PRINTING MONEY DEPRECIATES THE DOLLAR...

...Causes Gold and Inflation to Rise

Gold is weaker on long liquidation, moving down to test the $900 level this morning. That level has held and gold has bounced off of it but it is still down $12 in early trading. Silver came down to test the $12.50 level and bounced off of that, but is still down $.12. Everything is down as well including the remainder of the precious metals, equities, oil and the dollar. Taking them in order we see the Dow down 91 points at 7,304. The dollar is down 65 basis points at 86.28 and oil is down $.96 at $48.22 a barrel. Weakening of the equity market may enable gold to find some safe haven demand. However, the weak longs obviously have to be flushed out of the market. As I have said repeatedly, gold seems to be in an $880 and $950 trading range and may remain in that range for some additional time. While there has been some easing in the flight to quality demand for gold, as equities have been trending higher in recent sessions, gold is nevertheless the asset of last resort. Once the disappointed longs have been cleaned out of the market, I think we will again see a retesting of the higher levels of this trading range. At some point, impetus will be generated to push gold above those levels, back to a retest of the $1,000 level.

The general negative tone of all markets today may have some correlation with the fact that the Federal Reserve will release the decision of its meeting today. Many are waiting to see whether the Fed will confirm that it is beginning quantitative easing or printing of money to purchase bonds on the long end of the market. This would be an effort to push long-term rates down even further. It also would be a confirmation that the Fed has few options left to it in an effort to try to stabilize the financial sector. Based on Fed Chairman Bernanke's statements on 60 Minutes, the Fed is already monetizing debt or engaging in quantitative easing through the printing of money. I suppose the question is whether they will do this on a grander scale than they have done so far. Sooner or later there will be no choice in the matter. It is simply impossible to finance the trillions of dollars that are required for this stabilization of the financial system.

At the lows this morning, the bargain hunters came back into the market to buy gold. Bargain buying may be the principal feature today and for the next few days.

In the economic news Bloomberg interviewed P.J. Marta who set forth the proposition that the United States has seen the best days of its empire. He talks of the dollar losing its reserve currency status and the reins of economic power being turned over to another country much as Great Britain turned them over to the United States after World War I. I think more and more people are coming to the conclusion that the death of the dollar is at hand. The amount of money that is being spent by our government almost guarantees the dollar cannot survive in its current form. Whether the world turns to another nation's currency special IMF drawing rights, or U.S. debt and the dollar are collateralized with gold, or as the U.N economists have recommended a new reserve currency is established, some major change is at hand. It marks the end of the dollars reign as the world's reserve currency.

The Consumer Price Index rose 0.4%, that's 4.8% annualized. As the dollar loses buying power, we should see the CPI moving up aggressively. Perhaps that may take another year or so. However, inflation will be the ultimate outcome of the debasing of the currency. This month's CPI largely reflects higher gasoline and energy costs. The core CPI, which excludes food and energy prices, was up 0.2% for the second straight time last month. This is slightly higher than expected. The IMF said it expects the global economy to contract by even more that previously expected this year and that recovery is still many months away. They indicated it might be until the middle of next year until clear signs of a global upturn begin to emerge. They also said even once recovery takes hold, global growth will be sluggish and won't return to the lofty level seen earlier this decade for some time.

These are important reasons to own gold for diversification. It is highly unlikely that big gains can be made in the equity market. However, big gains are potentially possible in the precious metals. As inflation takes off, gold also should take off on the upside. Printing of money depreciates the dollar and causes gold and inflation to rise. Investors should be looking ahead to the natural and predictable results of the actions taken to bailout the U.S. economy and world economy. Those who do so will likely want to accumulate gold at these bargain basement levels.

Investors should contact Goldline at 1-877-341-2646 for assistance in getting started with gold. Since gold is in what appears to be a "bottoming process" investors may wish to take advantage of Goldline's unique Price Guarantee Program. This program provides a two-week window of opportunity to re-price your order in the event there is a correction after you make your transaction. Ask Goldline to explain this to you so you can determine whether you qualify for this special program. Call Goldline at 1-877-341-2646 for further information.

Also, be sure you ask for the free information package. It contains terrific articles that explain the reasons why the global economy finds itself in these difficulties. It also provides you information on the equity market, the dollar, precious metals, and general information on investing you may find helpful. If you san "Joe said to call," Goldline will give you a free copy of the CD interview I did with Frank Barbera, a prominent market analyst and strategist. Goldline will also give you a free copy of the American Advisor Newsletter. Call Goldline at 1-877-341-2646 for your free information package.

If you would like to take advantage of the Price Guarantee Program, which provides you with a two-week window of opportunity in which to re-price your order in the event of a correction, you must select assets with some collectible value such as 20 Francs, Double Eagles and Silver Dollars. Call Goldline at 1-877-341-2646 for further information on the Price Guarantee Program.

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