth in the U.S. economy slowed dramatically to a 1.1% annual rate in the fourth quarter, the weakest growth in three years, the Commerce Department said Friday.

Silver rose to fresh highs Wednesday and platinum hit a new record high of $1056 on renewed investor and bank buying, traders said. Partly responsible for the renewed upside momentum is the expectation that a decision on whether or not Barclays Global Investors' iShares Silver Trust will finally get approval from the U.S. Securities and Exchange Commission is imminent.

The yellow metal has gained 9% and silver is up 8% in the last 30 days.The prospect of $600 gold and $10 silver in 2006 -- a rise of 16% and 13% respectively -- is growing among analysts daily.

Monday J.P. Morgan announced that gold prices may reach $600 to $800 an ounce by the end of the year on supply worries, firming jewelery demand, geopolitical concerns and favorable currency environment. Prices might jump as high as $800, if Iran's nuclear issue heated up and oil hit $100 a barrel, J.P. Morgan said.

2006 is China's "Year of the Dog", which may deliver a "gold bite", according to CNN. Albert Cheung told CNN Friday that under the five elements theory -- wind, water, fire, earth and wood -- fire is very strong in the 2006 Lunar New Year, which begins January 29. He warned that the fire element "is not good for the harmonious situation of the world. Year of the Dog could herald tumultuous times for commodities such as gold, and the stock market in general." (Ed. Note: Does CNN really need a Chinese astrologer to help the world understand the prospects for gold market? Perhaps, but here in the West, fire is a symbol of purification and refining, as in... gold and silver!)

"This is the year to watch out for the end of the great American spending binge," Morgan Stanley Chief Economist Stephen Roach told the 735 attendees of the World Economic Forum in the Swiss resort city of Davos Tuesday.

This morning CBNC interviewed George Soros, asking his opinion of the U.S. markets amid all of the positive talk from government and industry leaders in Davos -- his response? "Think Titanic ... I see people dancing while the ship slowly sinks in a sea of debt."

U.S. stocks rallied Friday, helped by strong quarterly results from Microsoft and Procter & Gamble. A government report showing a sharp slowdown in fourth-quarter growth raised hopes among some investors that the Fed may end its string of interest-rate hikes. The Dow tumbled 214 points last Friday, turning negative for 2006 after oil prices hit a four-month high.

CNBC Squawkbox recently asked, "Where's Dow 24,000?" , a value level that would have kept stock prices up with rising crude oil prices. But some tangible assets have even outperformed oil and real estate! see Investment Scorecard.

Swiss America CEO, Craig R. Smith commented today, "Escalating geopolitical uncertainty, rising oil and commodity prices and a reckless disregard for the stock market risks are a formula for disappointment and declines on Wall Street unless investors wise up and diversify assets into other markets."

As for the significance of Dow 11k... "The problem is that stock indexes tell investors very little about the individual stock and virtually nothing about it's true value. Stocks in general are "priced for perfection" in a world that's far from perfect", according to Mr. Smith. (see DOW 11,000... Not NOW!)

"The American public has not yet understood the stranglehold that Iran and OPEC has upon our future oil supplies -- nor the race between nations to devalue their currencies (including the dollar) -- nor the reason Central banks are buying gold and selling paper ... but they will in due time." says Smith.

"Finding financial truth or value without a plumb line is impossible. The plumb line used to be the U.S dollar, until it began a steep decline in 2002. Today gold is emerging as the new international plumb line, in a cockeyed world of paper and debt -- which explains why it has doubled in value over the last five years -- AND why why it will double or triple again in the next five years." (see Introducing THE RULE OF GOLD).

Adam Hamilton, of ZEALllc.com asks, "Is gold really at a breathtaking 25-year high once the radically changing measuring stick of the US dollar is considered? Not even close! So far in real terms gold has barely clawed back above where it languished for years in the mid-1990s. The recent real-gold prices still look dirt cheap compared to average gold prices of the last 35 years or so. It is not prudent or valid to compare today�s dollars to dollars of decades past without adjusting for inflation. Whenever the financial media insists on doing this it is lazy at best and intentionally trying to mislead investors at worst. We won�t really see 25-year gold highs until the metal exceeds $1250!"

We're not surprised last year, millions of prudent investors worldwide came to the same conclusion: a portfolio without gold was a luxury they could no longer afford. Gold closed out 2005 at $517.40 an ounce, and is forecast to gain further in 2006 as funds and investors see it as a safe haven amid worries about inflation, economic growth and geo-politics.

"Commodities are an asset class for the first time in history", says Barrons Roundtable member Mark Farber, who "thinks the price will eventually exceed $3,000."

The recent metals rally shows no signs of running out of steam amid solid demand as higher energy prices fuel inflation concerns. Investors and funds are finally re-allocating assets out of stocks and bonds and into gold.

