Four-Digit Gold Prices a Reality
GOLD GNOME Gold Stocks to Capture
the Second Leg of Bullish Profits

We're convinced that gold will regain its popularity and return as one of the most profitable sectors in 2007 . . . and we don't want you to miss a penny of it.

If you thought the gold bull began in 2001 when an ounce sold for $280 and ended in mid-May 2006 when it tapped a quarter-century high of $725, you'll want to read every word that follows, then act quickly on our advice.

While we witnessed a speculator-driven sell-off of gold in the second half of 2006, as gold closes in on a key mark today, most analysts agree with Gold Gnome that when it happens, it will kick start round two of huge demand and huge profits.

In the first leg of the gold bull market, Gold Gnome.com readers pocketed 66% in Vanguard Precious Metals (VGPMX) and 48% in Oppenheimer Gold and Special Minerals (OPGSX). Knowing when to buy and sell were absolute keys to our success.

In Gold Gnome's latest special report, "Three Gold Picks Set to Skyrocket in 2007," we identify this crucial entry point for buying gold and give you the name of three high-flying stock ready to double, triple and more...

Growing Demand Equals Higher Prices

Demand for gold in 2005 hit a record of $53.6 billion with a 26% rise in investment demand in tonnage terms in 2005. Excluding official bullion sales, demand exceeded supply by 470 tons that year.

Much of that explosion in demand will likely come from retail investors in India, China, and West Asia, countries that are developing an appetite for gold as investments, not just for bling. Considering makers of jewelry (bracelets, necklaces and earrings) account for 69% of gold's global demand, this little shift could be a huge boon for the yellow metal.

Investment demand from these countries rose 34%, 32% and 20% respectively in 2005. In the second quarter of 2006 alone, increase in tonnage investment demand went up 19%. In value terms, that's a 76% rise.

Consider this little fact: Pension fund assets in 11 major markets, including the U.S., Japan and the UK, amount to $16.4 trillion. Even if a fraction of these funds starts flowing into gold, can you imagine what it would do for gold prices?

India is the largest gold-consuming nation in the world. China, on the other hand, has the fastest-growing economy in modern history. Both of them are in the process of liberalizing laws relating to the import and sale of gold in ways that will facilitate gold purchases on a mammoth scale.

In China, home to 1.3 billion people, private gold ownership has been outlawed for generations. But in 2002, the Shanghai Gold Exchange opened and started free trade in gold for the first time in that nation's history. China recently passed legislation that will allow the country's four major commercial banks to sell gold bars to their customers.

Finally, The Bank of China, the country's biggest foreign currency lender, has begun allowing investors to buy and sell gold using their U.S. dollar accounts in a move to boost sales of the precious metal.

This system for selling bullion to the largest population in the world is getting off the ground and the effect on gold demand will be staggering.

Considering the high savings rate in China, gold is a logical investment. It's estimated that the equivalent of US$36 billion in Chinese private investment could move into gold in coming years. Plus, the Chinese government is moving to increase its low gold reserves. If these predictions come to pass, China alone could consume 40% of the world's entire gold production in years to come.

India's Become Downright Demanding of Gold Too

Here's What the Rest of the Investment World thinks . . .

As you can see, we’re all on the same page.

According to TheBullionDesk.com analyst Ross Norman, winner of the LBMA 2006 gold price forecasts, the price of gold could hit $850/oz in 2007. That’s a 40% move from today’s mark of $610. “We are predicting an average price of $700/oz with a spike to $850/oz.” “The shortest bull market for commodities lasted 15 years, the longest 23 years, so if history is any guide, they've got a long way to go. This is not a bubble."
— Jim Rogers, Author, "Hot Commodities.""Gold is now being accepted as the fourth currency along with the dollar, the euro and the yen. But there is a difference. Gold is also being recognized as the tangible currency and the only safe currency. That gold pays no interest -- but traded not too long ago at a 25-year high in terms of dollars -- is a testament to its value and safety in the eyes of sophisticated investors."
— Richard Russell, Editor, Dow Theory Letters"Gold is in a bull-market trend, and there are a lot of reasons for that, and we will see higher prices. People shouldn't be surprised to see gold trade in the four digits. Investors should worry less about whether this particular moment is a good or bad entry point and ponder the implications of sailing through uncharted waters without a lifeboat."
— John Hathaway, Portfolio Manager, Tocqueville Gold Fund "Gold prices may reach $2,000 an ounce by 2010 on demand for an alternative to currencies. You have much more money than there is gold, and as people see their currencies falling relative to gold, they're going to be saying `Maybe I should have some of this'."
— Robert McEwen, CEO U.S. Gold Corp. "The price of bullion may exceed $1,000 (U.S.) an ounce within five to seven years as demand growth driven by Asia outstrips global supply."
— Pierre Lassonde, Pres., Newmont Mining"If our current gold rally truly unfolds into a Great Gold Rally, $1000 gold is merely the first stage. A gold bubble, which will probably ultimately happen as a way to climax the coming gold mania maybe five to seven years out, could easily launch gold above $5000 per ounce. The actual top of a new gold bubble at the final pinnacle of another Great Gold Rally could touch $6000+ per ounce!"
 — Adam Hamilton, CPA, Zeal Intelligence

"Gold prices actually started their life at $35 per ounce in the early 1970s. From there, it went to $850-$875 -- a twenty-five-times-over move. Gold began its latest move up at $252, so prices at $6,250 can't be ruled out either, in terms of magnitude of the move."
— Jon Nadler, Investment Products Analyst, Kitco

India is now the world's biggest gold consuming nation. Its share of global gold demand is about 1-1/2 times that of the United States, though its GDP is only 1/20 that of the United States. With its high rate of gold consumption, India accounts for 18% of the annual global gold demand, while its share of global GDP on nominal dollar GDP is only 1.6%.

