Dear CIGAs,

The excellent Shadow Government Statistics economic service (shadowstats.com) makes the following statements today, January 16,2009 in a flash update.

“The annualized real contraction for fourth-quarter 2008 retail sales was 17.1%”

“Consistent with a still-deepening recession, fourth quarter 2008 production showed an annualized quarterly contraction of 11.5%, following an 8.9% contraction in the third quarter.”

“ A depression is defined [SGS] as a recession where peak-to-trough contraction exceeds 10%, a level currently exceeded in annualized terms by both fourth-quarter real retail sales and industrial production.”

SUMMARY

Since we at Guild Investment Management predicted several months ago that we were entering a moderate depression, rather than a recession during the current downtrend, few have agreed with our view. The above data by Shadow Government Statistics show that the trends in retail sales, which is considered a leading economic indicator, and in industrial production are strongly indicative that a depression is in the process of developing in the United States.

Respectfully yours,

Monty Guild
www.GuildInvestment.com