Gold +23% ytd!

* Gold prices fell 1.5% Friday near $785/oz. on profit taking, a firmer dollar and $89 oil. Gold closed in NY down $12.10 to $783.10/oz. silver fell $.25 to $13.98/oz. Gold prices fell 4.5% this week, but ended the month down just 1%.

As of Nov 30, 2007 for the year; gold is up 23%, silver is up 10.6%, the Nasdaq is up 9.1%, the Dow is up 6.6% and the S&P is up 4.5%. With the U.S dollar now down nearly 10% in 2007 alone, U.S. stock indexes appear to be just barely keeping pace with real world inflation.

* "Gold is giving investors another chance to 'buy the dip' in 2007. For investors who have waited for a good entry point, now is a great time. A long-term diversification strategy works for those with the discipline to buy short-term weakness," says Swiss America CEO Craig R. Smith.

"Analysts generally remained confident on the metal's ability to contain losses below $800 due to expectations for further dollar losses as investors anticipated cuts in U.S. interest rates will dent the dollar's appeal," reports Reuters.

* Crude-oil prices fell near $88 Friday, the lowest level this month, after jumping as much as $4 higher Thursday on news of a Canadian pipeline fire. Wednesday oil fell near $90 a barrel on rising inventory and further signs that the OPEC may increase production at its meeting next week.

On Wall Street...

* Wall Street stocks rallied at the open Friday, then closed mixed despite Fed rate cut hints delivered by Fed Chairman Ben Bernanke. For the month the Dow ended down 4%, the S&P down 4.3% and the Nasdaq down 6.9%.

"U.S. stocks zig-zagged higher Thursday following the stock market's strongest two-day climb in five years, as a spike in crude-oil prices and a 99% profit decline at Sears dampened investors' enthusiasm," reports MW.

Stocks spiked higher Wednesday after a Fed official's speech bolstered thinking that another interest-rate cut will come in December. Fed Vice Chairman Donald Kohn said the central bank's monetary policy should be "flexible", in contrast to more hawkish statements made by other Fed officials.

"The year's gain for the S&P Index were erased last week, after growing concern that losses from mortgage defaults will spread through the economy pushed down shares of banks, brokerages and retailers. "It's a very panicky market," said John Kattar, who oversees $2 billion as CEO at Eastern Investment Advisors in Boston, reports Bloomberg.

"A full-blown dollar crisis on top of a credit crunch and a weakening economy would be frightening. It would send financial markets reeling and tie the hands of the Fed, perhaps forcing it to raise interest rates even as recession looms. The sky-high euro would soar further, choking off Europe's growth. Political tensions would also rise. Already Airbus has called the dollar's decline 'life-threatening' and France's president, Nicolas Sarkozy, has given warning of 'economic war'," reports Economist.

"We're in the early stage of a global flight to safety due to a chronically ill dollar which must fall further according the global marketplace. The greed of the 90s has now been replaced by the fear of a credit-induced recession coupled with Fed-induced inflation," says Swiss America CEO Craig R. Smith.

"The correlation of geoeconomic forces appears to be moving against the United States in Europe, Africa, the Middle East, South Asia and the Far East. And greed is what triggered a global subprime mortgage fiasco, which, in turn, pushed the dollar right off its pedestal," reports MENews.

"A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce," said Gerald Celente, Trends Research Institute Director. "We are going to see economic times the likes of which no living person has seen, a panic of 2008," reports UPI.

"Canada and the United States both should abandon their national dollar currencies and move to a regional North American currency as soon as possible, Stephen Jarislowsky, a billionaire money manager and investor, told the Canadian parliamentary committee," reports WND.

"Americans should go 'for the gold' in 2008, because it's still not too late. As WSJ recently pointed out, using the historical oil-to-gold ratio of 10 or 12-to-1, $95 oil should equate to $950/oz. to $1,150/oz. gold prices. So compared to oil prices, $800/oz. gold offers great value and financial peace of mind," says Swiss America CEO Craig R. Smith.

"America's kingpin of mortgages is on a collision course with bankruptcy: Countrywide Financial. If it goes under, the impact on U.S. financial markets will be immediate; the damage to the U.S. economy, long-lasting," reports Money&Markets.

