Market News ~ Aug 2006 ~

Iran defies, metals shine
Bumpy landing ahead... geopolitics and fundamentals support bull mkt
Spot: $626 gold ... $12.86 silver ... $70.26 oil

By David Bradshaw, Editor, Real Money Perspectives
Aug 31, 2006 ~ updated M-F 7a-7p

Gold prices moved to a one-week high Thursday as Iran defied a UN deadline to curb its nuclear program, increasing demand for the metal as a haven. Thursday gold closed in NY up $7.80 to $625.00/oz., while silver rose $.36 to $12.81/oz. Year-to-date gold prices are now up 21 percent, while silver is up 45 percent. Year-over-year gold is up 45%, silver is up 90%!

Real consumer spending grew at the fastest pace this year, while consumer prices rose at a slower pace in July (excluding food and energy), the Commerce Department reported Thursday. Fed chairman Bernanke said nothing about direction of central bank's policy at a speech today.

The U.S. economy was stronger than originally thought in the first half of the year, with growth in wages and salaries one-third higher than previously estimated, the Commerce Department reported Wednesday. "Real" gross domestic product for the second quarter was revised to 2.9% annualized, from the earlier estimate of 2.5%, the government said.

"Instead of gliding to a smooth landing, the US economy now looks set for a bumpy ride as the property market hits major turbulence. 'Home for sale' signs have edged out gas price billboards as the most important sign of downside risk to the economy," said Lehman Bros economist Ethan Harris.

"In the coming decade, as the dollar suffers one of the great meltdowns in monetary history, gold will reclaim its place at the center of the global financial system, and its value, relative to most of today's national currencies, will soar. The result: Gold coins, gold-mining stocks, and gold-based digital currencies will be vastly better ways to preserve and/or grow wealth than dollar-denominated bonds, stocks, or bank accounts", writes James Turk at Daily Reckoning Thursday.
[Ed Note: James Turk will be a featured speaker at The 13th Annual Hard Asset Convention next Wed./Thur. along with Craig Smith and dozens of other hard money advocates, including myself.]

Iran: "central banker of terror"

U.S. and European officials are ready Thursday to push for low-level sanctions against Iran, like travel bans, as the country remained defiant on the day of a U.N. deadline to halt uranium enrichment. "The Iranian nation will not succumb to bullying, invasion and the violation of its rights," Ahmadinejad said during a speech to a cheering crowd the day before", reports AP Thursday.

"Iran is the central banker of terror. It is a country that has terrorism as a line-item in its budget," said Stuart Levey, the U.S. undersecretary for terrorism and financial intelligence to AP Monday.

"Israel is carefully watching the world's reaction to Iran's continued refusal to suspend uranium enrichment, with some high-level officials arguing it is now clear that when it comes to stopping Iran, Israel may have to go it alone," The Jerusalem Post reported last week.

"Iran now presents a clear and present danger to the world. The time when Iran will have a bomb is imminent ... no matter how many times they swear their intentions are entirely peaceful," says Dr. Jerome Corsi, author of Atomic Iran.

"This is a gold buy on a potential expanded military conflict with Iran," said Frank McGhee, head metals trader at Integrated Brokerage in Chicago. "If we end up with sanctions against Iran, then Iran will threaten to use oil against us. It's rebuilding the wall of worry that ran gold up to a 26-year high," reports Bloomberg News.

Markets prepare for holiday

Oil prices remained close to $70 as Iran remained defiant in the face of a United Nations deadline demanding that it stop enriching uranium for its nuclear program. Crude for October delivery was last down 29 cents at $69.74 a barrel on the New York Mercantile Exchange. (Watch: Oil Price Debate on CNBC)

U.S. stocks traded near flat line in Thursday's session, after Ben Bernanke made an upbeat prediction about productivity growth but failed to give investors insight into his thinking on inflation and rates.

