Higher Gold Prices

In 2002 a very rare event occurred: Five of the planets in our solar system aligned themselves in a straight line.

In late April of that year, Jupiter, Mercury, Venus, Mars and Saturn lined up in a five-planet array that wouldn't be repeated for a century.

The setup provided a planet-watching opportunity of absolute wonder.

Oddly enough, this event occurred just as gold was starting on the bull run that we have witnessed for the past five years. See chart below:

While the past five years has been a great time of profits for the few investors who followed gold and the mining stocks, they were nothing compared to what is about to happen.

I expect the red line on the chart above to move in an almost vertical manner over the coming months. I wouldn't be surprised to see gold move up $100 an ounce in a single trading day, an event that the modern world has never witnessed.

The fundamental reasons for this I have expounded on these pages and others for years.

Recent events, however, have led me to the conclusion that the time for a major upward move in gold has finally arrived.

Earlier in the year I wrote an article stating that gold had broken a key benchmark, when the yellow metal hit its highest monthly average price in history. In February 2007, gold crossed its all-time monthly average high, which had been $666.75 an ounce, to reach $669.35. That record had been in place since 1980, when gold briefly traded over $800 an ounce.

More importantly, gold has confirmed this new trend in five of the last seven months! The average monthly high for gold in those five months was as follows:

• April 2007 monthly average gold price $681.37.
• May 2007 monthly average gold price $668.86.
• July 2007 monthly average gold price $667.30.
• August 2007 monthly average gold price $686.03.

These monthly average charts are sending a clear message. I am surprised more people are not talking about this.

Recently gold, the HUI and XAU were diverging from the general stock markets. The Dow was down almost 250 points, while gold and the shares were having a stellar day. This divergence I believe is also sending a very clear message that something in the Land of Oz is not right.

Upon further investigation of the news we saw Fed statements regurgitating more of the standard double talk. What the Fed was really saying between the lines was this:

All the funny money we recently injected into the system and the lowering of the discount rate to help financial institutions that are in major trouble IS NOT WORKING! We will need to cut rates!

The dollar index, which is already teetering below the critical level of 80, now looks like it could move to a new historic low. How low, no one knows, but the dollar is in serious trouble.

Cutting interest rates in an astonishingly stupid move by the Fed to protect the real-estate and stock markets will blow the dollar out of the water. In the end it won't help real estate or stocks either. I see both the real-estate and general stock markets correcting to much lower levels in the coming year, regardless of what nonsense the Fed tries. But try they will.

What I see is that investors worldwide will start running to protect themselves from one failing fiat currency to another. They won't understand what to do to protect their savings. Because of their improper understanding of what money is, they will move with increasing rapidity from one paper currency to another. As each one fails, they will eventually find out what true wealth really is.

This activity will resemble the childhood game of musical chairs. I don't know how long it will last, but one thing is for sure: When the music stops, gold will be the only sound currency left. Just as it always has been.

Until next time,

Greg McCoach

Right now - without question - the best opportunities for investors to protect themselves against the coming financial reckoning are with precious metals and mining stocks and that's what makes the Mining Speculator portfolio the best in the business.

At the moment, of the 35 stocks in the Mining Speculator portfolio, only six are down. And of the 29 stocks that are up, fourteen are up over 500% apiece... eight of which have gained more than 1,000%.

And the portfolio return? 626% in the past six years.

To get in with the early investors and be a part of this metals explosion, click here to join the Mining Speculator.

If you think you've missed the
boat on Gold...think again!

Gold continues to break multi-year highs, putting an exclamation mark on a metals bull market that has already made fortunes for some far-sighted investors...

Now it's your turn.

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