Cash is Trash - Buy Gold

Submitted By Jack Bass
Cash is Trash – Buy Gold Stocks U.S Policy Points to Dollar Debasement No country wants a strong currency - a weak U.S. Dollar will mean higher commodity prices ( for gold , oil etc . priced in U.S. dollars The longer-term outlook for the dollar is clouded by the fact that aggressive Federal Reserve moves to boost the economy look set to devalue the currency by creating inflation. Indeed, no country wants a strong currency in this global downturn, and all central banks may be tempted to inflate away their debt, says David Hale of David Hale Global Economics in the FT. Enter "that ancient form of money" and ultimate store of value: gold. Precious metals consultancy GFMS expects a new record high above $1,000 an ounce as investors begin to worry about the collapse of the dollar in America and alternative currencies continue to grapple with problems of their own. More inflation and more dollar debasement can be expected. The Federal Reserve has thrown away the rule book. It is ignoring three hundred years of central bank practices and putting the dollar on an untried path in an attempt to avoid the consequences of the inevitable bust that always follows the boom created by easy credit. James Turk adds : The Federal Reserve's grandiose experiment will I expect eventually destroy the dollar, and I don't hold out much hope for any other national currency. To explain why, take a close look again at the above table. We can see that gold is rising against every national currency. The reason for this phenomenon is that the dollar is the world's reserve currency, and because of this role, it is held as a reserve by central banks around the world. The dollar provides part of the base upon which other currencies are created. Therefore, as the dollar is debased, other national currencies are also being debased along with it. In other words, the US dollar is now going down a 'black-hole', and its gravitational pull is dragging every other currency down with it as evidenced by the rising gold price this decade in all currencies. Gold Bugs - Let's Get Physical The world's largest bullion-backed ETF, New York's SPDR Gold Trust, said its holdings rose to a record 805.96 tonnes on Wednesday January 21,2009 On the supply side, the world's fifth largest gold producer, Harmony Gold (HARJ.J) and Australia's biggest bullion miner, Newcrest Mining (NCM.AX), both cut their output forecasts. Harmony said it now expects production to decline in the second quarter from the first, after its gold grade decreased. Newcrest said meanwhile it sees gold output in a range of 1.63-1.7 million ounces in the year to June 30, down from a previous forecast of 1.68-1.78 million. "For the current year, an output of 280-300,000 ounces of gold is anticipated and 17-18 million ounces of silver," said Commerzbank analyst Eugen Weinberg in a note. Can Gold Prosper in Deflation ? The CEO of Sprott Resource Corp ( SCP on Toronto ) backs the recent purchase of 40,000 ounces of gold with this analysis : One of the beautiful things about gold is that it can show its relative value in both an inflationary and a deflationary environment. Some people argue that if they just keep printing, we’ll end up with some kind of hyperinflation anyway. However even in a deflationary environment, where people concern themselves with the banking system, lending and where they have assets, it is a very powerful force for people to own gold. We’ve seen that manifesting itself this year and it probably won’t take much more (particularly now that the interest rate is almost down to zero) for people see the wisdom of gold as an asset class. It wasn’t too long ago that if you said people should have 5% gold in their portfolio, they thought you were a quack. Now people are certainly willing to go to 10% of their portfolio and they’re not seemingly crazy. In my portfolio I have 40% in gold and I think that’s the safest, and probably the most rewarding investment that I could have. If people come to that conclusion, even at 5%, the demand for gold would be outrageous and who knows where the price would go. I believe no matter what environment you’re in—deflation or inflation—people will run to gold. Gold is proving exactly what we all would have expected, that in almost any environment, it’s a go-to asset. Other Canadian Juniors 1 ) Western Goldfields ( WGI ) now producing in Nevada. The Company is ramping up production. It is two – thirds unhedged . The executives are former Barrick management . 2) Centamin Egypt ( CEE ) a Toronto listing for a low cost explorer in Egypt. The Company recently raised an additional $ 69 million and will not require further financing prior to 2009 production. 3 ) San Gold ( SGR) The recent run up in this producer is as a result of high grade finds in the “ Hinge “ zone. That zone is scheduled for production in 2009 and the Company will release new resource numbers in March. Jack Bass is the editor of The Apprentice Millionaire Market Letter available at htpp://www.amprogrom.com

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