GOLD, SILVER REACT TO SOFTER DOLLAR

Gold and silver have rebounded nicely this morning, with gold trading up $7.50 and silver up $.30. Both are reacting to a softer dollar, which is down 20 basis points at 76.23. The equity market is also higher as GDP for the 3rd quarter grew 3.5%. This was a bigger than expected increase in GDP growth. New claims for unemployment were over 500,000 again, but continuing claims declined as a result of people's benefits expiring. Christina Romer from the Administration said that had it not been for the stimulus package, GDP would have hardly shown any growth at all.

All of this suggests that continuing stimulus is going to be needed to pump up the economy. In another piece of good news,the housing sector grew for the first time since 2005. However, analysts say that that is entirely due to the tax credit for new homebuyers. In other words, if you look at the overall picture, the growth was clearly the result of the stimulus without which GDP may not have grown at all or even been negative.

Oil is also up over $1, which further benefits the precious metal sector. Perhaps Barclay's Bank will be correct in that a correction to $1,035 may have represented the bottom in this corrective process. They have been forecasting that their clients should buy the dip with the expectation that gold will rally above $1,100 during November. Certainly the seasonalities tend to support the gold market in November. Look closely at the precious metals as a method of preserving and protecting wealth and purchasing power. With the massive amount of stimulus that the Fed is pumping into the system, it appears increasingly likely that the dollar will lose buying power at a more rapid rate.

David Rosenberg, who was formally the Chief North American Economist for BofA/Merrill, said the only way out of this fiscal mess would be monetizing the debt. In other words, they are forecasting that the government will print money at an unprecedented pace in order to reduce the burden of the debt. They also made a fundamental argument that based upon simple supply/demand statistics compared with the amount of currencies in circulation globally, that gold could easily double and likely triple before this bull market is over. Rosenberg says that we are only a little bit more than half way through this secular bull market in precious metals. If he proves to be correct, acquiring gold at these levels would be an outstanding opportunity.

Call Goldline at1-877-341-2646 for more information on utilizing gold for your portfolio. Be sure you ask for the free information package and ask for a free copy of the 2009 GFMS Gold Update. That is a book that costs $450, but you can receive it for free. Call Goldline now at 1-877-341-2646.

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