"The U.S. rare coin market looks strong in 2006 as many first time clients have begun to purchase collectible gold coins for their portfolios. They are taking a percentage of their wealth and diversifying out of paper assets and into tangible assets. Any pullback in spot gold is EXACTLY what they are looking for to get started", says Tom Rodriguez, Sr. broker at Swiss America.

"Gold's recent correction serves as a timely reminder that nothing, especially not gold, rises in a straight line", says Alec Hogg at Mineweb.com. "Since the Bull Market started in mid 2001, the gold price�s progression has been marked by six distinctive mini-cycles.

"First of these saw its value rise from around $250 to $280. Gold then consolidated around $275 before its next sprint, to $325 (in 2002). Next came a run from $300 to early 2003�s new peak of $370, followed by the retracement in the gold price to $330 and the subsequent rise to $425 (early 2004). In 2005 the run saw gold moving from $380 to $450 before consolidating around $420. That was where the most recent surge started, with the price touching a 24-year high of $540. All of this suggests the four year long Bull Market is intact."

Gold's 18% annualized gain in 2005 is over SIX times higher than the S&P 500 -- a performance that has speculators and long-term investors actively accumulating during any price dip.

The "recycling of petro dollars into gold as a form of money, and strength in demand for gold jewelry in India, will drive prices to $650 in 2006" said Frank Holmes, chief investment officer at U.S. Global Investors.

GATA Chairman Bill Murphy told Canada's Globe & Mail recently, "The forces of darkness are finally on the run," refering to the recent rise of gold as proof of the victory over central bankers, political heavies and the conspiracy of silence that has kept his message of gold market manipulation out of the U.S. media. Story: Major Gold Bug Says Conspiracy Beaten. Free CD Offer featuring Bill Murphy Interview.

Gold has rallied sharply in recent months, amid robust demand for jewelery in China and India, buying by central banks, notably Russia, and inflation concerns that have been fueled by a surge in energy prices. Gold's bullish pattern of higher lows and higher highs is attracting more momentum-based buying.

Buying gold under $260 an ounce?

Using the Fed Inflation calculator, the recent high in gold of $540.00 �2005 dollars� today equates to just $252.00 "1981 dollars". So, for gold to reach 850 '1981 dollars' again, it would have to top 2,000 '2005 dollars' (see chart)

"Why is everyone so bullish on bullion?" asks The Washington Post.

"Investors traditionally pile into gold as a safe haven when the dollar drops, inflation rises and economic calamity looms. The trouble is, none of those things appears to be happening. The dollar is rising, inflation appears in check and the U.S. economy, while shaky in spots, does not seem headed for immediate disaster. Economic reports released Tuesday were uniformly rosy. Consumer confidence, demand for big-ticket durable goods and new home sales all were up."

Richard Russell (Dow Theory Letters) has an answer... "Gold has entered a new phase. This phase is characterized by gold separating itself from all paper currencies including the dollar. It's clear that something has changed -- that gold is now being accepted by sophisticated investors, not as a speculation, but as an alternative currency. Thus, over recent weeks while the dollar was strong, gold has continued to climb. Such action would have been considered almost impossible even a few months ago.

"Gold is now being accepted as the fourth currency along with the dollar, the euro and the yen. But there is a difference. Gold is also being recognized as the tangible currency and the ONLY SAFE currency. That gold pays no interest -- but is still at an 18-year high in terms of dollars -- is a testament to its value and safety in the eyes of sophisticated investors."

Major funds as well as individual investors are seeking alternatives to stocks and instead are buying up precious metals -- despite tamer inflation numbers, lower oil prices and a firmer dollar.

A mere five years ago, gold was considered the laughing stock of the financial community. But who's laughing about the wisdom of owning gold now?

In the words of the soon-to-be-former Fed Chairman Alan Greenspan, 'If you want to know where interest rates are going, watch gold!'

According to entertainer (and long-time Swiss America customer and friend) Pat Boone, "The rising price of gold SHOULD be telling you that interest rates are rising and so is inflation! Over the past five years GOLD has quietly become the hottest commodity on earth, and thus, the price has doubled. But, the price of gold is still reasonable compared to our national debt. The entire world is now rediscovering the wisdom of owning gold. Shouldn't you? I recommend calling the number one name in U.S. gold coins, SWISS AMERICA for the number one book on gold, Rediscovering Gold in the 21st Century by Craig Smith." For details, read Swiss America's NEW Special Alert, GOLD RUSH, Phase II ... "The gold market entered the second phase of the bull market in 2005. Rising inflation and out-of-control debt will no doubt continue to drive gold up in 2006."


QUOTE OF THE WEEK ...