"September is the worst month of the year for all three major gauges - the Dow, the S&P 500 and the Nasdaq. Since 1950, the Dow has fallen an average of 1.1 percent in September, while the S&P 500 has fallen an average of 0.7 percent," according to the Stock Trader's Almanac.

"For the Dow to overcome the effects of inflation over the last 6 1/2 years, it will have to rise 18%", not 3% as widely reported in the financial media. "If we repeat the last secular bear market in stocks, it might be another 23 years (2029) before the inflation adjusted Dow exceeds its January 2000 peak", reports Cross-currents.net.

The greenback bounced off a one-week low against the euro Thursday -- touched earlier in the session in reaction to the European Central Bank's decision to keep interest rates unchanged and its hint at further rate increases ahead. "I think what you're seeing is the market squaring up a little bit ahead of Friday's payrolls," said Greg Anderson, senior foreign-exchange strategist at ABN Amro.

"The dollar has plunged to within a hair of its all-time low for the decade. It�s sinking silently into an abyss. And it�s sending the signal that virtually every commodity under the sun � gold, silver, oil, gas, base metals and food � is on the launching pad, about to take off", says Larry Edelson at MoneyandMarkets.com.

Edelson continues, "The prime beneficiaries: Oil and gas companies, utilities, consumer staples, pharmaceuticals, mining companies, and virtually all natural resources. The prime victims: Companies that depend too heavily on imported resources and borrowed money."

"The boost in commodity prices due to Mid-East war and hurricane threats has been rung out of the market for the short term, which provides a great buying opportunity for long-term investors" said Swiss America CEO Craig Smith.

"We are getting ready for the next explosion in precious metal prices," said Puru Saxena, CEO of Puru Saxena Ltd., a Hong Kong-based fund management company. Gold will be buoyed by "a worsening of geopolitical conflicts, and tensions in the Middle East," Saxena told Bloomberg last Friday.

"Will silver hit its previous 1980 high? It was $48.70 then, but that's $120 in today's dollars - almost 10 times the current price. Given that just below the surface, the threats to the U.S. economy are even greater today than in the late 1970s, we can easily envision silver closing in on its previous high and even going way beyond it", writes Doug Casey of International Speculator in "What's Next for Silver?".

"My historical studies show that gold is very highly correlated with future inflation, as measured by the CPI. At today's gold price � which has more than doubled from its lows about five years ago � CPI can be expected to start running between 5% and 7%" wrote Smart Money's Donald Luskin about The Inflation Threat.

Housing in "free fall"?

July's orders for big-ticket items fell 2.4%, steeper than anticipated while sales of new homes dropped 4.3% in July the government reported last Thursday.

Sales of previously owned homes in the U.S. dropped to the lowest in two years in July, the National Association of Realtors said Wednesday. Existing home inventories rose 3.2%, the highest since 1993, while sales fell 4.1%. Increasing housing weakness may prevent the Fed from increasing interest rates on Sept. 20, curbing demand for dollars.

"This soft-landing scenario is a fantasy. Anything housing-related is going to feel like a recession, almost like a depression, says Ed Leamer, director of the UCLA Anderson Forecast. While he doesn't expect a recession in the next year, he predicts the housing slowdown will be nastier than the Fed projects, hurting consumer spending, jobs and growth", reports USA Today.

"With home prices likely to move lower, a lot of home owners are going to be in real danger of defaulting, meaning that the possibility of widespread foreclosures is a real danger. This is in addition to the coming diminution of mortgage equity withdrawals that have been so pivotal in spurring the recovery from the 2001-2002 recession. The great danger here is the potential unwinding of the massive debt that has built up over the past decade and the accompanying threat of damaging deflation that was averted after 2002 only with the help of the housing boom that is now definitely over" said Comstock Partners, Inc. Thursday.

"The real estate price explosion of the last five years is a powerful example of 'asset inflation'. Asset inflation generates phony collateral for runaway consumer indebtedness, luring the consumer into unprecedented debt excesses. The rapid house- price-inflation of recent years was clearly unsustainable, yet economists cling to the hope that house prices will flatten rather than collapse", says In Housing We Trust? -- a Swiss America Special Report.

