Gold +30% in 2007

* Gold rose over 1% Friday in the wake of Thursday's assassination of Benazir Bhutto, which pushed the dollar lower and oil higher.

* Gold closed in NY up $11.00 to $838.80/oz., silver rose $.10 to $14.76/oz. Gold's 28% rally so far this year is the biggest annual increase since 1979.

* "Gold will rise to a record in 2008, increasing for an unprecedented eighth consecutive year, as investors seek protection from accelerating inflation, metals analysts tell Bloomberg.

* "Stocks significantly pared their gains Friday, coming under pressure after sales of new U.S. homes fell more than expected in November, rekindling concerns about the U.S. economy and the housing crisis," reports MW.

Stocks suffered steep losses on Thursday, as news of the assassination of Benazir Bhutto unsettled the markets, overshadowing what were disappointing durable-goods data and slightly improved consumer confidence data.

* "The dollar tumbled against the euro for its sixth straight day Friday after a weaker-than-expected U.S. durable goods report Thursday added to concern about the economy and boosted chances of a Federal Reserve rate cut next month," reports Reuters.

* Crude-oil prices rose near $98 a barrel on Friday, as news of the assassination of Benazir Bhutto rekindled concerns about rising tensions in the Middle East.

Geopolitical angst

On Thursday Pakistan opposition leader Benazir Bhutto was killed in a suicide attack at a campaign rally. "Benazir Bhutto, the leader of the political opposition in troubled Pakistan, led a life of political turmoil marked by the violent death of several other family members. She was the first woman to lead a Muslim nation in modern times," reports WND.

"But the full impact of Bhutto's death won't be felt Thursday and seems difficult to calculate. Her death symbolizes that Pakistan, nuclear-armed, ever-volatile, and arguably the key front on the War of Terror, will descend further into chaos. That chaos may have far-reaching consequences," reports MW.

"A significant proportion of the investment community thinks that the U.S. economy is either teetering on the brink of recession or is already entering one," said Stephen Stanley, an economist at RBS Greenwich Capital. Bill Gross, head of PIMCO, the world's largest bond fund, told the Financial Times that "if I had to be bold, I'd say we began a recession in December," reports WT.

"Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come," reports AP.

* Market analysts warn that more U.S. businesses are likely to hang "going bankrupt" signs on their doors next year as the twinned blows of slower economic growth and pricey commodities force the weakest companies to seek refuge from creditors," reports MW.

"Just as the U.S. dollar has farther to fall, so do the commodities have farther to rise. On that point, JP Morgan forecasts that of all the commodities, they expect precious metals to be the strongest in 2008, followed by agricultural products, base metals and energy," reports Goldseek.

"Experts say they expect gold could surge to above $1,000 an ounce in the next 12 months on continued weakness in the dollar and robust investment demand," according to a broad cross-section of professionals interviewed by TheStreet.com. James Turk says the next leg of the bull run should mean a rally of 30% next year. (See Swiss America survey of 46 experts)

"For gold investors, there’s more good news to come: None of those catalysts that made 2007 such a grand year for gold are expected to be absent in 2008," reports MoneyMorning.

"Gold prices are holding up well, given the 3% dollar bounce we've seen recently. This is very bullish for gold as it enters a seven consecutive year of this 15 to 23-year secular bull market," said Craig R. Smith.

"The rise in gold prices to this point has been steady and sustainable. For much of its rise, gold has been in a stealth bull market. But the gold price advance is no longer stealth. The chart says it wants to go parabolic," reports DailyReckoning.

"Can anything be as mesmerizing as gold?" asks Barron's in "Golden Opportunity?" back on 12/26/05. "Commodities are an asset class for the first time in history", says Barrons Roundtable member Mark Farber, who "thinks the price will eventually exceed $3,000."

"Former Federal Reserve Chairman Alan Greenspan says the odds the U.S. will fall into a recession are "clearly rising" and he believes economic growth is "getting close to stall speed," reports AP.

"Stagflation is: Increasing costs and decreasing business activity = lower corporate profits and individual income = lower tax revenues plus exemption of the many from the Alternative Minimum Tax category = in the face of continue high spending an explosion in the US Federal budget deficit = in the face of a continuing US Trade deficit and a runaway US Current Account deficit = a severely lower US dollar = significantly higher gold prices! Do you have insurance against the failure of the system to function? Gold is that insurance policy you pray you won’t have to collect on, but you will. Gold is going to $1050 and onward to $1650," writes Jsmineset.

The consumer price index increased 0.8%, the biggest gain in consumer prices since 2005. Food prices rose 0.3%, and apparel, airline and drug prices also spiked. The core CPI, which excludes food and energy costs, was up 0.3% in November, the biggest gain since January.

Sharply higher energy powers a 3.2% rise in U.S. wholesale prices in November, the biggest move since 1973. "Meanwhile, consumers stormed into the shopping malls, pushing up retail sales by the largest amount in six months," reports AP.

"Central banks are having to fight two battles at once: against the credit crunch and against inflation. Never before have the central banks of North America, Europe, and Britain, acted together as such a unified phalanx, but never before have transatlantic credit markets seized up with such violent effect. The liquidity rescue has its limits," reports London Telegraph.

