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David Vaughn

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By David Vaughn     Printer Friendly Version
December 24, 2004

And how is gold doing?

Gold continues to remain strong & inflexible. Everyone is now wondering what the year 2005 holds in store for gold. But really before we can predict what the next year will bring for gold we must understand what has happened with gold this past year in 2004.

All of us know very well that since the earlier part of this year, 2004, that investors basically sat on the side lines & took a break from participating investing in the gold stocks.


Also, bear in mind that for 20 long years society has become convinced that long bull markets in the general equities market are normal & are always to be expected. Even now there remain those poor souls who remain glued to their TV sets every day watching the money channel waiting patiently for the bull market to return & for the Dow to continue its anticipated climb to 25,000 & beyond.

It sometimes takes quite a while for old perceptions to die. Let me repeat this because this is very important to understand. When an entire generation becomes accustomed to the “status quo” it is hard for anyone to notice the winds of change around them & this is where we have been in 2004.

During 2004 this past year what investors did was sit back and quietly observe this new phenomenon of a rising & stable gold price. And while investors sat back to observe the gold price they asked themselves if this gold bull was for real or just another short term rally witnessed time & time again for 20 long years?

So even as gold climbed to 16 year highs to a lofty peak of 456 an ounce it really was a very normal pattern of behavior for the majority of investors to sit on the sidelines for all of 2004 to just sit idly by & watch the gold performance show without participating. So now if we can come to grasp with these facts about what happened in 2004 maybe now we can move foreword & postulate what is going to occur next year in 2005.

So what does 2005 hold for gold?

Well, investors are becoming more comfortable with gold’s new muscle & 2005 will demonstrate more confidence in gold. I feel confident that in 2005 investors will slowly become more comfortable with investing in gold equities.

Actually, I anticipate investors literally jumping into gold stocks. I wrote at the beginning of George Bush’s first term that we would see a repeat of the “Herbert Hoover” scenario. And I believe that in 2005 we will begin to see more damaging effects from the US dollars slide down hill. And as these economic crises multiply gold equities will become an irresistible temptation.

And let’s talk a moment about the US dollar.

Let’s understand one very important concept about the real health of our economy & where the US dollar is heading. And actually where the US dollar already is. Read the following text.

“To say the dollar is “heading” toward a crisis would be like the captain of the Titanic saying after his ship hit the iceberg that it was facing a “potential” disaster. That’s crazy. The disaster was the collision itself. The ship was in crisis the moment that block of ice ripped a hole in her hull.” Derek K. Artsdalen

This guy does a good job with his analogy of what is happening to the dollar & where it’s at already. Now read what else Mr. Artsdalen has to say.


Now there are those who believe that the dollar will eventually just quit plummeting & reverse its course & start climbing higher again. But it cannot because already the debt level has reached an untenable position. And 2005 may just be the year foreign central banks make the crucial decision to quit supporting the US debt because the price for their own country to continue to do so is just too high.

And you are still debating getting into gold equities? Now might be an excellent time to get on board before the mad rush that is destined to occur in 2005. Yes, 2005 should prove to be an interesting year.

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Our goal is to provide a brief review of those gold & silver companies considered to represent respectable & excellent speculations. We don’t predict how high any stock may climb to.
Again, our goal is to simply lay before subscribers those companies whose prospects appear favorable & whose companies appear to be run by serious geologists & miners. You decide which company best meets your personal investment objectives.

David Vaughn
Gold Letter, Inc.

December 24, 2004


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