Recession? Stagflation ahead?

The United States is headed for a recession that will be "much nastier, deeper and more protracted" than the 2001 recession, says Nouriel Roubini, president of Roubini Global Economics. Writing on his blog Wednesday, Roubini repeated his call that the U.S. would be in recession in 2007, arguing that the collapse of housing would bring down the rest of the economy.

"Practically every indicator at our disposal and the historical record suggests that the next wave after the Fed has inverted the entire yield curve is either a hard landing or a very bumpy soft landing,"says David Rosenberg, North American economist for Merrill Lynch & Co. Inc.

"After the Roman Empire peaked out in the second century, its emperors repeatedly staged financial schemes like 'Project Sunrise' in Zimbabwe, billed as part of a fresh government drive to stop inflation and black market trading. As of today, you can no longer use your old Zimbabwean dollar bills. You have to use the new bills, with three fewer zeros... The Roman monetary system had been based on gold and silver coins, which acted as a restraint on inflation. But then, Roman Emperor Aurelian decreed that his coins were two and a half times as valuable as their actual worth, effectively jacking up the money supply by 250% overnight!" opines Bill Bonner in last Monday's Daily Reckoning.

"A retrenchment in U.S. consumption is slowly unfolding", reports BCA Research. "U.S. retail sales jumped in July, but this reflected an incentive-induced rise in auto sales and soaring energy prices. The growth rate of core retail sales (excludes autos and gasoline) peaked earlier this year and is on track to decelerate further."

The Federal Reserve decided not to increase interest rates in August for the first time in over two years. While many economists are cheering, others fear the Fed had to pause to prevent a U.S. recession -- despite the risks of higher inflation. Read Fed Statement

Many economists believe the Fed will follow the August pause with one and possibly two more quarter-point rate hikes in the fall. The Fed's next meeting is Sept. 20.

"The Fed was clearly backed up against the wall. If they'd raised rates to support the dollar -- the stock market and housing would have gone into a tailspin. By keeping rates at current levels the Fed has given the green light for a weaker dollar, higher inflation and gold prices and falling equity prices", said Swiss America CEO, Craig R. Smith.

"Sell stocks that are vulnerable to: Surging energy and commodity prices, higher borrowing costs, a bust in the housing industry, or slower consumer spending. Meanwhile, hold the stocks in sectors that stand to benefit the most from inflation: Mining, energy, and other natural resources", advises Martin Weiss, editor of Safe Money Report.

Craig Smith says, "The recent PR campaign by mass media pundits to convince Americans that a rally on Wall Street is right around the corner smacks of symbolism rather than substance."

Comstock Fund offers their perspective... "There have been 12 periods in the last 53 years where the Fed has engaged in a series of rate hikes. In 10 of those instances the S&P 500 subsequently declined AFTER the final rate increase, with an average drop of 22% to the eventual bottom."

The number of defaults on mortgage payments rose to a three-year high in the second quarter in California, a 67% increase from the year earlier period, DataQuick reported recently. Mortgage applications sank to their lowest level in more than four years, as home purchase loan demand tumbled for the third straight week, an industry trade group said.

"As we look back over historical cycles of residential real estate investment as a percentage of GDP, we have to ask ourselves, does a minor soft landing follow the most extended US residential real estate investment cycle on record? It sure seems improbable, but in today�s liquidity/credit driven world, anything can happen", writes ContraryInvestor.com.

They conclude: "Although the final hard versus soft landing verdict on housing, and by extension the US economy, remains to be delivered, storm clouds have clearly gathered and continue to grow just a bit darker by the day. If we were you, we'd take a few steps back from the proverbial housing cycle landing pad...just in case. We're not so sure we want to be too close to this thing when it lands."

