-- Posted Friday, 21 January 2005 | Digg This Article
What does the year 2005 hold for us?
I believe two principal issues will rise to the crest as the year moves forward. One is the inevitability of having a new Federal Reserve Chairman. The present chairman is getting close to 80 years old now & I do not envision anyone desiring to compete with Strom Thurman. The old financial magic we have witnessed for 20 long years will soon begin to disappear with the introduction of a new Chairman.
And the second prediction & major occurrence for 2005?
The dollar & the high US deficit will eventually cause a tear on the economy by the years end. And whether we find the US dollar experiencing an attractive rally toward the close of this year is meaningless because the deficit is just becoming too big, expensive & too big of a drain on the economy to continue without adverse affects.
And what about that US trade deficit that just refuses to go away?
“WASHINGTON — The trade deficit unexpectedly surged 7.7% to a record in November…” “The Commerce Department said the trade deficit, which economists had expected to decline from October's $56 billion, instead rose to $60.3 billion.” By Sue Kirchhoff, USA TODAY, 1-12-2005
Now I know you are tired of hearing this but the following fact is eventually going to shape your children’s future.
“Major infusions of foreign capital are needed to finance the deficit. Eventually, foreign investors could demand higher interest rates to buy U.S. assets, or pull back.” "Unavoidable economic logic suggests that eventually this situation will prove unsustainable," Cathy Minehan, president of the Federal Reserve Bank of Boston, said in a Wednesday speech.” By Sue Kirchhoff, USA TODAY, 1-12-2005
Do you know the saddest thing that occurs with the beginning of every year? We look back & see another year with our children forever gone. They grow too fast & are too quickly out our door. Of course some parents may be happy about this fact, but most parents look at every year with their children at home as special. And if you have a son, you think, “One year older & one year closer to Iraq.”
And what is our final prediction for 2005?
“How the mighty have fallen. The 10 largest stock mutual funds of 1999 have seen their assets fall $138 billion” By John Waggoner, USA Today, 1-18-2005
What we just read sounds to me like confirmation of an established trend. And that trend is money slowly moving away from conventional assets & searching for a new home. And what new home is much of this cash finding its way to today?
“Like J.R. Ewing on ‘Dallas,’ investors are finding wealth in tangible commodities such as oil, gold & land.” “Some of the sharpest minds on Wall Street are betting that you'll make more money in metals than Microsoft the next few years.” By John Waggoner, USA TODAY, 1-14-2005
What are we talking about here?
“We're talking about land and oil and gold, the commodities that once made John Jacob Astor, John D. Rockefeller and the Hunt brothers very rich men.” By John Waggoner, USA TODAY, 1-14-2005
And how long is this commodities cycle predicted to last?
“A soaring commodities cycle can go on for "years, if not decades," says John Brynjolfsson, manager of Pimco Commodity Real Return Strategy fund, one of the few mutual funds that invests in commodities futures.”
“That means we could be in the early stages of a seismic shift in the financial markets: a bull market in commodities that could last another 10 years.” By John Waggoner, USA TODAY, 1-14-2005
Who else has made their fortune in gold & other hard assets?
“Many of the nation's self-made millionaires — people such as Marvin Davis and T. Boone Pickens — had made their money in assets such as land or oil. One of the most popular TV shows of the era, Dallas, was centered around an oil baron, the nefarious J.R. Ewing.”
“Demand is outpacing supply.”
“Overall, the USA had 82 active metals mines as of June, down from 92 in 2002, according to the U.S. Geological Survey. Gold production fell to 226 tons in 2003, vs. 331 tons in 1993.”
“And you can't just open a new mine. You first have to find the metal you're looking for. You have to figure out if the location makes economic sense. Then you line up investors and get government approval before you turn the first dirt. On average, it takes five to seven years from discovery to production.” By John Waggoner, USA TODAY, 1-14-2005
After reading the above text do you understand now why gold is predicted to continue climbing & make many investors rich? And let’s definitely read what the experts are predicting for gold later this year & beyond.
“London – Gold prices will reach their highest level since 1981 this year as a weakening dollar boosts demand for the metal as a store of value, Deutsche Bank has said.” “Gold in 2005 would average $458.80 an ounce, 7 percent more than a previous estimate, Deutsche Bank said in a report dated January 13.” By Stuart Wallace, Business Report, 1-17-2005
And beyond 2005?
“The average next year would jump to $490.30, the highest since 1980, according to Europe’s third-largest lender.” “Further weakness in the US dollar as a result of unsustainable external imbalances and only measured return to a positive real interest rate environment in the US is expected to be particularly beneficial to dollar gold prices,” said London analysts John MacKinnon and Tama Willis.”
And what price range is gold expected to climb to just in the short range?
“Estimates ranged for $395 to $550. Frankfurt-based Deutsche Bank had the seventh-best mining analyst in 2003, with UBS, ABN Amro Bank and Merrill Lynch the top three, according to the Thomson Extel survey.” By Stuart Wallace, Business Report, 1-17-2005
Gold Letter has brought back the Life Time subscription.
Subscribe to Gold Letter Alert!
Order toll free 1(888) 836-7758
Or over the Internet: click here
Gold Letter provides a brief review of gold & silver companies. The goal of the email newsletter is to present before subscribers those companies whose prospects appear favorable & whose companies appear to be run by serious geologists & miners. The investor determines which company best meets his or her investment objectives (as it should be)
Marc Faber: "Six years after the bull market started in 1982, most people were not aware of it," he says. "It usually dawns on people slowly that a bull market in commodities has started." “We might be past the dawn of a great commodities bull market. But it could yet be early morning.”
David Vaughn
Gold Letter, Inc.
David4054@charter.net
http://www.goldletterdv.com
January 21, 2005
Author/publisher does not trade stock of the company being followed for 30 days before & 30 days after an article is published. Readers are advised that the material contained herein is solely for information purposes. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Gold Letter, Inc. is not a registered financial advisory. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment related advice. All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Authors of articles or special reports contained herein may have been compensated for their services in preparing such articles. Gold Letter and/or its affiliates may receive compensation & or stock options for the featured company’s right to publish & reprint & to distribute this publication. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
-- Posted Friday, 21 January 2005 | Digg This Article
