Gold Stock Bull

The fed continues to print massive amounts of dollars out of thin air. The US dollar is fundamentally and technically very weak and headed for even lower levels. Once the psychologically important support at 80 is broken, we expect a dramatic sell-off of dollars around the globe. We are in the early stages of a massive global currency debasement which will see tangibles, and most particularly gold, rise significantly in price.

Gold is bought and sold in U.S. dollars, so any decline in the value of the dollar causes the price of gold to rise. The U.S. dollar is the world’s reserve currency - the primary medium for international transactions, the principal store of value for savings, the currency in which the worth of commodities and equities are calculated, and the currency primarily held as reserves by the world’s central banks. However, since it has been stripped of its gold backing, the dollar is nothing more than a fancy piece of paper.

Money supplies all over the world are increasing - 10% per annum in the United States, 10% in Europe, 14% in Asia. The printing presses are working over time and eventually the chicken must come home to roost…

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If you are invested in gold, silver and the companies that mine these metals, you might be a bit disappointed by the relative lack of action over the past year. Indeed, if you would have bought the HUI exactly one year ago, you would up a whopping 4% as of the publishing date of this article (April 5, 2007). And if you would have bought 11 months ago (in May), you would actually be down 11%. The HUI has been trading up and down, but has been confined to an ever tightening range. Take heart, as this extended bout of sideways trading must be looked at with some perspective.

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