Investors are betting that a slowing economy will bring inflation back under control. If they're wrong about this, stagflation with mediocre growth and rising prices will be the inevitable outcome" says Forbes.

"Today, economists and American consumers don't seem to be particularly worried about recession. But things can change quickly. The problem with recession forecasting is that you never know when a recession has started until long after it begins. The National Bureau of Economic Research is the official dater of recessions, and it doesn't make forecasts. We could be in a recession now, for all we know", reports Daniel Gross in Slate.

"We remind readers how stagflation comes about (and why Ben Bernanke is doomed)", writes Bill Bonner in Monday's Daily Reckoning...

"The Keynesian economics practiced by governments and central bankers depends on deception. As more money and credit is introduced into the economy - as "stimulus" - it is mistaken for real wealth. Consumers think they have more money to spend; businessmen think they have more customers; investors think they see more profits. Deceived, they happily expand the economy. As time goes on, however, prices catch up to the funny money and the consumer wakes up to the fact that he or she is no better off than before."

"So, gradually, the old trick stops working. Money and credit may pour in, but no one is fooled. Instead, prices rise, while the economy goes limp."

"Gold is a long-term buy-and-hold market. If you only have 5-15% of a portfolio in gold it should be viewed as insurance against a drop in the other 85-95% of your investments. If it rises as it has over the long term, great, but I think people should be looking for safety first, not profit," Swiss America CEO Craig Smith told Doug Fabian's radio audience. [Listen]

"The global dollar sell-off is accelerating. Gold has responded by racing past $500/oz., $600/oz., and $700/oz. We should expect market volatility, sharp price swings and corrections as the world's faith in the U.S. dollar declines and their faith in gold grows -- ever pushing it toward four-digit prices", says Craig R. Smith.

"This market is exhibiting all the classic behavior of a traditional bear market: sharp but short-lived rallies sprinkled in among an ongoing downtrend. The rallies are so fierce that, at face value, they appear to be an end to the decline. But since they have no follow-through, the bears continually reassert their will", says Larry McMillan in Forbes.

"In the world of investing, the craze for fast, if not advance, information has uprooted almost every rule of patient investing. The new rule seems to be: 'Don't bother about long-term results. Taking advantage of the short-term swings will take care of the long-term results.' Consequently, everyone seems to have turned into a short-term trader masquerading as an investor � or worse, as an investor committed to the long haul", writes Gene Marcial in the latest Businessweek.

"Central bankers are temporarily boosting the in-credible shrinking U.S. dollar, but we must look closely at the fundamentals for clues as to where the markets will go in the future", says Craig Smith.

"The devaluation of the dollar isn't something that happens on a particular day. It is something that happens every day. In the last 50 years, the dollar has lost 86 percent of its purchasing power, reflecting an annual inflation rate of 4 percent", says Scott Burns in Dallas Morning News.

Gold Shines On!

"Gold Shines On!" reported CNBC last week. "Now that the war premium has been squeezed out of gold prices it is back to the fundamentals, which is an upward trend for gold,"said Frank McGhere of Integrated Precious Metals.

John Bridges, Gold Analyst for JP Morgan appeared to agree with Frank, saying, "We have a demand-driven market for gold today. The fundamentals overwhelmingly demand that you have a position in gold today, which has outperformed stocks every year since 2000. Gold is useful insurance for a portfolio."

CNBC then asked, "What is the best form to own gold?" Mr. McGhere replies, "Physical ownership is best, ETFs can be good secondarily." Mr. Bridges adds, "Both physical ownership and gold stocks, chosen carefully based on size and age of the gold mines."

"No country can keep running up debts and deficits the way we are doing and still be a strong reserve currency," said Richard Russell to Reuters on Wednesday.

"We are going to have a panic for gold as the dollar runs into major trouble." Mr. Russell sees gold as a long-term holding and forecasts that the metal will ultimately hit $1,000 an ounce."

