ANNUAL DEFICIT IN EXCESS OF 7% OF GDP

Plans for an Israel – Hamas cease-fire may have triggered some selling of gold this morning, causing gold to drop $16 in early trading. Gold is also feeling pressure from a pull-back in crude oil, down $1 and a softer tone in equities. The dollar is down 78 basis points at 82.07. The Dow is down 137 at 8,879. Some are forecasting a significant drop from the levels we are at now on the Dow. While gold has fallen considerably today, we must remember when conditions are thin the move is occurring in an illiquid market. This tends to exacerbate price fluctuation according to the Dow Jones Wire Service. One trader said, "I had a tiny three lot market order that was filled at three different levels. So it's very thin." Another analyst told Dow Jones Wire Service, "Technical range – bound trading, with gold having an inside day so far despite the weakness. He lists support and resistance at $850 and $870."

ADP's report of the loss of 693,000 jobs in December gave rise to renewed fears of continuing deflation. Moreover, Meredith Whitney of Oppenheimer stated today that the banks are going to need considerably more money from the government in order to survive. Citibank, in particular, is facing grave difficulties even after receiving $100 billion in additional capital last year. This suggests the economic crisis may worsen considerably before it gets better. President-Elect Obama said he will inherit a $1.2 trillion deficit. When you add in the economic stimulus package, the deficit could rise to $2 trillion. The annual deficit is now in excess of 7% of GDP. There has never been a country that has been able to sustain deficit of that magnitude. In every instance previously their currency has collapsed and devaluation has been forced with all of the negative consequences.

Central banks have clearly lost their appetite for selling gold reserves. Last week the European Central Bank gold reserves fell only 6 million euros. That's an extremely small amount. The reduction in the euro system reserves of gold and gold receivables was lower mainly because of re-valuation adjustments. There was one central bank that sold a small amount of gold. In the view of many analysts gold should hold around the $850 level and it would be nice to see silver hold above $11, which it is likely to do. Assuming these levels hold, then gold will probably try higher towards the end of the week and into next week.

When we look back on the ADP Employment Report, there are a couple of things that stand out. First, part of the losses are due to adjustments in their methodology. However, the drop was the biggest drop in the history of these records. Therefore, it is certainly significant. Some analysts are saying the benchmark revision to the data looks likely to be a better measure of non-farm payrolls data. Moreover, the Fed revealed yesterday that they are to keep interest rates at extremely low levels and continue to pull out all stops to try to put an end to the severe recession that the economy faces. They are loaning huge amounts of money to banks and their balance sheet has increased from about $800 billion just a few months ago to $2.3 trillion. This is an outrageous escalation of money supply that has been created out of thin air. Over time this can have only one outcome and that is a drastically lower dollar. Merrill Lynch commented on these "beggar – thy – neighbor" competitive currency devaluations. Yesterday they said, "We remain fans of gold. We also remain fans of gold in the global reflationary beggar – thy – neighbor policy backdrop … gold is in a clear secular bull market..."

To read the entire Merrill Lynch quote, call Goldline at 1-877-341-2646 and ask for the free information package. You will find the complete text of that quote in the article package. You will also find a very important article from Forbes.com calling for formal devaluation of the dollar. Others are likewise recommending the dollar be devalued in an effort to re-stimulate the economy. Other nations also are in the process of devaluing their currencies. Moreover, you will find quotes from many bank analysts and brokerage analysts who are considered extremely creditable, who are explaining that gold is a great buying opportunity and looks set to move dramatically higher. Some analysts are forecasting gold to rise to $1,000 an ounce in the first quarter; others say it may be as high at $1,500 an ounce by the end of the first half. While there are few that forecast that gold may move lower, given the circumstances of the economy, it is more likely the dollar will fall and gold will be considered a better choice of currency – a better choice of value. To receive the free information package or to get started with gold or silver, call Goldline today at 1-877-341-2646. With the market in a corrective mode, this is an excellent opportunity to consider the possibility of making a purchase and utilizing Goldline's Price Guarantee Program. This program gives you a two-week window of opportunity to re-price your order in the event of a further correction. Call Goldline at 1-877-341-2646 today to learn more about special offers and free information.

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To receive the free information package, including articles on the dollar, the economy and gold, call Goldline at 1-877-341-2646. Goldline also provides several other helpful articles. There are a number of other independent third-party source articles that you will find extremely helpful and informative. You will also receive the Client Account Agreement, a company brochure and a Coin Facts Risk Disclosure booklet. Read these carefully before you make an investment. Call Goldline at 1-877-341-2646 now to receive your free information package.