"Gold isn't rising on the U.S. inflation statistics. Get real -- gold is rising because the central banks of the world are destroying what's left of paper money. 'Competitive devaluations' is the name of the game"

-RICHARD RUSSELL, -Dow Theory Letters, 1/11/06

Last week's quote ..."Gold is as much about investors� state of mind as it as about the status of mines. It is a set of beliefs and a world view as much as it is a shiny, malleable metal to wear around your neck, or pound into coins, or stow away in a safe-deposit box." -JON MARKMAN, "Why gold is gleaming again" -MSN, 12/22/05


Understand Gold?
(If not, what might you be missing?)

When it comes to understanding gold, don't expect much help from the mass media -- the "pros" are just as clueless as the crowd.

Consequently, the American public is largely ignorant of what rising gold prices mean (if anything). How is this gaping void of understanding possible in the Internet Information age?

For the last two generations Americans have been brainwashed into thinking that paper money and credit have replaced gold as "real money" -- not to mention the shameless propaganda from Wall Street downplaying the biggest bull market in precious metals since 1980 when gold hit $850!

For example, recent media headlines report: "Gold at 25-year high" yet, fails to mention that after discounting prices for inflation, gold must rise to $2,200 an ounce -- four times the current price -- to achieve the same value as the previous price peak in 1980.

Suffice it to say, that confusion shrouds our understanding of gold, money and inflation, which means finding out the truth about gold has never been more challenging -- especially if you rely only on somewhat deceptive headlines.

GOLD 101

Since the dawn of creation, gold has been held in high esteem as a store of value:
Gold has served as a universal monetary substance in all civilizations. Why? Because gold is one of the few common values that has united mankind throughout the millennia, transcending race, religion and geography - a rarely noted fact but significant in light of today's growing cultural convergence and emerging global economy.

What does Alan Greenspan have to say about gold? How and why does gold maintain economic freedom? "Gold and economic freedom are inseparable. This is the shabby secret of the welfare statists," said Mr. Greenspan four decades ago -- over a decade before the last oil-gold shock of 1979.

After the "irrational exuberance" of the roaring 90's came a rude financial awakening:
'True' wealth begins with tangible assets, and although the so-called financial experts had officially declared "Gold is dead!", substance always triumphs over symbolism in the long term. And so little wonder why gold, the ultimate substance, is one of the hottest commodities in the 21st century!

Slowly but steadily gold prices have doubled in the past five years (From $260 to over $550!)
Recently gold has begun rising faster because it's entered a NEW phase. Strong physical demand, central-bank buying and concerns about inflation are but a few of the major elements driving this worldwide precious metals rally which has yet to fully impact the U.S. public.

None of this "news" comes as a big surprise to our regular readers!
Five years ago we first published "REDISCOVERING GOLD IN THE 21ST CENTURY: The Complete Guide to The Next Gold Rush" the first book to boldly announce the beginning of a new global gold rush. Since then, we've published four Real Money Perspectives annual updates in magazine format. Our new annual RMP edition, "The Rule of Gold" is now available in print! Here's what you'll discover inside...

* 2005 INVESTMENT SCORECARD ~ 2006 TRENDS
* SILVER: POISED TO EXPLODE UPWARD!
* WORD�S GETTING OUT GOLD IS GOOD!
* EMPIRE OF DEBT � Book Review
* WHAT KEEPS ECONOMISTS AWAKE AT NIGHT?
* BULLION OR NUMISMATIC, CONFUSED?
* THE RAREST GOLD ON EARTH
* FOUR-DIGIT GOLD!?

We want you learn how to make this new golden trend your friend! Swiss America is committed to helping you to "rediscover gold" and understanding what's really driving precious metals higher and higher.

"The Rule of Gold" is an easy-to-understand 20-page newsletter designed to answer your biggest questions about precious metals and U.S. gold coin investing. To help you get up to speed quickly we will also include our 30-minute audio CD, "The Future of Gold and Silver".

Register Here for your FREE copy ~ Read the Introduction by Craig R. Smith


ABOUT THE EDITOR

David M. Bradshaw is Editor of REAL MONEY PERSPECTIVES, a new, syndicated daily financial/cultural news digest. In 2001, he published REDISCOVERING GOLD IN THE 21ST CENTURY: The Complete Guide to the Next Gold Rush and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 2004, he produced "A CITIZEN'S GUIDE TO COUNTER-TERRORISM" a free-to-the-public educational resource on DVD and CD. In 2005, he released a new CD, "WHAT'S YOUR WORLDVIEW?" a one-hour CD sample from his 24-hour series, "THE BIG PICTURE: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. MORE ... PERSONAL NOTE: Youngest daughter Braida Zoe (age 23 mo.) feeds herself, climbs, swims, trampolines and is building an ever-widening vocabulary. Shown with her mom (and loving wife) Micki.


DISCLAIMER: All of the provided information is believed to be accurate, however errors are possible. The opinions in the Commentary section do not necessarily reflect the opinions of Swiss America. Past performance of any investment is no guarantee of future performance. All investments have risk.

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