ANALYSTS SAY, "BUY THE DIPS"

Gold and silver are both higher in spite of a stronger dollar. Gold is up $7 and silver is up $.16 in early trading. The dollar is up 16 basis points at 79.66 and oil has rebounded along with the metals, up $1.77 at $67.88 a barrel. The Dow is down 13 points.

In the economic news the number of people on unemployment insurance benefits fell slightly for the first time in twenty weeks. The number of first-time claims for jobless benefits fell to a seasonally adjusted 621,000, an improvement of 4,000 over the precious week. However, be mindful that these are the best levels of unemployment that are reported by the government, particularly since they seasonally adjust these numbers. Nevertheless, this is a dismal number and evidences the fact that jobs are still being lost at an extraordinary rate. However, any improvement is to be welcomed as this is a very difficult economy. As the economy begins to recover, inflation pressures will begin to emerge as the result of the enormous expansion of money supply and the various stimulus programs. That will be bullish for the gold market and will ignite a move to significantly higher levels. In fact, gold at this point may be anticipating some level of recovery and that could be part of the upside momentum that we are seeing now as people anticipate rising inflation ahead.

This morning, Standard Bank recommended buying gold on dips. They said gold is likely to hold above $960 an ounce and the rally is not likely to stop until gold rises through the $1,000 or above level. While most analysts believe that gold will soon challenge the $1,006 level, some are concerned that gold may need a further period of correction and consolidation before making the next significant advance. However, one can never be sure of that. As many analysts have been saying, this is an opportunity to buy on the dips and should be taken advantage of by investors.

Yesterday, Bloomberg interviewed Larry Jeddeloh of the TIS Group. Jeddeloh said he thinks the stock market may rally considerably, perhaps gaining as much as 30% to 40% in the near term. However, he believes this would represent simply a bear market rally and the market will again turn lower to make a new record low in the 440 to 500 range on the S&P 500. He said that credit cycles end with debt deflation. They can run 20 years or longer. Currently, this debt deflation credit cycle is in the ninth year. Jeddeloh anticipates a significant bout of monetary disorder. He said in the next three to four years there would be a different currency regime. He believes the dollar will lose its reserve currency status and that power will be shifting from the West to the East. He said that Europe is in very bad condition also, and that there will need to be an arrangement between the euro and the dollar to stabilize these currencies. He said further that the market would begin to price gold as money. When central banks and investors can't decide what is a reserve currency, gold will be used as a reserve currency for a period of time. Jeddeloh said that his firm owns a significant amount of gold, but it intends to increase its gold holdings and is buying on the dips. Further he pointed out that the Chinese are buying gold and oil and we should be doing the same. The dollar will be declining.

Jeddeloh also forecast that another major war would occur in the Middle East. He predicted that two years from now, trouble will begin to emerge and that Russia is likely to be the chief protagonist in a war in the Middle East. When asked for his forecast on how high gold could rise, he quoted Edward Zore of Northwestern Mutual Insurance Company. As I have been stating over the past few days, Northwestern Mutual made its first gold buy in 152 years. They have purchased about $400 million worth of gold. When asked of his view of the market, Zore said, "The downside risk is limited but the upside is large." He said, "The price could double or even rise five fold if the economy continues to weaken." Jeddeloh said that forecast of $5,000 an ounce is not out of the question, although he anticipates a rise to somewhere between $2,300 and $5,000. He also said that a two-day close above $989 will lead to $1,280 and a longer term target of $2,325.

These are prominent experts whose opinions should be valued by all investors. At the very least, investors should inquire about these forecasts, read them and decide for themselves whether the forecasts make sense. If you call Goldline today at 1-877-341-2646 they will send you free copies of the various articles that I often refer to. The free information package is extremely helpful and valuable for all investors, whether you own metals or not. Call Goldline today at 1-877-341-2646 and ask for the free information package and become better informed.

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