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Investing In Gold & Uranium!

By: David N. Vaughn, Gold Letter, Inc.

-- Posted Thursday, March 29 2007 | Digg This ArticleDigg It! |

Gold continues to battle resistance to climb higher and higher.  It’s definitely doing an excellent job staying over 650 dollars an ounce.



I like to take a snapshot of different graphs of the gold price through out the week to illustrate that we are witnessing a bull market very much in force.  These are strong numbers and an excellent technical position.



Part of what is keeping gold poised higher is the expectation of higher inflation and inflation encompasses everything that is causing you more personal difficulty in keeping up with your present standard of living.


Spring has definitely arrived in the Deep South.  All the leaves are coming out on the trees.  The Yoshino cherry trees are in full bloom.  Almost everything is in bloom except for many investors understanding of gold stocks.  The issue is really not about where the gold price is at the moment but whether there remains to be money to be made in gold and resource stocks in general. 


Dear David:

“As Jackie Gleason immortalized, "to the moon, one of these days, Alice (concerning the gold price)".

Eric Y. 


And I say, yes, there is money being made even as we speak in gold and resource stocks.  Gold has remained firm and continues to remain in a good strong position.  For those with understanding there remains excellent and very real wealth to be made.  For the ignorant let them complain and only wish they had the willingness to be bold and exercise sound discipline and wisdom.



“…I'm impressed how daily charts of Gold itself look so much more constructive than XAU or HUI charts. Overall, the metal's strength is more important as the stock rises will eventually follow, and usually, even outperform the commodity itself.”

Owen M.


The weather really is starting to be more beautiful with every passing day!  When I think that some in this nation are still shoveling snow at this moment my heart goes out to them, but there remains plenty of room here if you wish to come on down.  The weather always is remarkable and the overall friendly southern hospitality is even better.  Greenville remains the home to BMW and Michelin.  A German company and a French company.  Hitachi, big time from Japan and Stihl, another big German company.  Almost feel the US is becoming a colony belonging economically to all these other nations and their foreign money.  Globalism in action.  Eventually all Americans will be serfs working for other principalities and powers.    



“Can we make a comparison of what happened in the nation of Germany (IN 1918) and what is presently taking shape internationally?”

Claude F.


Claude, I think the history books 50 years from today will answer that question well.  But you want to read about gold and uranium stocks and making lots of money, right?  Well, we can do that.  I will always be the first to attest that it takes money to pay the bills so there is nothing wrong with getting rich off gold and uranium.


Hi David

“I like to read your posts. They are very interesting.”  “The economy like any other reality is governed by fundamental simple laws which cannot be distorted…”  “There are still so many people believing in a perpetual free lunch in the USA, that when the party ends it will be painful for everybody.  The wake-up is going to be brutal and a real hell.”  “…the only alternative is to collect gold and silver as much as you can. Forget about RRSP or other type of pension plans.”

Mircea R.


The only thing I can say negative about this region is that as growth comes too many trees are cut down.  Remember the Dr. Seuss story about the trees that were all being cut down?  In my humble opinion we can never have too many trees surrounding us.  When too many trees are cut down there is a feeling of being exposed.  Kind of similar to the feeling that comes with too little gold exposure in your personal portfolio.  Teresa below has a good suggestion for us all.



“Life may not be the party we hoped for, but while we're here we should dance.”

Teresa P.


Lets all dance…but only those with gold and silver in their portfolio. Gold continues to be a good long term investment even if the only reason were an escalating inflationary environment.  And I don’t think anyone out there will disagree with me that prices are going up and wages are not staying on par with these price increases.


“The Federal Reserve left interest rates unchanged Wednesday for a sixth-consecutive meeting, warning that "somewhat elevated" inflation posed the greatest risk to the economy, trumping "mixed" economic data and the housing slowdown.” “… the overall tone of the statement was tough on inflation, with policymakers saying their "predominant policy concern remains the risk that inflation will fail to moderate as expected." “The economy has cooled in recent months, but inflation hasn't dimmed as hoped, putting the Fed in a policy bind.” “Since the Fed's last meeting, core consumer inflation, which doesn't include volatile food and energy prices, has jumped to 2.7% year over year.”  Click


I know my general cost of living is escalating and I don’t care how the government plays with its statistical figures to make inflation sound inconsequential.  Inflation is recognized and feared by every real home maker that pays monthly household bills and visits the grocery store every week.  And, hey, I just heard the price of the humble postage stamp is going up again in a couple months.  But there is no significant inflation, right?



“30 years of trading futures and options has taught me many things.  The most important of which is the fact that gold is an excellent income vehicle.  Simply buy the metal and put 100oz. in the bank box.  Sell one gold call against it.  The return will probably be better than my social security check.  Pray the bank doesn't fold!”

