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IRAN
& GOLD - WHAT NEXT? Gold continues to show strength as evidenced last Friday.
And how is gold’s buddy, uranium, doing?
And let’s look at the gold chart for Wednesday. As I said gold is strong and refuses to be held down. A tremendous amount of momentum continues to drive the price keeping it strong. Oh, I’m sorry; you don’t believe gold and uranium to be a good investment? Your loss. Again, these charts are characteristic of bull market activity. I ask myself sometimes why I keep writing these letters and I suppose it stems from my desire to comment on what I consider the obvious. Where I often see established “trends” and patterns others just see disjointed events. One real serious trend I see in development is the importance of Iran in the scheme of world politics. It doesn’t take a rocket scientist to notice that things seem to be coming soon to a show down over Iran and I don’t think that showdown will be a pretty event. The lines are definitely being drawn now in the sand via both sides of the fence. “Thursday's raid on the Iranian consulate is more evidence that President Bush is ready to escalate the conflict.” “Observers on all sides, left, right and other, convinced themselves that the appointment of Adm. William Fallon to oversee military operations in Iraq and Afghanistan meant there would soon be Tomahawk missiles, if not U.S. soldiers, crossing the border into Iran.” click And as you just read President Bush has just sent an additional carrier group to the Persian Gulf in anticipation of something cooking on the burner. Also, the US military is establishing its influence over the Iranian Consulate in Iraq that involved a Mexican standoff just this past week. Can you spell “war?” Yes, a showdown is on its way and I hope we are not witnessing the prelude to World War III. “Bush, in his speech on Wednesday unveiling his revised Iraq strategy, accused Tehran and Damascus of allowing use of their territory for launching attacks inside Iraq, and vowed "we will interrupt the flow of support." “Bush also said he had ordered an additional aircraft carrier strike group to the region and would deploy Patriot missile defense systems to "reassure our friends and allies" -- steps widely seen as a warning to Iran and Syria.” click And Israel seems to preparing for a major war mission. “PLANS are under way for a massive bombing strike on sites where Iran is believed to be enriching uranium…” “The Pentagon is believed to be considering options that would allow it to destroy facilities such as Iran’s main centrifuge plant at Natanz in a single night of bombing.” “The only question then would be what the Iranians might do in retaliation.” click Anyway, my point in bringing all this up is just a subtle reminder to suggest to you to continue to hold on to your gold and resource mining shares. Gold, silver, uranium and many of the base metals will do well in 2007. But only for those who hold onto their shares. Believe it or not a large segment of folks have ignorantly thrown in the towel and really believe this rally in gold and resource stocks is over. Don’t think so. The world is still buying both gold and uranium with abandon and just these two investments alone are making many investors very wealthy. Sure, as I have said before this type of speculation involves risk, but all of life is a risk and your 401 K from here looks mighty weak and alone. “The White House said Sunday it is not planning military action against Iran, but refused to rule out the possibility…” “…on ABC's "This Week," Hadley (President Bush's national security adviser) would not rule out the possibility of such an attack…” click What is the old saying? If it smells like smoke, if it looks like smoke, then perhaps it is smoke. Anyway, the point again is that you better hold onto your gold investments as this could get very serious if escalations get out of hand via an attack against Iran. We have been very lucky so far that another 9-11 event has not occurred, but I believe our luck may be running out. Oh, are you still not convinced that this mess with Iran is coming to a showdown between east verses west? Read the news text below and weep. “TEHRAN, Iran -- Iran said Monday it is installing 3,000 centrifuges to enrich uranium at one of its nuclear facilities…” “Enriched uranium is used as fuel in nuclear reactors and, at a higher degree of enrichment, can also be used to make atomic bombs.” “…Iranian scientists and military personnel could be working on a secret enrichment program at one or more unknown sites that is much more advanced…” “Last month, Ahmadinejad boasted that Iran would soon celebrate, probably in February, the completion of its nuclear fuel cycle -- the processing of uranium from mining the ore to enriching it.” click The rest of the world is presently using uranium for peaceful purposes. It is believed Iran is striving to use uranium for the purpose of creating nuclear weapons. And the question of course is if the US and Israel will allow this to happen. And like I said earlier - I would not be liquidating my gold investments anytime soon. The following email below is from a reader who has become a near millionaire investing/speculating in gold mining shares. David, “(I) Buy gold explorers I could trust. Well, today that act fluctuates between $1,000,000 and $750,000 based pretty much on POG trends of gold shares. I made it a Family Revocable Trust in order to fund a High School Scholarship we award starting last June. Our IRAs have increased accordingly to another up and