CHINA, OTHER COUNTRIES REDUCING U.S. DOLLAR HOLDINGS

Gold and silver are both higher again this morning, supported by expectations of future inflation and weaker equities. The dollar is firmer today, which is holding the metals back a little. The dollar is up 29 basis points at 81.28. Oil is down $1.63 at $60.42 a barrel, after reaching a high of $62.87. The equity market is rebounding from a loss of more than 120 points. It is currently down 105. Safe haven demand for gold seems to be a prominent feature of the market. Nervousness about the violence in Nigeria and other areas of the world has also been supportive of gold.

The Index of Leading Economic Indicators rose 0.1%, but may be adjusted lower in the future. Other economic data continued to demonstrate that the economy is weakening. Yesterday's release of the FOMC minutes confirmed that Fed officials believe that the economy will continue to worsen throughout this year and perhaps through next year. They also discuss the possibility that they may need to buy greater amounts of U.S. treasuries in order to support the market. They have been buying enormous amounts of treasury and agents of debt. This is essentially "printing" money out of thin air. It is the single most inflationary thing that a central bank can do. They have also been providing vast amounts of money amounting to trillions of dollars of liquidity to the banks and other financial institutions. In time, this must necessarily result in higher inflation or said another way – in a falling dollar. There is no doubt this will occur, the only question is when.

In the meantime, China and other countries are trying to reduce their dollar holdings. China, for example, is very active in Africa and the Middle East purchasing oil and other natural resources with their dollars. Similarly, countries have been reducing the amount of U.S. government debt that they have been acquiring over the past several months. All of this suggests that in time the dollar will be considerably lower and gold will move considerably higher. Some of the most prominent and successful fund managers such as John Paulsen and David Einhorn, along with Steven Mandel, bought enormous amounts of gold during the first quarter of this year. Their purchases amount to nearly $3 billion.

Weekly jobless claims reflected further weakness in the economy, but the Index of Leading Indicators rose 1% in April. That was the first gain in seven months. It would be excellent for gold and silver to consolidate the recent gains and hold above the newly formed support levels. If gold can close out the week above $935 an ounce, it will be well positioned to move into the $950 range with ease. This morning gold hit a high of $944 before profit taking set in.

A technical analyst told the Dow Jones Wire Service this morning that: "Global gold prices may rise to $1,250 - $1,650 an ounce during the next one to two years on strong fundamentals and technical support." The analyst is Jurg Kiener with Swiss Asia Capital who further said, "The sheer fact that there has been backwardation in prices and supply is incredibly tight shows that gold prices are likely to rise." They are recommending that their investors put 10% to 15% of their funds into precious metals. Moreover, Kiener said: "Gold is a safe haven for investors during both inflation and deflation." B of A/Merrill said this morning, "We remain unabashedly bullish on gold."

Given the recent forecasts of so many analysts and investors for gold to be in the $1,200 to $2,500 an ounce range over the next couple of years, I think it is very important for all investors to own some precious metal assets. Analyst Ivory Johnson was interviewed on CNBC. He said that everyone should own some gold for diversification and as a safe haven asset. He pointed out that the U.S. government has committed $12 trillion to various bailout programs in the course of the past year. Money supply is up 125%. China and other central banks are concerned about potential for the dollar to fall aggressively. As a consequence, gold is being recommended as a way of preserving wealth and for potential profits over the next several years.

Call Goldline today at 1-877-341-2646 to learn more and to get started with your gold investments or to add to your portfolio. Ask Goldline about their Price Guarantee Program and about the various gold and silver assets that are available. In addition, be sure you ask for the free information package. It contains several brand new articles and a brand new CD interview I did with Frank Barbera. All of that will be very helpful for today's investors. Call Goldline at 1-877-341-2646.

Investors should contact Goldline and ask them to explain the features, benefits and cost structure of the various gold and silver investments that are available to you. Select those that best meet your own personal and individual investing needs and objectives. Investors looking for low transaction costs may wish to consider bullion assets such as American Eagles, Swiss 20 Francs, Krugerrands, Canadian Maple Leafs, Silver Bags or Silver Bars. However, the Price Guarantee Program is not available with these assets.

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