"The Fed minutes forecast slower growth in 2008 in the range of 1.8% to 2.5% next year. Inflation is expected to remain 'contained'. Headline inflation is expected to slow to 1.8%-2.1% in 2008, down from around 2.95% this year," reports MW.

"Black Gold's Yellow Link: Oil Hints Metal May Rise," reports WSJ. "If U.S. growth slows to the extent it spills over into Asia and the rest of the world, gold is set to 'massively outperform,'" says Michael Lewis, at Deutsche Bank.

"For many years, oil-rich Persian Gulf states have pegged their currencies to the dollar. Now that link is stoking a bad bout of inflation in their red-hot economies and putting policy makers in a dilemma: Break the dollar peg and risk undermining the U.S. currency, or keep it and face growing local discontent," reports WSJ.

"The era of 'peak gold' has arrived. Try as they might, miners cannot find enough ore at viable costs to replace their fast-depleting reserves, even if they dig miles into the center of the earth," reports London Telegraph.

Meanwhile, Iranian President Mahmoud Ahmadinejad said last weekend that OPEC's members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a "worthless piece of paper."

"The Gulf Arab countries, most of whose currencies are pegged to the dollar, will jointly consider a revaluation in December in a bid to combat inflation," reports LT.

"The United Arab Emirates may end the dirham's 30-year-old peg to the dollar and link it instead to a basket of currencies, central bank Governor Sultan Bin Nasser al- Suwaidi said last week," reports Bloomberg.

Last week the dollar slumped on fears that the oil-rich Gulf states will ditch their US currency pegs, setting off a massive realignment of the global currency system and a flight from dollar assets across Asia," reports London Telegraph.

Retail prices rose 0.3% in October as food and energy prices rose, the government said Thursday. Consumer prices are up 3.5% and producer prices are up 6.1% over the past year -- the largest change since September 2005.

Federal Reserve officials will publish economic forecasts quarterly, up from twice a year, and extend the horizon of their estimates, offering what Chairman Ben S. Bernanke called a "rough" guide to the direction of interest rates last week," reports Bloomberg.

"Bernanke’s Fed is only two fed fund rate cuts into what could be a prolonged easing campaign and the dollar is already collapsing. This is deeply unnerving in that it suggests the Greenspan doctrine of cutting interest rates first and asking questions never is broken. Having little to show for his meetings, phone calls, and rate cuts relating to the subprime mess, will Bernanke really be able to amass a coalition of the willing to support the U.S. dollar when the time comes?," asks FallStreet.com.

"The Fed is now caught in an extreme Catch-22; if they cut rates the dollar collapses, if they raise rates the U.S. economy collapses under the weight of either $900B in bad mortgage debt or $900B in consumer credit card debt. This means we may be in for either a debt-induced depression or a Wiemar Republic-style hyper-inflation," says Swiss America CEO Craig R. Smith.

"Wall Street banks will have to slash valuations on a further $400B of risky assets as new U.S. accounting rules come into force this week, triggering a likely wave of fresh writedowns," reports London Telegraph.

"The markets' statement is that the U.S. has lost its way," said Allen Sinai, head of Decision Economics Inc. in New York. So gold is back in the role it had played for thousands of years: as a store of value, a way to preserve wealth and a hedge against financial calamity," reports LA Times.

"We are in a danger zone. It would take two shocks to bring the economy to its knees. We got one shock in the form of the credit crunch. Oil could be that second shock," says Nariman Behravesh, chief economist at Global Insight Inc. and former Fed economist," to Bloomberg.

"The U.S. economy not only faces the risks of a sharp slowdown from the housing market contraction, but also of a surge of inflation from sharply higher crude oil prices and the weaker dollar, Fed chairman Ben Bernanke said [testimony] last Thursday," reports MW.

"It is time that people in the United States changed their definition of privacy. Privacy no longer can mean anonymity," says Donald Kerr, the principal deputy director of national intelligence. Instead, it should mean that government and businesses properly safeguard people's private communications and financial information. Kerr's comments come as Congress is taking a second look at the Foreign Intelligence Surveillance Act," reports AP.

