Dear Friends,

1. Pay no attention to the reasons given for gold’s strength. The primary reason for gold’s action is in the US dollar.

2. The idea that the dollar is a safe haven investment is SPIN on a whole new level. Buying interest free non-guaranteed debt of a nation, as is the case with the US dollar that is strangled by growing debt, will provide little safe haven.

3. The US dollar has .7285 as a magnet pulling it down. I rate that influence stronger than the .7600 support level.

4. Gold is going $1224 on its way to $1650.

5. The gold banks will fight it all the way.

6. The gold banks cannot fight the dollar because even they are too small for that market.

7. In the 70s the tide was turned for gold first by France and then by the Saudis.

8. The tide in gold this time will be turned by China, not only with gold bullion itself, but through their impact on the US dollar.

9. The US dollar was bulled during the China/USA financial management meeting.

10. That bulling was transitory as no single entity is powerful enough to offset the directional desire of the dollar. Goldman’s cancellation of their bull recommendation on the euro only impacted the longs that ran plus new shorts for one US session.

12. The Chinese are irate about the China bashing from US sources that seems to never stop. Today it was 3 people with the plague. Any negative news dealing with China gets immediate F-TV headlines in the US and is heard in China immediately.

13. The idea that China is captive of the US dollar is ignorant nonsense.

14. The drop in the US dollar is due to an overabundance of debt causing less international buyers.

15. Debt in the US has only one way to go and that is ballistic.

16. The Chinese will offload dollars in a myriad of ways.

17. It will be the decline in the dollar, this time to .7200 and in the winter lower that will bull gold to $1224 and then $1650.

18. This time China via the dollar will replace the early 70s French and the late 70s Saudis that helped gold then reach it high levels.

In conclusion, the gold banks will have as little luck as they did in the 70s bullying the gold market down. They will fail MISEARABLY just as they did then.

Respectfully yours,
Jim