Dave A.


In addition to trees being cut that have stood for generations just change in general is hard to digest upon getting older.  Because of higher rents and a popular downtown area Greenville lost the old “Map Shop” that for 30 years sold every type of map you were looking for.  And remember the downtown book shop I used to write about that had the cat as the proprietor…seriously.  Well, higher rents also drove them to close their doors.  The cat that lived in the book store is now homeless and now looking for other work.  And what about those housing market woes?



“For those pundits who are saying the housing market spiral downward is done and probably won't spill over into other sectors of the economy, I say this.  With 1 trillion dollars in ARMs set to readjust this year and with a negative savings rate, we are a looong way from done!  Watch out below.”
Scott W.


Change is difficult because what we grew accustomed to and familiar with all of a sudden one day is gone.  Part of the reason so many potential investors cannot accept the possibility of making real money in gold equities is that they remember the cold hard years of 1980 to 2000.  People grew up in those generational years and remember how gold suffered with little respect and struggled every day to keep its proverbial head held high.  But not today.  Gold is in a long term uptrend today for those with eyes to see.


“Gold is on track to set record levels, “probably this year, possibly next,” according to Jeffrey Christian, MD of the global bullion markets research and consultancy outfit, CPM Group.” “…gold is still on the upward course.” “Prices could subside in the following year, but at a new level, in order for the bull run to sustain.”  Click


Gold’s position within the financial community is continuing to grow and to improve every day.  But those with long memories see only yesterday.  But the key to making real and serious money is to be able to recognize change and adapt and adjust accordingly. The status of gold has improved beyond imagination but not for those who remain steeped in nostalgia for the past.  Wake up folks.  This is a new world today and the rules are changing.  It will be your loss if you cannot readjust your financial portfolio to reflect these new changes.  More than just inflation is carrying the gold price ever higher.  And don’t forget that all central banks every where are adding more gold to their established reserves.


“The Bank of Russia's gold and foreign currency reserves amounted to $321.7bn as of March 16, up $4.4bn, or 1.4 percent, from the previous showing. This was the biggest weekly gain since February 9, or in over a month. Hence, the reserves have been rising for three weeks straight, with the increase amounting to $10.6bn, or more than 3 percent, over this period.  The noticeable growth in Russia's reserves may be attributed to the Central Bank's stepped up foreign currency purchases on the domestic market. Still, Russia has only been able to slightly narrow the huge gap separating it from China and Japan, the world's leaders in terms of gold and foreign exchange reserves.”   Click


And don’t forget hot uranium.  Uranium excites me because the world is becoming uncomfortable with coal and oil based power plants.  Only nuclear power will provide a cleaner environment for our children.  And when you consider that the oil supply is indeed finite what else is there to replace it except nuclear energy.  Yes, you must also have some quality uranium stocks in your personal portfolio.


“Uranium bulls are snorting and stamping the ground as world prices rise towards the $US100 a pound level.” “While several leading investment banks, most notably Goldman Sachs JB Were, are reported to have upgraded their price projections for this year and 2008 to more than $US90 a pound, forecasts that could prove conservative.” "With secondary uranium supply forecast to fall and global reactor requirements to increase, the current tight supply demand balance in the uranium market is expected to persist throughout 2007.” "In 2008, the spot uranium price is forecast to increase by a further 10 per cent to average US$103 per pound (in 2007 dollars).”  Click


And more uranium news?


“The spot price is tipped to break the $US100 a pound barrier within weeks, which is ten times what it was four years ago.”  “…the global uranium shortage is forcing utilities companies to pay higher prices.  "They can see that with this trend towards alternative energy away from coal fired power stations towards nuclear that the demand for uranium is only going to increase," he said.   "There's going to be more and more reactors around the world and basically they can't afford not to be securing their supplies."  Click


Uranium is only getting hotter as an investment play and now consolidation is entering the fray.  Always a greater opportunity for making money when you successfully choose those stocks soon to come under consolidation.


“Justin Reid’s recent thesis, 2007 – Uranium Equities, is appropriately sub-titled, “The Sector Moves Towards Production & Consolidation.” His dual theme for uranium mining stocks in 2007 is consolidation and U.S. uranium miners offering a security of supply. Reid wrote in his February 14th report, “We expect that the acquisition parade has just begun and will become a common theme in 2007.” “The juniors are showing strength across the board as well as across continents.” “Thanks to the steady upward uranium price climb, now being heralded as likely to be one of a top-performing commodity in 2007 – and with some analysts calling for US$100 uranium per pound, the sector has attracted several hundred players and wanna-be players.” Click


And let’s not forget the growing mess that is the “sub-prime loan” catastrophe.  That problem will not be going away anytime soon.