Dollar-Gold-Oil Trends

* "I think the U.S. investment community is basically still out of this [gold] rally. Before we see the peak, U.S. investors will be very much in it the way they were back in 1980. And when U.S. investors get involved, the returns could be enormous," said Wistar Holt, partner at Holt & Shapard Capital Management in St. Louis to St. Louis Post.

"Global commodity companies believe that gold prices will rise for years to come, eventually reaching at least $2,000 and it will probably go even higher. Investment experts say gold is the best commodity to invest in because it has stood the test of time," reports Nandita Jain of Commodity Online.

"Gold has a 5,000-year solid track record. It is a time-tested and valuable commodity. It always has been, and it always will be. So it is the ideal commodity to invest in these days," says Prahlad Patel, a gold investment expert based in Mumbai to Rediff.com.

"The best way for investors to get started is to buy small amounts of gold at regular intervals over time, says John Hill, director of metals research for Citigroup Inc. He expects gold to climb to $1,000 an ounce over the next several years," reports WSJ.

"The dollar peg is slowly being whittled away. The world agrees the dollar must fall , with oil producers having all but abandoned the buck. An announcement from oil producers refusing to be paid in dollars would not surprise anyone at this point," commented Swiss America CEO Craig R. Smith.

"The falling dollar is the very definition of inflation," said Chip Hanlon, president of Delta Global Advisors Inc. "A weak dollar makes the cost of living for all of us go higher and gold is the best hedge against that," reports Chicago Tribute.

"Gold is out of the box. The gold price rise accelerated yet again yesterday and at this rate even the forecast of $950 gold by the year end could be an underestimate," reports Mineweb.

While analysts see potential for gold to move above $850, some traders said heavy speculative positioning on the U.S. futures market raised the possibility of a sharp correction," reports Reuters.

"With the two external drivers of gold a weak dollar and strong oil together conspiring to lift the metal higher, we are now in range of a move to the all-time nominal high," said UBS analyst Robin Bhar. But, he warned, "Assuming that $850 trades, a scramble for upside could see gold push higher still," reports AFX.

"The relatively subdued interest of the investing public, if not the investment newsletters and columnists, is in fact good news for those long the metal. It means there are a lot of people left to buy the stuff, which is not the case at bull market peaks. So even at $800 the ounce, the real gold bull market has not begun," reports FT.

"We reaffirm our old targets for gold of $3,000 to $5,000 an ounce (Plus silver over $100 an ounce). Gold is not merely a colorful trinket but a monetary asset, and when mass fear strikes at the heart of paper money, the stampede to gold will be awesome," James Dines, Editor of The Dines Letter told MW.

"Once gold clears $805, that means $882-$889 and then on to $1050. It does not matter if it is next week or next month. It is coming as the price of gold makes its way to $1650," says Jim Sinclair of JSMineset.com.

"They say inflation is under control. But the market is telling you differently. Historically, gold has been a barometer of inflation," said one precious metals dealer in New York to Reuters.

"Isn't it a little late for gold?" asked CNBC host Mark Haines last Friday. "No, gold prices will hit $850-$870 by year end and $2,000 gold is achievable, said Rob Lutts of Cabot Money Mgmt. [Mr. Lutts is now the 44th expert to predict "Four-Digit Gold"]

The sharp rise in gold prices hasn't scared off investors yet -- quite the opposite, according to George Milling-Stanley, spokesman for the World Gold Council.

"One of the things that has characterized the bull market since April 2001 is that investors have perceived every dip in the price as a buying opportunity," said Milling-Stanley. "They have perceived gains also as a buying opportunity," reports BusinessWeek.

"Inflation worries and a weak dollar were likely to push gold towards the record high of $850 in the first half of next year. We could see negative real-term interest rates in the U.S. next year as the Fed is likely to cut rates further. This will make gold more attractive," said Philip Klapwijk, chairman of GFMS to Reuters.

Meanwhile, "The world's richest supermodel is insisting she be paid in almost any currency but the U.S. dollar. Like billionaire investors Warren Buffett and Bill Gross, Gisele Bundchen the Brazilian supermodel is at the top of a growing list of rich people who have concluded that the currency can only depreciate because Americans are living beyond their means," reports Bloomberg.

