Well, the year is drawing to a close so let’s examine how gold has done for 2006.

Gold for the year is up around 20%. The Lipper Gold Mutual Fund Index is up around 33%. Not bad I think. And the serious gradual fall out for the US dollar has begun. The real estate meltdown has begun and continues to gather momentum. We have a new congress coming into office that will begin making changes that will contribute to higher long term gold prices.

The following article below came out in the past couple of weeks or so and many readers are asking for comments. First of all let me state that I find the article to be ridiculous. The article asserts that we have something to fear from China. This is first of all ridiculous because for 100 years I do not believe we have ever seen one aggressive act come from Asia against the interests of the United States.

I believe I am correct in this.

Asia is our friend and buddy and never have they in any way threatened or harmed a single American hair. So why should we even begin to suspect that they would take advantage of us now simply because they hold a 1 trillion mortgage over our heads today? Really, can you believe some folks? These guys and gals like us and are our friends and want to help every single American boy and girl to prosper even at the expense of his or her Asian neighbor. Anyway, below is the ridiculous article full of Asian slander I am referring to. Read the article with the understanding that this could never contain an ounce of truth though.

“…the Chinese government has informed visiting Bush Administration officials they intend to dump One TRILLION U.S. Dollars from China's Currency Reserves and convert those funds into Euros!” “China told the U.S. delegation they no longer have faith in U.S. Currency for several reasons:

1) The Federal Reserve Bank ceased publishing "M3" data in March, making it nearly impossible for anyone to know how much cash is being printed. China said this act made it impossible to tell how much a Dollar is worth.
2) The U.S. Dollar has lost upwards of thirty percent (30%) of its value against other foreign currencies in the recent past, meaning China has lost almost $300 Billion simply by holding U.S. Dollars in its reserves.
3) The U.S. has no plans whatsoever to reduce deficit spending or [the] ability [to] pay down any of its existing debt without printing money to pay it off.” “For these reasons China has decided to implement an aggressive sell-off of U.S. Dollars before the rest of the world does so. China reportedly told the US delegation; "we are the largest holder of U.S. Currency and if the rest of the world unloads theirs before we unload ours, we will lose our shirts." click

Anyway, the above article can simply have zero truth to it because the Chinese like us and would never desire to hurt us in any way. It’s simply ridiculous to assume that they are one day going to call in the mortgage they hold over this country. The truth be told I am sure the Chinese folk are trembling in their boots. The United States is economically invincible and will never fail. Just can’t.

“Uranium prices surging. $115 a pound predicted for 2007” “…well-respected Australian based research organization Resource Capital Research, which specializes primarily in the uranium sector among other minerals resources, has predicted spot uranium oxide prices rising to $115 a pound during 2007. According to RCR’s latest quarterly review of the market, analyst John Wilson states: “Forward indicators suggest the uranium price is heading to US$90/lb by mid 2007…and US$115/lb by September 2008, an increase of 75% over the current spot price.” “The upward revisions are largely driven by the expected impact to the uranium market of delays at the Cigar Lake project (Cameco) in Canada.” click

The following reader email below comes from Denmark with a very good question.

Dave, “…I'm trying to figure out what the US government will do with its current debt situation and future unfunded liabilities time-bomb…” “Unfunded liabilities are now at about 44 tril. How will the US eventually pay this, keeping in mind that amount grows significantly each year, much faster than receipts? Will the government A) cancel these social programs altogether, or B) keep inflation high to erode the liabilities to zero (please see xls for some quick calcs - am I way off?), or C) just roll with it forever/until an major asteroid hits Earth?”
James M., Denmark

Well, I think we can answer James from Denmark with the following email comment from another reader below.

David, “Once we were amused by inflation. It only happened to banana republics and the Germans of long ago.” “Now we depend on inflation. It raises the stock market but we call it a bull market. It raises the price of a house but we call it wealth creation.” Tom N.

Tom, just answered what the long term solution to all US dollar problems will be. More inflation. It is simply the only way the US government will ever even hope to handle the escalating US dollar mess. And higher inflation ultimately is what contributes best to a rising gold price. Do you begin to see why gold bugs are so confident of long term rising gold prices?

Are readers making money investing in uranium stocks? Read the following email from a happy reader and I will let you decide.

Good morning David, I have enjoyed reading your articles, particularly with regards to Uranium over the last few months…” “In April 2005 I invested in a small Western Australian based Uranium company called…” “With the announcement of successful diamond drilling this week the split share price climbed as high as $2.16 making my investment now worth $13,000,000; (thirteen million dollars).” “The initial 20 cent stock is now worth approx $6.48.” “…this is just the beginning.” “…very few people understand what is going on with the Uranium price and have failed to take advantage of it. WHAT ARE THEY WAITING FOR?” Michael V.

Good question to ask Michael, “What are people waiting for?” But my experience is that most folk generally have this instinctive internal timing mechanism where by they wait for a market to top out and then they jump in. Always happens that way and always will. That is why those that prosper are always in the minority because they think outside the box and are willing to jump in and take worth while calculated risks when they present themselves. The stupid just sit back like idiots and wait for the rain.

Hi David, “…just read your article as published on xxxx.” “…your insistence on uranium made me buy a few of the companies out there and needless to say, I am seeing 20-30% in last few months and hope and expect a good deal more.” “…is uranium still so unknown by wall street people? I am surprised Mr. Kramer of TV fame has not been there pushing…” TKS

Yes, yes, yes to the following question below!

“is uranium still so unknown by wall street people?”

And for the above reason is why uranium remains the buy of the century still.

Hi David, “I enjoy reading your articles and I share your views on subscribing to a few good newsletters.” “After watching and reading the opinions of many different newsletter and industry commentators I have singled out about four that I really trust. They are: Paul Van Eeden, David Morgan, Doug Casey and Jim Dines.” Cheers. Have a wonderful Christmas. Jason, Calgary, Alberta

Good choices, Jason.

 “Uranium spot prices will continue to rise into the New Year, hitting $90 US per pound by mid-2007, according to a report by Resource Capital Research.” “It projects the spot price could hit $115 US per pound by late 2008. Resource Capital said junior uranium miners are seeing strong interest from investors, with Canadian companies like…” “…are forecast to continue to outperform the sector…” click 

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