down $750,000.” “My 2 large gainers were .25 xxxx and xxxxx…[climbed from .25 to around 10 dollars at its peak].” “JUST TAKES A COUPLE GOOD JUNIORS TO MAKE THE REST A RELAXING HOBBY WHILE YOU WAIT.” “I even gave the maid 300 shares xxxx in a college IRA act for a grandson…” “In other words all the signs were there last 6 years and when on a roll? When hot you're hot! Roll the hot hand…” Don I. The email below is from a reader making his fortune in uranium mining shares. Hi David, “Since you asked for emails, and I like the idea, I thought I would let you know what I am doing with my investments. In late October 2005, I was introduced to uranium stocks. I bought one stock at that time and IT HAS BROUGHT ME A 350% PROFIT. I bought and sold it many times, occasionally I missed the price jump; otherwise, I would be up 496%. Since then, I have invested my entire portfolio in uranium and I have profited well, but I am awaiting the "2nd Phase of This Bull Run". It is not too late to get in, either, but I advise your readers to subscribe to a good newsletter to get the best stock names. I am much more optimistic than many, and I expect to see $115/lb. minimum by the end of 2007.” Bob Canada (the home of politically stable uranium mines) What is driving higher uranium prices and how high is the price of uranium anticipated to climb in 2007? “Climate change, global warming and political tomfoolery worldwide SHOULD STRENGTHEN THE CASE FOR STRONGER URANIUM PRICES AT HIGHER SUSTAINABLE PRICES.” “…the past year should be marked as the transformation period for uranium mining projects. Those exploration and development uranium companies, which had uneconomic sub-$40 and $50/pound projects, became very economic when uranium began trading north of $60/pound. After spot uranium broke through $70/pound in mid December, and long-term uranium reached $69/pound, THOSE ONCE-QUESTIONABLE URANIUM MINERS TOOK ON SHADES OF BECOMING POTENTIAL CASH COWS WITHIN THIS DECADE.” click What the above text is referring to is that petroleum based energy is destroying our environment and only nuclear power represents a clean and non threatening alternative to oil and coal. Are you beginning to understand why uranium mining shares are poised to continue climbing through the roof? “It is no wonder the research analysts are bullish about the uranium price. Vicky Binns and Daniel Hynes of Merrill Lynch forecast an average price of $75/pound in 2007 and $80/pound in 2008. The analysts stated, “We don’t see a major trigger on the horizon that will force spot prices down.” Adam Schatzker of RBC Capital Markets remarked, “There is not a lot of mine production. The inventories being sold into the market are disappearing and we’re actually in a supply-demand deficit.” He predicted the uranium price would average $100/pound in 2007.” click I am going to make some personal comments on the present mess in Iraq and the Middle East in general. Please have patience with me as these events will very positively affect the gold price and drive it higher as tensions increase in this region. “President Bush on Tuesday criticized the handling of Saddam Hussein's execution, saying it looked like "kind of a revenge killing" that had eroded the American public's faith in the Iraqi government.” “Bush said the hanging showed that Iraqi Prime Minister Nouri al-Maliki's government "still has some maturation to do" as U.S. and Iraqi forces make a new push to secure Baghdad.” “The president's criticism, in an interview with public television's Jim Lehrer, came on a particularly bloody day in Iraq. At least 65 people died in an explosion outside a Baghdad university. Overall, more than 140 Iraqis were killed or found dead.” “…he was troubled with the circus atmosphere surrounding Saddam's execution Dec. 30. Cellphone video showed Saddam being taunted as he stood on the gallows.” "I was disappointed and felt like they fumbled the — particularly the Saddam Hussein — execution," Bush said.” “Bush acknowledged that the way the execution was conducted made it harder for him "to make the case to the American people that this is a government that does want to unify the country." “Bush has called on al-Maliki, a Shiite, to reach out to disgruntled Sunnis and to help disarm sectarian militias as 21,500 additional U.S. troops begin arriving in Iraq.” “An official video of Monday's execution of Saddam's half brother showed him being decapitated by the noose.” click
Now what is my point in bringing all the above up? That place over there is going to hell in a hang basket and nothing anyone does is going to change that inescapable fact. And my concluding point is that if all gold had to influence it was middle east tensions that would sufficiently keep the price strong and high forever because as time progresses so will the inevitable conflict and chaos in that region. Take away the oil over there and the situation might change as there would be no interest from the west but the oil does exit there hence the US and other western powers will be there also. Wouldn’t it be convenient if we could move all that oil to a safer place like maybe Australia? But then everyone would probably be fighting over Australia. And again and again anyone without blinders has the intelligence to recognize that gold will continue to attract a growing number of investors as the volatility naturally escalates and leads to World War III. And where is the price of gold heading in the coming years? Hi Dave, “…we have a gold price that is about to go up and because the companies can not suddenly produce any more