GOLD REBOUNDS, DOLLAR SOFT

Precious metals are rebounding nicely as the dollar is softer this morning. The dollar is down 17 basis points at 77.16. Gold is trading up $5.40 and silver is $.25 in early trading, while platinum and palladium are posting large gains with platinum up $21.90 and palladium up $7.75. Oil is trading up $.36 at $78.39 a barrel. A weaker dollar and higher oil prices are tied together with both helping to support gold in its latest up move. Gold seems to have excellent support at these levels and appears to be a buying opportunity according to many analysts.

The Asian Development Bank warned that inflation in China and India may become a problem as growth accelerates in both countries, said HSBC analyst James Steele to the Dow Jones Wire Service. He stated, "China's policy response to the economic crisis, while securing a swift and impressive turn around in economic growth in 2009, now threatens to create unintended risks to growth in 2010 - 2011 in the form of higher inflation." Based on some of these factors, Steele sees the gold bull market remaining in place this year.

Barron's Magazine Randall Forsyth said, "From Greece to California, markets are beginning to worry about what has traditionally been deemed a risk-free asset: government debt securities." If sovereign debt is questioned, then investors generally turn to gold. The problems with Greece having its credit rating downgraded and the fact that the ECB President Trichet vowed that it would grant no special favors to Greece, all gave rise to increasing demand for gold rather than paper currencies.

Here in the U.S., the White House has warned the state of California that Washington cannot solve its $19.5 billion deficit problem. It would really be catastrophic if we begin to see major states unable to pay their bills and defaulting on their bonds.The article said, "The sovereign debtor whose situation evinces real concern is the state of California, the 7th largest economy in the world. As such, it vastly overshadows in importance other dicey sovereign debtors, such as the PIIGS (Portugal, Italy, Ireland and Spain). But like members of the EMU, California can't devalue to reduce its real debt burden." California is now ranked as number 10 of the top 10 default candidates among sovereign debtors, right behind Greece. The U.S. government itself has a similar problem, but it has the ability to devalue its debt away. In the opinion some analysts that is exactly what will happen over time, just as it has been occurring over the past 50 years. John Hathaway, head of the Toqueville Fund said, "I'm very bullish on gold prices." Many other analysts share his view that gold remains in a very bullish mode.

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To receive the free information package on gold investing, call Goldline at 1-877-341-2646. You will also receive the Client Account Agreement, a company brochure and a Coin Facts Risk Disclosure booklet. Read these carefully before you make a purchase. Call Goldline at 1-877-341-2646 now to receive your free gold information package.