Daily Commentary

GE Stock Posts Biggest Loss In 20 Years

The markets today are flooded with bad news.  GE posted a substantial 12% drop in profits as a result of problems in the credit sector of their business.  Also GE stock fell about 14% in early trading.  Jefferson County, Alabama where Birmingham is located, filed for bankruptcy protection, as did Frontier Airlines.  The municipalities are all having difficulty because of the failure of the Auction Rates Securities markets.  Derivative investments are all having very serious problems and are likely to continue having problems.  The credit market difficulties will not be over for quite sometime.  Now we are beginning to see that it isn't just a sub-prime mortgage problem.  It is a credit derivatives problem in general.

Consumer confidence is continuing to decline, which indicates that retail sales are likely to fall back.  Consumer confidence is down at the low end of where it was during the big stagflation era of 1970's.  Expectations of personal finances are at the worst since 1980 according to Reuters.  At the same time, inflation is rampant.  Inflation was the front-page story of the Wall Street Journal yesterday.  Food and energy inflation in particular are skyrocketing causing massive problems on a global basis. 

All of these are substantial reasons for people to invest in gold.  First, it is a "safe haven" asset.  Second, it protects against declining currencies.  Third, it is an asset that rises aggressively during times of inflation and stagflation.  Today, the metals are trading in a sideways pattern.  There is book squaring going on ahead of the weekend.  Scott Myers, senior analyst with Pioneer Futures said, "I still think it (gold) has legs and we are going higher.  If we get a few settlements above $950, I think you'll probably see a move towards $1,000.  I think it's just a pause in an up trend."  This seems to be the sentiment of the majority of prominent analysts. 

One of the reasons that there is some book squaring going on is that the G7 is meeting over the weekend.  There is always some concern as to what the G7 may come up with; it could be either positive or negative for the market.  Deutche Bank, which recently forecast that gold would rise above $1,100 in the near term said, "In the absence of a pocket of U.S. dollar strength around this weekend's G7 finance ministers meeting we would expect new price gains across the complex."

I continue to believe these corrections present excellent buying opportunities in the precious metals.  We have an abundance of analysts who are forecasting that gold will rise above $1,000 an ounce over the next several months.  Over the course of the year, many of the most prominent analysts think we will see silver above $22 and gold above $1,100.  With that kind of a forecast over the next nine months, gold and silver present excellent investment opportunities.  

Call Goldline today.  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 Krugerrands, Canadian Maple Leafs, American Eagles, Silver Bags and Silver Bars.   Investors who would like to take advantage of Goldline's Price Guarantee Program, which is an excellent program giving you a two-week window of opportunity in which to re-price your order in the event of a correction, need to select coins with some collectible value.  This program is not available with bullion assets.  Swiss 20 Francs qualify for the Price Guarantee Program.  These gold coins have been very popular investments.  When you acquire 29 of them, you receive the 30^th for free and you can utilize Goldline's Price Guarantee Program.  Ask how you may be able to extend that program beyond two weeks.  Those who are interested in silver may wish to consider pre-1964 silver half dollars.  Acquire $6,000 worth and you can receive free shipping.  Moreover, those who invest $6,000 in qualified assets have an opportunity to receive absolutely free a 1700 year-old coin from the ancient Roman Empire.  These coins are the Constantine gold coins made about the year 300 A.D.  They are genuine coins, not replicas. They have been independently authenticated, graded and certified as almost uncirculated by the Numismatic Guarantee Corporation, which ensures you that they are genuine.  You may be able to receive a free ancient coin with your $6,000 investment in qualified assets.  Call Goldline now to learn the details of these special offers at 1-800-827-4653.

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Investors should be mindful that past performance does not guarantee future results. Transaction costs are generally 5% to 7% on bullion and 30% to 35% on coins. This is also referred to as the spread, or the difference between the buy price and the sell price. The market must go up enough to overcome this spread before an actual profit is achieved. All markets go up and down. Coins are a long-term, three- to five-year investment, suitable for 5% to 10% of the average portfolio. Please see Goldline's Risk and Disclosure Statement for further details.

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