Daily Commentary

Buy The Dip and Add to Your Holdings

Gold is continuing to correct this morning, down $7 in early trading, but off of its lows when it was trading as much as $11 down.  Silver is rallying and leading the metals, up $.13 in early trading.  The performance of silver, given the fact that gold is down and platinum is down $86, is fantastic.  There is a lot of pressure on the metals from the fact that the dollar is up 26 basis points at 72.60 and oil is down $1.96 at $126.89 a barrel.  A stronger dollar and falling oil is a very negative combination for gold and other precious metals.

The Chairman of Dow Chemical published a report today announcing they are raising their prices by 20%.  I think that maybe the largest single across the board increase in their history.  It suggests enormous inflationary pressures as Dow Chemical products are used in a wide variety of products and manufacturing processes.  This suggests further inflation directly ahead.  Interestingly, after yesterdays correction the demand for physical gold in Asia was up significantly.  Dow Jones Wire Service reported, "The weakness will likely prove temporary, and gold's longer-term outlook is still positive, given concerns about inflationary pressures and still shaky outlook for the dollar, said Wallace Ng, a senior trader at Fortes in Hong Kong."

Looking at the U.S. inflationary picture the national average retail price of regular gasoline jumped 14.6 cents or 3.9% to a record $3.937 a gallon.  In California, prices topped $4 a gallon.   Bear in mind that the hurricane season lies directly ahead.  Any interruption in production as a result of hurricanes will add further upside pressure to the energy market causing more pain at the pump and higher inflation.   While we all worry about higher inflation problems, the problems in the banking system continue to be severe.  A report from the Federal Reserve indicates there are likely to be an enormous number of Alt "A" and adjustable rate mortgages that will into foreclosure as homes are worth less than the amount owed on them.  Homeowners with excellent credit and lots of cash in the bank will be giving homes back to the banks because it does not make good economic sense to continue to make mortgage payments when the value of the house continues to drop.

In April durable goods orders fell 0.5%.  Moreover, retail sales rose 1.9% in the first three weeks of May versus April.  These statistics indicate the economy may not be as weak as many perceive.  However, the jury is still out on these issues.  One thing is clear, consumer sentiment is collapsing, confidence in government is almost nonexistent, and the cost of living continues to increase at an incredible rate.

In this environment it makes a lot of sense to have a precious metal diversification component in your portfolio.  Gold and silver are both in clearly defined bull markets.  They have been in bull markets since the year 2000 and will continue to be in bull markets for some time to come.  Therefore, the smart investors use these periods of correction and consolidation to buy the dips and add to their holdings.  Today would be an excellent opportunity to acquire gold and silver at bargain basement prices.

I recommend investors call Goldline today and ask them to explain the features, benefits and cost structure of the various gold and silver investments 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 American Eagles, Krugerrands, Canadian Maple Leafs, Silver Bags or Silver Bars.  However, the Price Guarantee Program is not available with these assets. 

If you would like to take advantage of the Price Guarantee Program, which provides you with a two-week window of opportunity in which to re-price your order in the event of a correction, you must select assets with some collectible value such as Swiss 20 Francs, Double Eagles and Silver Dollars.  When you acquire 29 Swiss 20 Francs, you will receive the 30^th coin for free.  Investors may wish to consider several tubes of these coins to obtain several free Swiss 20 Franc gold coins.  Call Goldline at 1-800-827-4653 for further information.

To receive the free information package including the special booklet from the FDIC that helps you to understand whether your bank accounts are safe and enables you to be sure that your bank has the proper insurance to protect your deposits, call Goldline.  We also provide several other helpful articles.  There are also a number of other independent third party source articles that you will find extremely helpful and informative.  You will also receive the company brochure and a Coin Facts Risk Disclosure Booklet, which you should read carefully before you make an investment. 

Goldline will send you a free CD of the special interview with analyst Frank Barbera if you ask for it.  This is a remarkable interview and I think everyone would benefit from listening to it.  Call Goldline now to receive your free information package at 1-800-827-4653.

^{You should carefully read the client Account Agreement and the Risk Disclosure information. These explain important things you need to know before you invest in precious metals, such as: past performance does not guarantee future results. Transaction costs are generally 5% to 10% 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, preferably five- to ten-year investment, suitable for 5% to 10% of the average portfolio. Please see Goldline's Risk and Disclosure Statement for further details.}

Back to Daily Commentary