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Where is Your Money?


By: David N. Vaughn, Gold Letter, Inc.



-- Posted Monday, 10 July 2006 | Digg This ArticleDigg It!

 

Well, what can we say about gold?

 

Very resilient isn’t it?  Did you notice the Fed raised the interest rate last week and what happened?  The price of gold climbed.  Let’s get something straight right now.  Higher interest rates equal a higher gold price. 

 

I cannot count the number of worried readers who are so afraid the Fed is going to kill the gold price.  Frank is worried below.

 

Dave,

“You are my last hope. I have written to others about my concern that the Fed may kill gold if they continue to raise rates above 6.5% as occurred 25 years ago, but have never gotten a response. So I ask you: “Can the Fed kill gold by raising interest rates?”

Sincerely,

Frank O’Neill

 

Frank, please try and understand that the fed cannot any longer control the gold price as they cannot even control any longer our US economy.  So in simple terms burn the following text below in your mind.

 

Higher interest rates = higher gold price

 

OK.  So these are just words, correct?  Well, a picture is worth a thousand words so let’s look at a picture.  Friday, 6-30-2006, the Fed raises rates and what happened to price of gold?  Look below.

 

 

According to Bill Murphy with Le Metropole this was the biggest single daily gain for the gold price since the Gold Bull market began in 2001. Where you readers get the idea that higher rates are a threat to gold beats me.  All anyone has to do is observe the gold chart when ever the interest rate is raised. 

 

So where is gold now?

 

 

 

My oh my.  It continues to climb even higher, huh?

 

There is so much changing so rapidly in our world today and it is near impossible to keep up with it all.  And this applies very much to the gold and resource markets today.  I don’t believe any of us who are truly desirous of following seriously the day to day developments of this industry can do so without getting out periodically to see what is going on first hand. 

 

Hey David,

“I wonder if our financial leadership is foolish enough to be pushing the price of gold down for political purposes while the Chinese are quietly buying up large quantities of the metal through Calyon and the derivatives markets. I see a near daily climb during the Far East part of the spot market while a matching daily drop during the London and NY portion of the market. We could lose the economic war before we even know it is going on.”

M.C.

 

You can subscribe to a dozen different investment publications, but getting out on occasion attending these market conferences will add to your knowledge base.  Plus, these market events can allow you to meet the executives who are running the mining companies you are presently invested in. 

 

I’m heading up to the Artic Circle this weekend to visit a silver property that is looking quite attractive.  Meet me up in Edmonton this weekend then we’ll freeze our rears off together as we head for the North Pole. I’ll fly from Edmonton and on to the Yellowknife area.  There is supposed to be a roast muskox awaiting us.  Sounds good.  Once we get into Yellowknife well be flying further north in a chartered Twin Otter on floats. 

 

Come on and join us!

 

Did you hear this past week that the United Arab Emirates Central Bank governor hinted that the emirates will shortly be purchasing more gold and also euros for the purposes of diversifying their reserves?  Far too many US dollars and its time to diversify.  And how much is the governor of the UAE Central Bank recommending?  Up to 10% in gold when the market conditions are right or about 2 to 3 billion US dollars in gold. 

 

We are still in the hot muggy days of summer when everyone is at the beach and on vacation, but fall is coming and with it a new defining trend higher for gold.

I wrote at the top “Where is your Money?”  At least a portion better be in resource stocks and commodities.  Keep your eyes on gold and silver.  This is a long term bull market and the excitement hasn’t even yet begun.  Subscribe to Gold Letter, Inc. if you wish to receive emailed alerts of under valued gold, silver and resource stocks.  to order, click here!

Have you written me yet?  Let me hear from you and especially those of you just back from Asia.  Let me know what you observed.

David Vaughn

Gold Letter, Inc.

David4054@charter.net

7-7-2006

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 Monday, 10 July 2006 | Digg This Article





 



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