The "official" CPI has risen 4.1% in the past year, the government reported on Wednseday, compared with a 4.3% increase in the 12 months ending in June. In the past year, inflation-adjusted earnings fell 0.1% and hourly earnings are down 0.5% in the past year.

"By re-jiggering the manner in which CPI and GDP are calculated, the government misrepresents the true health of the economy", Peter Schiff, President of Euro Capital Mgmt. told CNBC recently. "From the government�s perspective, all the misrepresentations are part of a giant confidence game that is meant to keep all the marks from wising up. A fiat-based monetary system only functions as long as confidence is maintained", writes Mr. Schiff.

"Where does smart money go in a crisis? On the defensive or bargain-hunting?", asked KNX's Business Hour with Frank Mollek of Craig Smith recently. "Gold is the crisis super-metal. It's a classic hedge against uncertainty as well as a reliable store of value -- unlike all paper currencies. But never buy or sell in a panic, instead, get educated first, then put 5-15% of your assets into tangibles. We like investment-grade U.S. gold and silver coins, because they are less volatile than bullion based on their rarity", Mr. Smith told KNX recently.

"Gold should trade in a broad range of $575 to $675 through the end of August," said Peter Grandich in a recent note to investors. "Strong seasonal factors and a continuing long list of bullish fundamental and technical factors should lead to a new year high in the fall."

"Gold has returned to it's historic role of being a hedge against inflation as well as an internationally recognized store of value. Gold prices are quite likely to test the levels reached earlier in the year on concerns about global tensions", said Clive Johnson Bema Gold CEO to CNBC recently. (Watch it)

"But it's virtually impossible to establish a store of value with any paper currency, given the ocean of debt the world is now swimming in. All currencies are subject to violent swings given geopolitical events. Smart money is looking for safety, value and is now rediscovering gold as the bedrock of a diversified portfolio", says Swiss America CEO, Craig R. Smith.

Mr Smith continues, "If the war in the Mid-East escalates I expect to see $90-$100 per barrel oil and $850 gold. Maybe higher. Israel is not going to stop until they eliminate or severely damage Hezzbolah. If that happens, it may just pull Syria and Iran into the conflict, which could turn this current crisis a real mess."

"Many oil producing nations are getting tired of exchanging what is perceived to be a 'precious diminishing commodity', oil for a not-so-precious multiplying commodity, the U.S. dollar", says Mr. Smith in his book, Black Gold Stranglehold.

"The shocks from the Middle East now have the potential to be more negative than the shocks we had last year, such as Katrina and the runup in oil prices," says Lakshman Achuthan, managing director of the Economic Cycle Research Institute, or ECRI. He notes that the economy is in a much more fragile state than it was a year ago, reports Thestreet.com

"Experts agree gold is a 'crisis hedge'. Geopolitical tensions have never been higher and show no sign of letting up soon. Therefore, investors must decide what impact these events may have on their money. Fund and money managers are now hedging against more trouble in the world. I think individuals should do the same", says Swiss America CEO Craig Smith.

"Big money is coming back into gold. The daily chart of GLD shows gold closing above its blue 50-day moving average. Since the 50-day MA is above the 200-day MA, and gold today (July 11th) broke out above both MAs, this is what I term a "moving average buy signal" says Richard Russell in Dow Theory Letters.

"A MAJOR breakout in gold was triggered July 11th on geopolitical concerns, a weaker dollar and near record oil prices. This could signal the beginning of gold's next major leg up to $1,000/oz. A technical breakout is what major portfolio managers watch for before buying or selling. If you have any poor performing investments or liquid capital, add to your gold portfolio today!" said Jim Carrillo, a broker at Swiss America.

"With the market burdened by rising global tensions, inflations fears, Fed rate hikes and hurricane season, commodities and commodity-related issues should continue to represent a 'safe haven' for investors amid the chaos", says Jocelynn Drake, senior editor at Schaeffer's Investment Research. She advises Forbes readers, Seek Shelter In Commodities.

