Daily Commentary

Euro Falls Substantially Against the Dollar

Gold fell sharply this morning dipping below $900 an ounce, as the euro sank.  Analysts said the entire market is being driven by the euro, which has fallen substantially against the dollar over the past two days.  The dollar is up 47 points at 71.80.  Oil is also lower down $.83 at $117.24 after reaching a high of nearly $120 yesterday.  Gold has recovered from its lows, however it is still trading down $23 and silver is down $.57 in early trading. 

Analysts said to Dow Jones Wire Service, "While gold has yet to respond to oils recent surge and the dollar's record low against the euro, it would be prudent to focus on the medium and long-term."  The analysts further said, "Gold's historic correlation with the oil price will be re-asserted in coming days as gold plays catch up with oil.  Unlike gold, oil is not a finite currency used as a safe haven asset and store of wealth."

From a technical point of view, overnight gold hit a sell signal level at $914.30.  Once that was triggered traders moved out of the market and a good number got short.  John Nadler who is a well-noted analyst said, "While the current pause is still seen as a period of consolidation, the risk of a breach of the $900 level remains in place and could take bullion to the $880 - $890 area."  That level would mark the bottom of the trading range that gold has been in for a couple of months.  Therefore, as we look at this market we have to conclude the trading range remains between $880 and $950.  We may continue to see some fluctuation within that trading range for a few more days.  However, next week the Fed meets and they are likely to reduce interest rates by ¼%.  That should bolster gold and weaken the dollar. 

As we look at the charts, gold has moved into oversold territory once again.  It is likely that the period of consolidation may be drawing to a close and gold may be better positioned for a more sustained and substantial rally. 

Investors who have utilized Goldline's Price Guarantee Program have been insulated from this correction.  At some point investors may choose to re-price their order to lower levels to acquire more gold for their money.  In other words, the risk of loss on this correction has been passed from the investor to Goldline to some greater or lesser extent.  Those who would like to get in the market today, to take advantage of the opportunities that present themselves, should utilize the Price Guarantee Program.  It provides a two-week window of opportunity during which investors may re-price their order to lower levels in the event of a correction.  This is a valuable tool that is available only through Goldline.

Looking at some of the economic news the Royal Bank of Scotland has reported enormous losses totaling $5.9 billion.  They are in the process of raising $23 billion through a stock offering.  Banks all over the world are experiencing similar problems due to the sub-prime mortgage issue and credit derivatives problems.  This has truly become a global market and the problems of bank crisis, currency crisis and inflation are all a global phenomenon at this point.  There are many who believe the worlds currency system is coming apart at the seams.  A collapse of the dollar reserve based system will have significant implications for every person on the globe.  We are seeing this played out in terms of global food and energy inflation.  Wheat, rice and other staple commodities have skyrocketed to the point that many people will not be able to afford them with dire consequences.  That is one of the reasons we have been seeing rice riots and food riots around the globe.  This will lead to famines.  At the same time energy prices going through the roof are having an impact on virtually everything that is used and consumed.  It takes energy to produce things and to ship them.   When you have a collapsing dollar causing oil to raise to $120 a barrel, you have an impact on virtually all aspects of the world economy and society.

Looking at the housing market, you can see not only that home sales have been declining and prices are falling, but also there were a record number of foreclosures in California in the first three months of this year.  All of these are factors that continue to create severe problems for the U.S. economy and similar problems throughout the world. 

These are all reasons, in my view to be accumulating gold.  As the dollar based currency system collapses, there will be significant consequences including very aggressive inflation.  This should be extremely bullish for gold over the longer-term.  The same is true for silver.  These are some of the many reasons why investors should have gold as a permanent part of their long-term portfolios. 

Call Goldline today to get started.  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.  However, remember these assets do not have the availability of Goldline's Price Guarantee Program.  If you select assets that have some collectible value like Swiss 20 Franc gold coins, you can utilize the Price Guarantee Program, which is very valuable and helpful as can be seen today.   Acquire 29 Swiss 20 Francs and the 30^th Swiss 20 Franc gold coin is free.   When you invest $6,000 or more in qualified assets you can also receive free shipping on your entire order.  Call Goldline now to take advantage of the 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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