Hi David,

“What I find most amazing is that we’re so head-in-the-sand about things that, say, a year or two ago would have been cause for major panic” “Nobody sounds an alarm.”

George I. L. 


Folks, Do you think “Big Ben” is going to be able to save us this go round?  Any more of that Greenspan magic left?


“I almost feel sorry for old Benny B. and our other fiscal leaders. The situation they find themselves in is akin to the classic nightmare motif of a person driving in a car with the devil (deflationary collapse) behind him and a cliff edge (hyperinflationary oblivion) before him. It's a double-bind situation. And the only real way to escape a double-bind is to stop and think about what got you into that situation in the first place! In this instance, as you've already guessed, the FED came to find themselves in this situation by abandoning the gold standard. Therein lays the solution, and the only means of waking up from this nightmare.”
 John J.


Mr. Ford the economist shares his financial commentary below.



“I could send you the plethora of comments I've passed on to others relating to the idiocy of sub-prime mortgages and what they portend to the US economy.”  “…the federal government will not be able to bail anyone out.  The reason is simple, derivatives have been invented and used shamelessly to create ever increasing spirals of credit that have wrapped themselves around virtually every financial institution in the US of any real size.”  “…I really doubt the ability of any economist to predict the outcome (and I'm an economist). The second most amazing aspect to all of this is the continued belief that somehow or other the US economy will survive this relatively unscathed. How can the equivalent of + one year's housing starts being put into foreclosure not affect the economy?  How can the interbank lines survive?”

Ford C.


Remember brother Alf?  Alf is an excellent market analyst and his commentary is always worth listening to.  Many folks don’t know this but Alf played in his own TV show back in the 1980s.  Or I may be mistaken.  That might have been another Alf.  The one that is coming to my mind had too much hair.  Anyway, let’s see what Alf has to share with us.  Alf Field is providing us with an “Elliott Wave Gold Update” that in my opinion needs to be heeded.


Alf Field – “Both gold and silver seem poised for dramatic upside price explosions if the latest Elliott Wave count set out below is correct.”  “…there is another possibility that has very bullish connotations and which looks as if it has a high probability of being the correct interpretation. This interpretation calls for an immediate strong 3rd wave upward move in both silver and gold. Under this interpretation gold should knife through the resistance in the $680-$700 area without a problem and rise to levels in excess of previous forecasts for the peak of wave 3 of $760. A target of a minimum of $800 is now possible for the peak of wave 3.” “What has created this bullish scenario is the…”


The technical data and interpretations get fairly complicated but my goal is to touch base on the main points of Alf Field’s analysis.


Alf Field – “…the upward forces that are about to burst forth in gold are stronger than those at work in silver.”  “…there are extremely strong forces at work in the gold market that should soon propel the yellow metal upwards in a very strong 3rd wave type move.” ajfield@attglobal.net


Gold Letter emails brief reviews of undervalued gold, silver, uranium and other resource stocks that are under valued and poised to rise. 


Our top 10 best performing stocks are up over 2,000% and our top 50 best performing stocks are up over 500% - 60 minute real time delay when the markets are open.  The top 50 represent around 50% of all Gold Letter's recommendations since inception.  Gold Letter is the only newsletter that tracks and publishes this kind of exact data on their recommended stocks.  You won’t find this precise record keeping provided with any other newsletters.


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And before we go let’s listen to analyst Mr. Wiegand to get a good picture of where the gold price seems destined to head in the remainder of 2007.


Roger Wiegand – “…we just saw a private report using proprietary information that a certain gold index should rally 40% for 2007.  I have never seen that ratio before and its proven success rate is so powerful I cannot conclude anything else but that a +40% 2007 rally must be a reality.” “Gold ETF has shown us a continuation rectangle from June, 2006 to its break-out point on February 1, 2007.  Those patterns, the longer they stretch sideways in time, can produce explosive moves either long or short once price finds new direction.” “Watch carefully for breakouts in the precious metals and their stocks.  Often, they do not move at exactly the same time but do trend together most of the time. This week’s rally in copper was terrific and is also a signal the metals are ready to move up once again.  Copper’s new and powerful rally could be round one of the next ten round rally in gold and silver.”  Click 


And what remains our mantra at Gold letter, Inc.?


“There are always rich men, even in the poorest countries.  It is the nature of some men to make money.”  Colleen McCullough


And the next question we ask if it is perhaps within YOUR nature to make money.  Those who are making money in this market send me an email and share with the rest of us your story.


David Vaughn

Gold Letter, Inc.




The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. Authors of articles or special reports are sometimes compensated for their services.  © Copyright 2007, Gold Letter Inc. 

-- Posted Thursday, March 29 2007 | Digg This ArticleDigg It! |

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