Tangible commodities and high quality collectible investments again outperformed intangible investments like stocks, bonds and T-Bills in the first half of 2006, just as they have every year since 2001.

"Despite the recent volatility in the gold bullion and lower grade generic $20 gold piece markets, the U.S. Gold Commemorative coin prices have remained steadfast without a downward correction", writes Tom Rodriguez, Sr. broker at Swiss America.

"Over the last 5 years a Mint-State-66 Morgan Silver dollar has gained 170% to $420 each today -- with silver spot prices under $11/oz. Sixty days ago, when silver spot topped $15/oz., this same coin was only $375. This illustrates how high quality U.S. rare coins can easily go up -- even though bullion is going down," says Swiss America broker Henri L. Parris.

Bill Fleckenstein said recently he thinks the Fed is done raising rates, saying "The Fed wants to be loved. It doesn't want to be the tough cop. So it's done fighting inflation and the rate hikes are over. That's started a rally, but it won't last." If Bill is right, we can expect a fresh dollar decline will support higher metal prices after the Fed meets in August.

"You needed to know two words to make decent money in mutual funds this year: China and gold. China's voracious consumption of commodities, such as iron, coal and steel, should lead to higher investment in resource-rich emerging markets, such as Brazil and Russia. All of which is good news for gold, which often serves as a basic currency in emerging markets",USA Today reported.

"The way I see it, gold has made its bottom. It's just starting to wake up from a generation-long slumber ... prices are not just going through the roof, they are going to the moon before this bull market is over", says economist Doug Casey.

"A small investment in gold could protect some of your assets from inflation or a falling dollar", said John Waggoner last month in USATODAY. "Sooner or later, the Fed will have to stop raising rates or risk recession. Then, foreigners will have one less reason to buy dollars. The dollar's fall could resume. And so could the rise in gold."

"The gold story is a long-term story - the bull market is established and nothing that has happened recently changes that. At this stage, it is quite clear that only a minority of investors own gold. We would only worry greatly if a decline in the price occurred at a time when everybody and his brother owned gold," says a recent Onassis Newsletter.

"The recent metals correction may have been the best opportunity to buy on a major dip this year. Gold is now trading far above its 200-week moving average of $550/oz.", Craig Smith reports. (see chart)

Smith advises:"Investors must decide what type of market they're really in. If it's a BEAR market, you sell the rallies. If it's a BULL market, you pick a price and buy. If there are dips, you buy more and hold on. WE'RE CLEARLY IN A LONG-TERM BULL MARKET IN COMMODITIES AND COLLECTIBLES. That's why it is incumbent on long-term investors to stay the course and buy every opportunity that presents itself".

Important Headlines and Special Offers ...
LISTEN: "Where smart money goes in a crisis" -KNX ... LISTEN: "Crazies put your assets at risk!" -Savage ... Seek Shelter In Commodities ... 2006 YTD INVESTMENT SCORECARD ... Gold rally no flash in the pan ... "Golden Op" -ADENS ... Inflation, Deflation, or Bust ... Climbing debt casts doubt on dollar's future ... Inflation Solution! ... IN COINS WE TRUST ... Buffalos!

Gold's Next Move?

So, what's next in the great commodity and collectible boom of the 21st century? Will gold coins emerge as the "Super" smart investment of 2006 again?

This writer's best guess and advice: Hold on tight to core precious metal and investment-grade coin positions and aggressively buy the dips, thus cost-dollar averaging for greater long-term growth. Commodities and high quality collectible investments are on track to outperform paper investments like stocks, bonds and CDs again in 2006, just like they have every year since 2001!

"Since I last wrote about U.S. Gold Commemoratives in May 2004, we've seen an average of a 30% price increase in grades MS64, MS65 and MS66, with several dates increasing 45% to over 50%! I expect this series to continue performing for several years to come" says Tom Rodriguez, Sr. Broker at Swiss America.

