Daily Commentary

Inflation is the Thief of the Thrifty Middle Class

Pending home sales fell 20% year on year.  Median prices are also projected to decline.  February home resales were revised lower to a decline of 2.9%.  March came in, down 1%.  Clearly, the housing market is worsening, not improving.  That cast a negative tone for the equity markets and gave rise to further concerns that the country could slip into deflation.  Moreover, a Fed governor implicated that the Fed may not cut rates again for some time.  That concept caused gold to feel some pressure and it corrected in reaction.  This caused the dollar to rise this morning, which also contributed to the correction in gold.  After four straight up days, one day of correction is welcome and gives investors a fresh opportunity to acquire gold and silver on the dip.  The market is also watching crude oil prices, which are trading little changed.

In further economic news, first quarter productivity increased significantly.  That suggests there are fewer workers producing more goods and services at lower cost.  The worker is bearing the biggest brunt of the problems that are facing today's economy.  The Wall Street Journal comments on this fact by pointing out the actions taken by the Federal Reserve and treasury have served to create inflationary pressures, which have been negative for middle income Americans.  As they said so eloquently, "Inflation is the thief of the thrifty middle class."  They further pointed out, "In its attempt to help Wall Street and the financial system, Fed policy is punishing average Americans."  These words ring true to every American who is struggling to make ends meet. 

Clearly, as a result of the dollar, which is up 53 basis points at 73.53, we see some pressure on gold, which is down $10.  Silver is down $.14 in early trading.  Although gold is weaker this morning it remains above key support levels and the up trend has not been violated.  Gold and silver both remain in a trading range as they work through this period of correction and consolidation.

Another factor that has had some psychological impact on those who really don't understand these markets is that the IMF voted yesterday to go forward with gold sales.  This now requires ratification by the participating nations including the U.S.  The U.S. Congress is unlikely to vote on this issue this year.  In addition, if they do end up making these sales, they will be pursuant to and within the European Gold Sales Agreement.  Therefore, there will not be any additional gold coming to market as a result of this action.

Analysts are now commenting they expect gold to grind higher as crude oil continues to hit new record highs.  They are looking for gold to develop a base above $870 an ounce to provide the platform from which to move into the $900 range.  Yesterday, Thomas Winmill forecast that we will see oil trading at $150 a barrel and gold above $1,200 an ounce this year.  In trading this morning, oil hit a high of $122.31 a barrel.  Clearly, energy prices are driving inflation higher and that too should be bullish for the gold market.  A key chart point is $854 an ounce.  That would represent a 50% retracement of the rally from the August low to the March high according to J.B. Slear of Fort Wealth Trading.  As long as gold is holding above that level, it is probably headed to completing its consolidation and moving back up into a test of the $900 range.  For the corrective process to continue longer, it would require a three-day close below that level.  Thus far, we have not seen action like that. 

Analysts continue to view gold and silver as buying opportunities at today's levels.  Goldline investors have an additional benefit in that they can use Goldline's Price Guarantee Program.  With this program you can make your transaction today.  If there should be a correction within the next two weeks then you have the opportunity to re-price your order to the lower level and acquire more gold or silver for your money.  This is an excellent and very valuable tool that is available with assets that have some collectible value such as Swiss 20 Francs, Double Eagles, Silver Dollars and other similar assets.  Moreover, when you acquire 29 Swiss 20 Francs you will receive the 30^th free.  There are also some specials with Proof American Eagle Silver Dollars.  These coins normally sell for $54.95.  However, Goldline is offering them at $44 on a limited basis.  Also ask the folks at Goldline to explain the features, benefits and cost structure of all the precious metal assets 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.  Those assets do not have the Price Guarantee Program available.  Call Goldline today to learn how you may take advantage of these special offers at 1-800-827-4653. 

To receive the free information package, including quotes concerning rising inflation, the need to stock up on food in your pantry, oil going to $200 a barrel and gold reaching above $1,200 an ounce this year, call Goldline.  Be sure you also read the Coin Facts Risk Disclosure Booklet, which contains important facts you should know before you make an investment.  Call Goldline now at 1-800-827-4653.

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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