I wrote in the April 6, 2006 commentary that investors immediately took action following the FOMC's typical short public statement issued after every FOMC meeting over the past few years. In its statement, the FOMC inferred that inflation was rising because inflation hedge values were moving higher. I said that there was only one thing to do-rush out and buy gold and silver before it is too late.

I also warned that the FOMC is still attempting to slow price inflation. The problem, however, is that there is too much liquidity worldwide. For several years, foreign investors have been buying U.S. real estate, and for the past four years, they have been buying U.S. stocks and bonds.

Recently, massive amounts of money have returned to the U.S. via the employment/tax act of 2005. It makes no difference whether it comes in the form of euros, yen, francs, or Yuan, because it must be converted into dollars before foreign investors are able to buy anything.

Then there is the stock market. The Dow finally broke 11000 over the past several months, and foreign investors bought more U.S. stocks. Investors sold later that day, an event reminiscent of a too familiar trend; up in the morning and down in the afternoon. The point here is that all that money stayed in the U.S., not to mention the estimated $800 billion that was lured back to the American economy by the tax break (5.25%) I mentioned earlier. When added together, these factors amount to a hell of a lot of green backs.

Moreover, we must keep in mind the amount of dollars Chinese investors are spending in the U.S. economy (buying gold, silver, and real estate). Think about how those dollars, moving quickly from one pocket to another, make dollar holders extremely nervous. Beginning April 14, 2006 (the last trading day of that particular week), the dollar started to show weakness, and investor anxiety began to worsen. Gold hit $640 April 19, 2006 at 2:00 p.m. EST, but then backed off and settled at $632.70. On April 20, gold dropped to $619.60 (New York spot gold).

The question, of course, is whether it is too late to buy into the current bull market. The recent commodities rally is currently playing catch-up with the real estate bull market. In order for the price of gold to move anywhere near that of real estate's large market move-up, it must at least soar upward approximately 400 percent.

Central bank sales will again pressure gold's price. When is anybody's guess.

Real estate, on the other hand, did not have this kind of downward pressure to overcome. In order for gold to catch-up, it must surpass $1,000 an ounce. While interviewed three years ago on the Ed Taxin Network and GEM radio, I was asked to determine gold's fair market value.

The question came about after I charged G7 central banks with refusing to allow gold to move with its fair market value. In answer to the previous question, I replied $686 (however, that was three years ago). Therefore, it stands to reason that the price of gold was stunted by G7 gold sales for three years.

It does not take a far stretch of the imagination to realize the possibility that gold will remain bullish for the remainder of this decade. It even becomes easier to imagine when adding the value of the dollar to the equation. The dollar, at minimum, faces a 30 percent loss of value over the next few years (and could even plunge as much as 50 percent).

I expect gold to move opposite the value of the dollar (China will make sure of it). For those of you who do not like trading in gold, consider the Swiss franc as an alternative. Swiss annuities are a safer and more profitable investment. Moreover, the U.S. government does not regulate Swiss insurance products. I am more than happy to explain to you in detail the basics of Swiss annuity/insurance products. You are welcome to give me a call at (760) 720-0107 or e-mail me at net2host2@adelphia.net. Like tornadoes and hurricanes, dollar collapse is on its way. A little insurance by way of gold, gold mining shares, silver mining shares and/or a Swiss annuity is in order.

What's more, I have been following a small Columbian gold mining company, Columbian Goldfields (CGDFOB). The stock has risen over 100 percent since November 2005. I will send you more info on this company soon.

Sincerely,
Kenneth Coleman