The United States Mint has released its first ever 24-karat (.9999 fine) gold coins in June, The American Buffalo struck at the U.S. Mint at West Point. In addition to the bullion coin version, Mint-State 69 and high-relief, mirror-finish versions, known as a proof, will also be minted for collectors.

A TV Shopping network boasted in a press release this week that they "sold $100,000 of gold Buffalo coins in 3 hours." Wow, sounds great, right? But wait, what they do not tell you is that they must charge nearly 10% more than Swiss America for the same MS-70 "First Strike" Gold Buffalo coin. Worse yet, they claim their price is discounted by "25% to 75%" from the coin's market value. HA! Please, turn off the TV and call Swiss America at 800-289-2646 or register here to get the best deal on the hottest new U.S gold coin out there.

Robert Kiyosaki, best known for his "Rich Dad" series of books, has been investing in gold since 1972 and said he thinks it is still a good investment. "I still think gold will go to $1,500 an ounce. I'm betting against the U.S. dollar. Gold is a hedge against U.S. government mismanagement," said Kiyosaki, adding that his family members have a tradition of saving all their spare change for months on end and then trading all the coins in for a single gold coin.

SPECIAL FREE OFFER from Swiss America CEO, Craig R. Smith: "Today, experts are calling for gold to hit $1,000, $2,000, even $6,000 an ounce! The GOOD news: It's NOT too late, gold is STILL a bargain! Five years ago my book, REDISCOVERING GOLD IN THE 21ST CENTURY: The Complete Guide to the Next Gold Rush announced the start of a new GOLD RUSH. If YOU want to UNDERSTAND GOLD -- before it hits four-digits, call NOW for my book, dvd and latest newsletter, "THE RULE OF GOLD" at 800-289-2646. Discover WHY Gold Rules!" My Free Gold Rush Kit!

RECENTLY ARCHIVED NEWS (...you may have missed)

Latest Feature Commentaries

Fifteen Reasons to Own Gold
8-14-06 -- By John EMBRY, Mises.org
1. Global Currency Debasement: The US dollar is fundamentally & technically very weak and should fall dramatically. However, other countries are very reluctant to see their currencies appreciate and are resisting the fall of the US dollar. Thus, we are in the early stages of a massive global currency debasement which will see tangibles, and most particularly gold, rise significantly in price...

Advice to Fed Chief Bernanke
8-3-06 -- By Bill Bonner, Daily Reckoning -- Poor Ben Bernanke. The poor man confronts a world in ARMs way. The adjustable rate mortgage was an innovation that helped the housing industry sell houses to people who couldn't really afford it. Now, those same people - millions of them - face automatic increases in their housing costs. From coast to coast, mortgage defaults are running 72% ahead of last year. Our advice to the Fed chief ...

"Substance Over Symbolism"
8-3-06 -- By Craig R. Smith, SATC -- The folding, spindling and mutilating of America's monetary system became legitimized in 1913, when the Federal Reserve was formed. Long ago bankers discovered a nasty little secret referred to as "fractional-reserve banking" which is fueled by credit and debt creation out of thin air. America's monetary system today is the result of an incestuous relationship between the federal govt and a private banking cartel, deceptively called "The Fed")...

REVIEWS: "AMERICA: From Freedom to Fascism"

7-28-06 -- By David Bradshaw, IFN -- A new documentary, "AMERICA: FROM FREEDOM TO FASCISM" from director Aaron Russo (The Rose, Trading Places) that tracks the increasing government surveillance of American citizens through the use of new technologies was released in 5 U.S. cities today. Here's excerpts of ten published movie reviews (pro and con). If you decide to see the film, please send us your review...

U.S. Gold Commems Shine!
7-12-06 -- By Tom Rodriguez, SATC -- For years, Swiss America has recommended high-grade U.S. Gold Commemorative coins to our clients as part of a properly diversified portfolio of tangible assets. Since I last wrote about U.S. Gold Commemoratives in May 2004, we've seen an average of a 30% price increase in grades MS64, MS65 and MS66, with several dates increasing 45% to over 50%!...