"The U.S. trade deficit widened in October, coming in above Wall Street's expectations, as higher oil prices and a continued increase in Chinese imports fueled the gap, according to the government's latest reading," reports CNN.

"The Fed remains more concerned about the risks to inflation than most investors. The Fed is set to overhaul the way it provides liquidity support to financial markets, following a negative reaction to Tuesday’s interest rate cut," reports FT.

"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.

"'Stagflation-lite' describes the outlook for the U.S. economy of stagnant growth and rising inflation, a term coined by Paul Ashworth of Capital Economics," reports FT.

Gold: trading vs. accumulating

"In the 100 months since August 1999, it is interesting to note that gold was higher at month end only 56% of the time. That result is what makes trading so difficult, which is why I recommend 'accumulating'. It's a much easier strategy than trading," reports James Turk of GoldMoney.com.

"The gold price will surge to a record high of $900/oz, driven by a weaker US dollar and economic turmoil in 2008, while a surplus in the metal will narrow by 97 tons, possibly dipping into a deficit, keeping prices strong, according to the VM Group/Fortis bi-annual The Yellow Book," reports Miningmx.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.

" After years of gains, fears of a gold correction are increasing. "Risk has returned to the market," says Axel Merk, manager of the Merk Hard Currency fund. "We are in the midst of a global credit contraction, and that means people will pull money out of all asset classes, even gold." For now, a modest position in gold seems sensible," reports Fortune.

"Americans can diversify their retirement portfolios with precious metals without any tax penalties or new contributions through the use of a self-directed precious metal IRA," Craig R. Smith recently told Nuwireinvestor.

"This bull market in gold and other commodities is not only going to be a big one, but a long lasting one as well. All of the evidence suggests that it’s going to be a once in a generation type of move and a very profitable one," reports The Aden Sisters.

"China's wealthiest investors are on the brink of plowing as much as $68 billion into gold markets as they take profits from roaring share prices and steer clear of property," says Wang Weilie, a top fund manager on the Shanghai Gold Exchange. 'Spot gold prices will hit $2,000 in coming years,'" he said to UBS Metals Daily.

"The yellow metal is becoming more popular in China while Western countries seem to have little use for it. If you were a hard-working people who labored endlessly in exchange for a currency that was essentially pegged to the U.S. dollar, you'd probably want to exchange some paper money for something more tangible too," reports SeekingAlpha.

"When I tell people to buy American Eagles, they’re usually skeptical and tell me about some midcap stock their broker suggested,” wrote Jeffrey Osborn, 48, a retired computer entrepreneur and private investor who lives in Maine and Florida, has about 5 percent of his liquid assets in American Eagles purchased in 1997."

"But I question holding assets denominated in a depreciating dollar. For now, I am not selling my coins. They are a good hedge against the unforeseen," reports NYT.

Housing outlook

"Without question, Bush’s mortgage rescue plan will exacerbate, not alleviate, the problems in the housing market. As the plan will sharply reduce the ability of new buyers to make purchases, it really amounts to a stay of execution and not a pardon. What is next, a moratorium on car payments?" asks Peter Schiff of Europac.net.

"President Bush announced a landmark plan aimed at bailing out hundreds of thousands of homeowners struggling to meet mortgage repayments by freezing interest rates on certain sub-prime loans for the next five years," reports London Telegraph.

"The U.S. government is working hard to give relief to struggling mortgage holders, Treasury Secretary Henry Paulson said Monday. "We are working aggressively and quickly, utilizing available tools and creating new ones, to help financially responsible but struggling homeowners," reports CNN.

"Markets are becoming aware of the fact that the decline in housing is not stopping. The housing bubble is not a reflection of what we did, as it is a global phenomenon," said Alan Greenspan last week. A debate is beginning to rage about where to lay blame for the mortgage mess... the man responsible for the lion's share of this debacle: Alan Greenspan," opines Bill Fleckenstein at MSN.

As of Friday, Nov 30th, year-to-date; gold was up 23%, silver up 10.6%, the Nasdaq up 9.1%, the Dow up 6.6% and the S&P 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.

Debt time bomb

"Like a ticking time bomb, the national debt is an explosion waiting to happen. It's expanding by about $1.4 billion a day — or nearly $1 million a minute. What's that mean to you? It means almost $30,000 in debt for each man, woman, child and infant in the U.S.," reports AP.

Dollar outlook

"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 dollar is steadily weakening, but more than a drop in the dollar's international value is happening here. The loss of confidence is in the dollar is accelerating each time it slips one or more percent on a persistent basis, with small short recoveries being seen in the midst of this decline. How important is this loss of confidence? Critical for it precedes policies, which long-term will lessen the role of the dollar to one of the world’s top 5 currencies," reports Julian Phillips of Goldforecaster.com.

"The correlation of geo-economic 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.

"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.

"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.

Metals outlook

"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.

"After hitting its first two targets ($780 and $840) gold is taking a breather. The Aug to Nov rally has left behind it two more targets yet to come, the next at $915 and then to $1125," reports TheMarketoracle.

"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.

"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.

"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.

"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.

"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 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. "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.

"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.

"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.

"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

"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.

"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.

"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.

"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.

"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.