The average retail gasoline price in the U.S. has risen above $3 per gallon for the first time since July 20, the AAA automobile group said on Monday, reports Moneynews.

"Banks are likely to mark down another $10 billion of mortgage assets in the fourth quarter, according to Deutsche Bank analyst Michael Mayo," reports CNN.

"There is going to be a major stock market crash, so protect your assets. Buy physical gold and hide it," says Charlie Merrill, a cousin of Merrill Lynch founder Charles Merrill reports WSJ.

The U.S. economy created 166,000 net jobs in October, the best job growth since May, the Labor Department reported Friday. The unemployment rate was steady at 4.7% as expected.

The Federal Reserve pumped $41 billion into the U.S. financial system Thursday, one of its largest cash infusions to help companies get through a credit crunch that took a turn for the worse in August," reports AP.

Fed policymakers stated Wednesday: "strains from financial markets have eased somewhat on balance." Still many Fed officials in the last week have described the state of financial markets as fragile.

"The Fed is driving the dollar down to save the housing market, but this is just a quick-fix. By cutting rates now the Fed has bowed to Wall Street pressure despite today's report of stronger-than-expected growth in the last quarter," says author and CEO Craig R. Smith.

The Commerce Department reported last week the U.S. economy GDP grew at a 3.9% annual pace in the third quarter, shaking off the housing slump.

"Gold is again demonstrating to the world how a healthy secular bull market functions: two steps forward, one step back. Smart investors will buy gold on the dips as it reaches toward $1,000/oz.," says Swiss America CEO Craig Smith.

"The market is in a bull run. The consensus here is that gold could reach $800 in a short term and that's motivating the market higher. Also the risk for a U.S. rate cut is feeding the trend," Frederic Panizzutti, analyst at MKS Finance, said to Reuters.

"Gold has surged 20% and oil 30% since mid-August. September Fed rate cuts spurred central banks to pump billions of dollars into financial markets to ease a liquidity crisis, reports Investec.

"The Federal Reserve Board acted "like a bartender" in lowering interest rates and its actions are contributing to a stock market bubble in the U.S.," said Marc Faber, publisher of The Gloom, Boom & Doom Report to Bloomberg.

A series of disappointing US economic data last week fueled near-universal expectation that the Fed will cut interest rates this week, which is a negative factor for the dollar and good for gold.

"According to a Merrill Lynch note to clients, we’re in the beginnings of a global readjustment that will end the dollar’s dominance as the “gold standard” currency for the world’s economies. The dollar is likely entering a long, slow decline - followed by a crash," reports FT.

"The Bush administration announced sweeping new sanctions against Iran last week -- the harshest since the takeover of the U.S. Embassy in 1979 -- charging anew that Tehran supports terrorism in the Middle East, exports missiles and is engaging in a nuclear build up," reports AP.

Sales of existing homes plunged by a record 8% in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years.

"The Fed has to cut on Oct 31st because a banking crisis is the nuclear apocalypse of economics. The result of this policy will be that the euro at $1.50, gold goes almost immediately to $1,000, and oil will probably spike short term above $100 (due to dollar weakness)," reports Thomas Kelly at SeekingAlpha.com.

* "Woe betide Wall Street if the Fed fails to slash rates dramatically over the Winter, starting on October 31. Woe betide the dollar if it does," reports Telegraph.

"A small gold market niche today offers gold buyers a whooping 33% discount from the May 2006 market highs; the classic $20 gold piece designed by Augustus St. Gaudens," reports Swiss America.

Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all his assets out of the dollar and buying Chinese yuan "because the Federal Reserve has eroded the value of the U.S. currency," reports Bloomberg.

"European finance ministers last weekend failed in their bid to slap down the U.S. for allowing the dollar to plunge to record lows against the euro," reports the Telegraph.

"Strong Dollar, Strong Currency" is more than a mantra... since economic history indicates that no country has ever achieved greatness nor maintained it by debasing its currency," reports Forbes.

"Currency traders were given a green light to continue selling the US dollar, as the International Monetary Fund said the greenback 'remains overvalued.' U.S. deficits will remain close to 1.5 per cent of world output until 2012, raising the likelihood of a disorderly plunge in the dollar," reports FT.

