$600 GOLD: WE'RE NOT SURPRISED!
By Dr. Fred Goldstein
Sr. Broker, Swiss America
(Originally published in "The Rule of Gold", 2/06)

The biggest surprise of the last five years ... was that none of the major Wall Street firms predicted this generational bull market in gold. In fact every year out of the last five their predictions were mundane.

These are the same highly paid analysts that brokerage firms depend on to give their clients the cutting edge. In fact, many analysts even recommended selling gold after it reached the $425 mark, while gold is now over $530 an ounce as of 1/11/06. Even today, over 71% of gold newsletter writers are still bearish, according to the respected Hulbert Index (HGNSI).

According to the Fort Wayne Journal Gazette article, "Does Gold Glitter for All Investors" by Rachel Beck published on 1/1/06, "Prices are all ready ahead of the estimates coming from many economists and Wall Street analysts. For instance, CSFB increased its fourth quarter price assumption last week from $450 an ounce to $486 and its forecasts are for gold to be priced between $430 - $469 per ounce in 2006." In other words, the analysts at this brokerage firm expect gold prices to drop over $45 during the next year!

Now I am not the Mogambo Guru, who would be throwing a tantrum or shouting from the rooftops, but this is more than perplexing -- it is simply absurd!

Here we have it in a nutshell. Swiss America, a privately owned numismatic coin brokerage firm has accurately called this gold bull market from day one in our book, "Rediscovering Gold in the 21st Century," while every large major money center bank and Wall Street investment house has gotten it so wrong.

Of course we did get a little help from our friends at GATA (www.gata.org). These tireless guys have worked for years to uncover the facts behind the secretive gold price manipulation of the last decade. GATA concludes that the central banks have loaned, leased or lost over 15,000 tons of gold over the last ten years.

These same BIG banks are now running out of available physical gold to continue their price suppression scheme. Growing demand for physical gold from India, China and the Arab countries are finally beginning to overwhelm bank efforts to manipulate the price of gold.

World gold mine production has fallen to about 2,400 tons annually, while world gold consumption is around 4,000 tons. It's no surprise to us that countries and their people now want gold more than U.S. dollars. Supply and demand dictates higher prices in a freely trading market.

Ben Bernanke will soon take over as our new Fed Chairman. He has said he is not afraid to use our printing press to create more dollars at any time. Art Rolnick, chief economist for the Minneapolis Federal Reserve Bank seems to make light of the government's ability to create more money (thus higher inflation) when he said, "We make money the old fashioned way, we print it."

Our U.S. trade deficit now exceeds sixty billion dollars monthly. This means we import more products then we export. Our trading partners (especially China and Japan) have excess dollars. If they do not send these dollars back into our markets for bonds, two things may happen. They may sell the dollar for other currencies or commodities, thus driving the dollar's value down - or our Treasury may be forced to monetize the debt by printing more dollars causing increased inflation.

Our U.S. budget deficit was last reported at $318.5 billion, but other sources report that including off budget expenditures like Social Security, Medicare, and the war on terror, our actual deficit is over $3 trillion!

According to most economists in the "mainstream", inflation is low. We are being asked to disregard the trillions of dollars in new debt being created, ignore rising household expenses and believe these idiots who recommend loading up on Treasury bonds to plan for retirement. Give me a break!

I am surprised more Americans have not already turned to gold, in light of all these imbalances in our economy. Many investors will blindly follow the "pundits" into the overvalued stock and bond markets because that's the traditional way to invest, as did their parents and grandparents. Sadly, I would not be surprised to see these trends continue. Debt will increase; while politicians continue to promise prosperity and economists downplay the bull market in gold.

Our prediction for 2006 is more of the same -- higher gold and silver prices leading to higher rare coin prices. I believe this is just the beginning of this gold bull market that's headed to record high prices in the next several years. You can listen to the same brokerage houses who have missed the boat on gold, or you can listen to those who have done their homework. Either way, I hope you are not surprised!

[Ed. Note: Read more great articles by Swiss America brokers in "The Rule of Gold" financial journal -- available free of charge for those interested in understanding the new gold rush, phase two.]


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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