October 1, 2007
Grant's News Letter
In August 20th, I put out an alert recommending that you buy gold. The Price had taken a hit following the news of sub prime lenders in the US starting to collapse under the weight of unpaid mortgages. Big financial institutions had to dump their gold and other assets to make up for the shortage in expected revenue.
Gold however was still an attractive buy, its inflation proof, it has intrinsic as well as collector value in the form of coins, and its been excepted as a medium of exchange for over 3,000 years.
Following my August 20th buy recommendation gold started to surge. The gold bugs seemed to agree that gold would hit a resistance level of $715 an ounce. This resistance level is the dollar figure the big banks, that routinely trade huge amounts of gold to artifically suppress the price of gold, would ramp up their efforts to try to stamp down the price of gold (See http://www.financialsense.com/editorials/casey/2007/0125.html for an explanation of how the banks are suppressing the price of gold).
Gold rallied and reached 714 an ounce before the price started to close lower, however the damn had broken, and even with the attempt to keep gold at or below $715 failed as gold eventually surged past the resistance price to its current high (about $740 an ounce at time of this publication).
Given the current gold rally and the declining value of the US dollar, gold looks poised to continue this latest bull run for some time to come, my recommendation look for gold beating its all time high of $870 before the big correction, in fact I would not be surprised to see gold touch $1000 an ounce before the market turns bearish. I am calling for $800-$840 gold by the end of the year.
Oil prices are also surging. Just going off the 2005 Bilderberg Group Meeting we can expect to see gas prices of $100-$150 a barrel by year end 2008. At the current rate of US Dollar devaluation I would expect to see oil hovering around the $90 a barrel range before New Years 2008.
The USD Index is suffering huge loses as foreign banks divest themselves of US Dollars. Arab nations have been buying up stock exchanges, Venezuela, the largest importer of foreign oil to the US, has dumped their dollars. The Canadian Looney is trading at the same level as the US Dollar, something that has not happened since the 1970’s. China is sitting on a hoard of US dollars and has been threatening to dump those trillions of dollars on the market if the US will not give into the Chinese on the issue of Taiwanese Independence.
I believe that when the devaluation of the dollar is complete it will be below .60, and we should see the USD Index falling to somewhere between .75-.73 by year end if the current trend of the USD Index declining by .05 points a month continues or worsens.
Silver has quietly been gaining value as well; given the attention everyone is paying to the gold market I believe now is an excellent opportunity to get into silver as well. Silver has many industrial uses, it will retain its value as the purchasing power of the US dollar declines and it like gold has been used as a medium of international trade for centuries.
The Liberty Dollar organization has started hinting of moving their private currency to a $50 dollar silver base, meaning that one troy ounce coin would retail at $50 Federal Reserve Notes. This indicates that those who are knowledgeable of the silver market see $15 plus dollar an ounce silver on the horizon. The Liberty Dollar will only move to a $50 dollar base if silver closes above $15 for 30 consecutive days.