2006 YTD INVESTMENT SCORECARD
7-6-06 -- By David Bradshaw, IFN ... Tangible commodities and high quality collectible investments again outperformed stocks, bonds and T-Bills in the first half of 2006, just as they have every year since 2001. Energy, precious metals and housing were the big financial success stories in 2005, rising between 18-36% -- often driven by speculators seeking short-term profits. Here�s how the numbers stack up so far in 2006 for some of the major tangible and intangible investment sectors...

Inflation, Deflation, or Bust!
6-30-06 -- By Bill Bonner, Daily Reckoning -- Concerning the US economy, and by implication the entire world, there are two major currents of thought. There are, on the one hand, those who believe in the perfection of man and those who don't. The first group thinks the science of central banking has made amazing strides. In the 1980s, the Volcker Fed learned that it could tame inflation. Then, 20 years later, the Greenspan Fed found that it could avoid deflation too. "Liquidity" is an economist's word for more cash and credit. "Inflation" is the word used to describe what happens to a currency when too much liquidity is made available...

Golden Opportunites
6-23-06 -- By Mary Anne & Pamela Aden (adenforecast.com)..."This [bull market in gold] is a major, mega-trend and it's going to take time, so don't get discouraged or impatient. As long as this major bull market stays in force, plan to stay on board and we think you'll be glad you did. Basically, there are six major factors driving this bull market: 1. too much spending, 2. too much money is being produced, 3. inflation, 4. the weak U.S. dollar, 5. international tensions and 6. China's growth and ongoing demand for commodities, which is coinciding with a new upmove in the 200-year commodity cycle." ...

Metals Pullback, Relax!
6-14-06 -- End the the bull market in gold... or just a bumpy bull ride? -- By Craig R. Smith, CEO Swiss America -- Gold prices have corrected 29%, as of today, since peaking at $725/oz. on May 9th -- but remains up 9% ytd! While many pundits see today's dramatic fall in precious metal prices as a healthy and normal strong bull market correction, others are calling it the end of the bull market. Which is it? ... I'm glad to see 'hot money' leave the metals...

NOTHING HAS CHANGED...
6-13-06 -- Yet some "gurus" say the gold bull market is over?! -- By Pat Mershon, Sr. Bullion Trader, SAPS -- Why did gold prices fall over 7% in one day? My guess is some very large precious metal producers have resumed hedging. This either sets up a great buying opportunity, or a state of massive confusion...

"In Coins We Trust"
5-26-06 -- By David Bradshaw, IFN -- Tangible commodities and high quality collectible investments are on track to outperform intangible investments like stocks, bonds and CDs again in 2006, just like they have every year since 2001! Gold and silver coins offer the missing link in all paper currencies: a "benchmark" store of value. The U.S. dollar is slowly but steadily sliding into oblivion , taking with it the hopes and dreams of all Americans -- along with the value of their savings account or investments. It is no longer a benchmark of anything, except the public's faith in government (which is evaporating daily)!

ABOUT THE EDITOR

David M. Bradshaw is Editor of REAL MONEY PERSPECTIVES, a new, syndicated daily financial/market news digest. In 2001, he published REDISCOVERING GOLD IN THE 21ST CENTURY: The Complete Guide to the Next Gold Rush and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 2005, he released a new CD, "WHAT'S YOUR WORLDVIEW?" a one-hour CD sample from his 24-hour series, "THE BIG PICTURE: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. Read my 2006 book review of, "The Meaning of Life" ... MORE at MIF... PERSONAL NOTE: Youngest daughter Braida Zoe (age 2) swims, trampolines, loves to learn, speaks in sentences, and is shown with her mom, Micki, and dad... me.

DISCLAIMER: All of the provided information is believed to be accurate, however errors are possible. The opinions in the Commentary section do not necessarily reflect the opinions of Swiss America. Past performance of any investment is no guarantee of future performance. All investments have risk.