quickly, so the price will go up even more. At some point someone or some companies will say it is now a good thing to do exploration, it is worth the risk. This might not be until gold is 1, 2 or $3000 but that point will come. Everyone will be into it like there is no tomorrow.” “In the next 10 to 15 years I don't see how gold, silver or just about anything that comes out of the ground can miss.” Kind Regards Blair C. Have you been making money in the market? You can if you are willing to “trade.” The greatest temptation often is to never sell and re-invest your earnings. Sure, if a stock is doing well and going up you want to hold on to it, but at least sell your original capital or a part of your original capital when you have a chance. Professionals who make real money in the stock market do so because they are constantly buying, selling, and buying again in a continuously repetitive cycle. Dear David, “It really surprises me that the general population has little clue of world economics and what is going on. I work for a major US hi-tech company, and now the picture is very clear - no more hiring in the US, and almost unlimited hiring in India. If you consider future jobs in the US, they are either in the service sector for the US, or very, very little else. If you consider true US growth (non-service jobs, ie: manufacturing), it is decreasing at an accelerated rate. Fiat currency around the world is also decreasing in value rather quickly. I'm amazed that so few know this, and are so heavily invested in US stocks in their 401K and spending like there is such a bright outlook on their investments. For our company, we can't invest in precious metals or uranium stocks for our 401K. Time will tell what the future holds, but I'm just flabbergasted at the lack of knowledge of the current state of affairs in the US. I guess everyone just reads the headlines in the news, and ignores what is really going on.” Brad D. Brad, are you pulling our leg here by telling us that jobs are disappearing and going over seas? Brad, Brad, Brad. What about those good McDonalds and Wal-Mart jobs that were created in December? Who really needs to make more than minimum wage anyway? We can all go on government welfare and food stamps if we cannot afford groceries, right? And the email below is from Mike. Mike seems to be complaining about inflation. Mike, Mike, Mike. Don’t you listen to the news every night? Katy and Brian Williams report every week that inflation is just not there. And I agree with the evening news. If they are telling us that there is no inflation it must just be our imagination, right? David, “Inflation, as one of your letters mentioned is much worse than the government says, but also worse than you realize!!! The price of bread and meat is important, but still small in real terms. How about this; my health insurance premium for just me and my wife exactly doubled in 4 and a half years from 695 a month to 1390 dollars a month and this is for very, very poor insurance. Even at 1.50 a loaf how much bread do you need? WHEN A BIG TICKET ITEM DOUBLES IT’S MORE HURTFUL. This happened despite the fact that insurance is a government regulated monopoly (only 3 insurance companies sell it in New York State) and as a result we no longer have medical insurance and no one cares. As for medicines, when we had Empire Blue Cross the insurance paid about 45 to 50 dollars a month for each of my prescriptions and I paid 5 dollar co-pay...but as an uninsured customer the same medicines in the same bottles at the same store cost me 150 dollars a month EACH...because I unlike Medicare and Empire cannot negotiate...BUT THESE NUMBERS DON’T GET FACTORED INTO THE CPI. My electric bill carries a "surcharge" of 50% every time...but I have been told that the dept. of labor does not consider that inflation either because "a surcharge is not a price increase it's just temporary" I swear that's what they told me verbatim. Dave, why aren’t you on TV? Mike G. Do you have something to live for? Just a reminder here in closing that life is more than just making a living and making lots of money. But money does help and it definitely pays the bills while we reside down here on earth. Gold Letter emails reviews of undervalued gold, silver, uranium and other resource stocks that are under valued and poised to rise. Gold is going higher and going to get stronger over the long term. I feel it in my bones, plus others feel it in their bones, also. “Gold steadied in Europe on Tuesday after trading in a tight band, and ANALYSTS SAID THE METAL WAS EXPECTED TO GAIN IN THE NEAR TERM ON A DOLLAR DECLINE.” "I (Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus) am relatively cautious for the first quarter and then (see) a turnaround in the second quarter, AND MAY BE CONSIDERABLY HIGHER PRICES TOWARDS THE END OF THE YEAR. A lot of fundamental factors speak for gold." “Technical buying reappeared after gold breached a key level of $615 last week, reflecting a recovery in confidence among investors after the metal posted its biggest one-day percentage drop in three months on Jan. 5.” click The very prestigious Gartman Letter remains very bullish on gold for 2007. The question remains, “Are you?” I didn’t receive an email from you last week. Yes, you. When you email me I will not include your last name and will only print your first name. Please send me an email so I can know your personal perception of the markets and the world economy. I want to know how this market is affecting you personally. David Vaughn
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