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Meanwhile, United States stocks enjoyed a recovery last year but are showing their weakness in 2004. Dow Industrials are down 28 YTD and the Nasdaq is trading below 2,000 again. The stock recovery has fallen on tough times and appear likely to be volatile in the weeks ahead as uncertainty grows over the true state of the American economy. Since the Federal Reserve continues to leave interest rates at the historically low 1 level, the United States economy must be far worse than we are being told. In an election year, government reporting tends to see the world through rose-colored glasses. The prospects for a stronger economy and a rising stock market long-term appear uncertain at best. With a major decline in United States stocks underway, optimistic investors are getting killed again. The rebound in the stock market and short-term economic recovery so far has been mostly due to tax rebate checks, government spending, and government hiring. Looking into the future, we are afraid that if America falls into another recession, we could have a massive problem next time and no ammunition left for the fight. Massive United States trade/budget deficits weigh heavy on the economy. No country in the history of the world has amassed so much federal, state, corporate and personal debt. Estimates now total $32 Trillion dollars worth of debt owed by Americans. In FY03 the United States Government spent $318 Billion on interest payments alone. Since 9/11, Bush has pumped billions of dollars into the United States economy to support the Iraqi War and fight terrorism, yet the economy remains weak. Even the tax cuts and tax rebates dont look like theyll save us from a recession. Nothing the government seems to do can put Americans back to work. Millions of United States jobs are shifting overseas, lost forever. Out of work Americans dont spend money in stores or pay taxes making both consumer spending fall and the debt to rise. To keep the economy going, United States officials forced the Dollar value down by 25 in the last 2 years. Theres a breaking point where lowering the Dollar further risks a worldwide currency crisis. We are worried that the Dollar could take an unexpected dive at any time, especially if terrorists strike America again. In Mid-March, the Dollar fell immediately after Al Qaeda claimed responsibility for the Madrid bombings. Will another terrorist attack on United States soil be the ultimate back-breaker for the Dollar? Bad News is Great News You may ask, Why is all this bad news so good for gold? The result of a weaker United States Dollar, is an automatic guaranteed rise in gold prices. A currency crisis could spike gold prices beyond the historic $850 level of the 1970s. At the same time, a weaker stock market will create a flight to safety by investors looking to protect their nest egg and seeking out better returns. The benefactor, in our opinion, will be those who invest in gold today while prices are still tracking at the $410 - $435 level. Gold Looks Strong for Next 5 Years Now lets look at late-breaking gold news: The 15 major signatory Central Banks have agreed to extend their Gold Agreement for another five years. The first agreement limited Central Bank Sales of gold and helped to turn the gold market into todays bull market. Before the agreement, gold prices were artificially depressed by Central Bankers. Gold prices suffered from unexpected, arbitrary sales of gold by the major world banks. When they finally agreed five years ago to limit their gold leasing, gold futures sales, and options, the cap was lifted off the gold price. Gold Supplies Dwindling There has been a major drought in new gold finds for the past decade. Throughout the 90s, extremely low gold prices forced gold mining companies to cut all expenses just to survive and risky exploration expenses were slashed. Despite the fact that spending will increase dramatically for gold exploration in 2004, it takes five to seven years to bring a new gold mine online creating a short supply/high demand scenario.
To control Social Security/Welfare benefits, Congress rigged inflation figures in the 1990s. Today, the Consumer Price Index excludes most things we spend money on every day to survive like electricity, gas, medical, and food. Forgive us if we get a little irate, but rising prices for gas, electricity, medical and food represent real costs. The 30 increase in energy is a number that reflects the true inflation in energy today. What amazes us is that Cable News channels were bragging about very a very low 06 inflation rate in February. A rate that high may force the Federal Reserve to increase interest rates which would kill the housing boom, slow down car sales, and promptly take the economy back into recession, or worse. Beware inflation is here, it just make take a while for officials to admit the truth. The Time To Worry About Inflation is Now We feel its important to consider the worse case condition for inflation. You may ask just why should anyone care about the true inflation rate? Because inflation sucks the life out of an economy, inflation hurts business profits, inflation drives down stock prices, inflation creates layoffs, and inflation dries up consumer spending. THE INFLATION FORMULA High Inflation Weak Profits Weak Dollar Stock Market Declines Rising Gold Prices. Why Gold Bugs Love Inflation In a hot gold market, the price of gold typically rises at a multiple of the annual rate of inflation.
We fear that inflation may kill the recovery, take us back into a worldwide recession, kill off corporate profits, and drive down the United States stock market back to the depths of despair we havent seen since after the high tech bust. Buy Gold in Troubled Times In conclusion, we firmly believe that an investment in gold should be based on the investment climate. The more uncertain the future, the more investors will want to hold gold. Today, we see clients buying gold to protect their portfolio from a currency crisis, a recession, and from the fear of a crashing stock market. Many people are also worried about another terrorist attack on United States soil. Diversifying into gold today, and maintaining a core gold holding, can provide you with ideal protection in the event of an unexpected crisis, regardless of the cause. Dedicate A Portion of Your Portfolio to Gold In our opinion, a reasonable allocation of gold in a conservative, diversified portfolio is 1 to 3 during a bear market in gold and 5 to 10 during a bull market in gold. This allocation will provide balance, diversity, insurance for your stock portfolio, and an excellent long-term profit opportunity. How much gold you should own is a personal decision you must make based on your own financial situation and expectations. Gold prices go up and down in value and gold is not a suitable investment for everyone.
Most importantly, do you have true diversification beyond common stocks and mutual funds? The risks and rewards facing investors today is unlike anything weve seen in our lifetimes. The opportunity to provide your family with protection is still available to you today. There is no guarantee youll get a second chance to buy gold at todays price levels. For all these reasons and more, gold is an investment whose time has come again. To take a position in gold of $1,500 to $100,000 or more, call our Certified Gold Specialists at Austin Rare Coins & Bullion. Theyre available seven days a week at 1-800-928-6468 to answer questions and provide live price quotes. Austin Rare Coins, A Firm You Can Trust The Gold Information Network is the Gold Division of Austin Rare Coins, Inc. We are proud to be a member of BBBonline, the Industry Council for Tangible Assets, and a leading dealer with the Professional Coin Grading Service and the Numismatic Grading Corporation. Buying from a reputable and established gold trader offers you the advantage of personal consultation and prompt liquidity when youre ready to sell your gold. For orders of less than $1,500 you may order directly online at the Gold Information Network using your Visa, MasterCard, Discover, or American Express.
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