"Japan and China led a record withdrawal of foreign funds from the US in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields."

"Washington was happy to see the dollar slide. 'They don't care so long as the fall is not disorderly. They see it as a way of correcting the deficit,' said David Woo, an analyst at Barclays Capital" to London Telegraph.

"Social Security payments will show their smallest rise in four years — an increase of 2.3 percent. Yet consumer inflation rose at the fastest pace in four years — at an annual rate of 3.6 percent," reports Moneynews.

"A true inflation rate is probably about 7 percent, several times higher than the fake figure now dished up to us by our government. At that level, the Fed funds rate of 4.75 percent would be a shocking negative 2.25 percent. As such, it would reflect the true dimensions of the economic problems now facing us," reports Moneynews.com.

"When you hear the term 'gold bug,' chances are you think of a survivalist doom-and-gloomer incessantly warning of financial disaster. Think again because recently the term might as well be a synonym for 'pretty smart investor,'" reports Kiplingers.

Next Stop: $850 Gold

* "Once gold rises above $850, the fourth step [of the gold bull market] will be complete and that'll be the next big milestone. Gold will be at a [nominal] record high and it will then enter a new super strong bull market phase. Within gold's big picture, the mega bull market is still young," according to The Aden Sisters.

"Having surged past $760 an ounce, some dealers have said the market was well positioned in coming sessions to close in on the $800 mark last seen in 1980 when bullion hit a record $850," reports Reuters.

"Investors have bought 2.7 million ounces of gold through exchange traded funds, or ETFs, in the past five weeks, half the increase for all of 2007, according to estimates by South Africa's Macquarie First South," reports Bloomberg.

"Investment bank Morgan Stanley said its 2008 gold price forecast is $800 per ounce and expects the metal to benefit from strong global growth and spreading inflation problems," reports Reuters.

"I've said gold was going to $1,000. If the Fed cuts rates, then I'm going to have to admit I was wrong. Then gold isn't going to $1,000. It's going to $2,000," writes Donald Luskin, Chief investment officer for Trend Macrolytics in Smart Money.

"Gold is headed to between $1,000 and $2,000 an ounce in the next five years. There's an 80% correlation between gold prices and oil prices. Gold usually trades at about ten times the price of oil, so with oil at $80 a barrel, we expect gold should be priced at about $800/oz.," said Frank Holmes, Global Investors CEO to MW (video).

"The dollar losing its reigning status would affect the global economy mildly and swiftly, as the loss of purchasing power by the dollar merely facilitate transfer of wealth of dollar holders to other fiat currency holders, and the owner of hard assets. If the party has to end for the dollar, it just means that the party is starting somewhere else," reports John Lee, CPA to Resource Investor.

Mr. Lee concludes, "A gold bull and prosperity can happily co-exist without a doom and gloom outcome. With an increasing global middle class and ever-expanding fiat money aggregate, I don’t see the rising gold and economic trends reversing anytime soon."

2008 Gold Outlook

Gold is entering a new investment driven phase as gold market drivers "tend to oscillate between bouts of eastern physical/fabrication demand and western investment demand," according to Citigroup's research.

Gold is starting into the most exciting part of its long-term bull market, the so-called second (and monetary) phase. Herein we normally see the biggest percentage gains, matched by biggest corrections. My tentative targets (by end of 2008) : 14% (inflation), $1,600 (gold) and $45 (silver)," says Harry Schultz to MW.

"If deciding to buy gold feels at all hard today, it might suggest the top of this market remains a long way off yet. As long as Bloomberg columnists argue that buying gold is like 'believing in the tooth fairy,' you might also take comfort in the fact that mainstream consensus is still opposed to gold," reports DR.

"Know who you're buying [gold and silver] from. I checked online and found all sorts of companies selling precious metals for investing. But never buy off the Internet or anywhere else sight-unseen," reports KOMOTV.

"The overwhelming consensus is that a weak dollar is good for America. Ironically there is more worry in Europe over the strong euro than there is in America over the weak dollar. Before we get any significant dollar bounce this complacency will need to be replaced by outright fear, and that the dollar needs to fall more sharply as investors actually act on those fears by dumping dollars," reports Peter Schiff of Europac.