India is experiencing an 80% growth in gold investment following a loosening of trade and market restrictions. Home to a billion people, gold is more than a traditional store of value; it is an inseparable part of the culture. As India develops an increasingly prosperous middle class, investors are purchasing gold. India's gold consumption rose 57% from a year earlier in the 12 months ended March 31, 2006, on top of a 63% jump in the previous year.

Gold and Indian weddings go together like pasta at Italian weddings. According to India's latest census, more than 47 million girls in the age group of 15 to 29 have yet to tie the knot. Assuming 80% of them do so in the next five years, that's 38 million weddings. At a very modest 10 grams per wedding, or slightly less than one-third of an ounce, that would translate into 76 metric tons of demand a year, enough to buy a fifth of all gold mined in South Africa last year.

The demand side for gold is very revealing. It certainly looks like a "golden era" is starting, just like the one in the 1970s.

Gold investment demand may gain in Europe, where the World Gold Council plans to start selling gold-backed securities.

ETFs linked to the price of the metal that now trade in New York, London, Singapore, Mexico and France have already attracted a combined $11 billion in investments since the first one was introduced in November 2004. The council plans on starting a similar fund in Italy, Germany, Belgium, the Netherlands and India.

Stealth Inflation Pumps Up Gold Gnome's Passion for Gold

By far, the most consistent factor determining the price of gold has been inflation - as inflation goes up, the price of gold goes up along with it.

Since the end of World War II, the five years in which U.S. inflation was at its highest were 1946, 1974, 1975, 1979, and 1980. During those five years, the average real return on stocks, as measured by the Dow, was -12.33%; the average real return on gold was 130.4%.

We've been warning Gold Gnome readers about the lurking stealth inflation capable of sending our economy into a tailspin.

Today, a number of factors are combining to create the perfect inflationary storm: an extremely stimulating monetary policy, a major tax cut, a long-term decline in the dollar, a long-term rise in oil prices, a mammoth trade deficit, and America's status as the world's biggest debtor nation. Back in 1979, short-term interest rates were 8%, but inflation was 13%. That means cash returned a "real" -5% a year. Gold went from $100 to $800 in no time. At the end of the 1970s, Fed Chairman Paul Volcker drove short-term interest rates through the roof. By 1981, short-term interest rates rose to 15%, and inflation fell back into the single digits, handing investors positive "real" returns. As a result, gold tanked to $300 by 1982.

Gold Stocks Very Profitable and Attractive

In just a short time, options for investing in gold have multiplied. Bullion and gold coins are no longer the only way to invest directly in the yellow metal.

As more investors realize that gold is a great way to profit in today's climate, more fund-makers have been happy to supply the means . . . much like hundreds of new ones born by the bull market in technology (but nothing like the over-valued bubble busters).

Since their advent, demand for the yellow metal has gone up 26%, to 600 tons - about 16% of the total gold demand.

Gold is Back and More Tempting Than Ever

The current high price of gold suggests that the major central banks were unsuccessful in the IMF-sponsored attempts to "demonetize" (politicize) gold. Having survived a concerted political effort to discredit gold, the recent price performance shows that gold is back, big time!

As suggested by the statistical price chart, gold is on a long-term bull trend. It appears that as soon as the price of gold falls below $600 per ounce, demand is triggered, especially from the Chinese and Indian retail markets.

Therefore, gold is poised to rise significantly in 2007 as economic and political reality dawns progressively upon investors.

We see not just inflation, but talk of a run on the dollar affecting the price of gold significantly in 2007.

Should the Democrat-controlled U.S. Congress get "tough" with China, we expect the price of gold to boom if China even hints at diversifying out of U.S. dollars and not entirely into the euro, but also into gold.

In addition, if for whatever reason there is an actual run on the U.S. dollar in 2007, as it passes below the index support level range of 80 to 78, we foresee many investors, even certain central banks, stampeding into gold as a hedge against a dollar default.

One of the biggest money shifters from stocks to gold is a weak U.S. dollar. The greenback, despite recent strength, has fallen 40% in the past four years.

Because all the catalysts for dragging the dollar down or into default are still in place, the greenback is very vulnerable to succumbing to one of the great meltdowns in monetary history.

Gold will then reclaim its place at the center of the global financial system.

Finally, the last gold bull ran from $35 in 1960 to $877 in 1980, a move of 2,329%. After another 20 years, in 2000, the yellow metal hit bottom at $251. If the price per ounce "only" rises half as much as it did in the 1960-1980 period, it would mean that gold is on track to reach the $3,000 mark.

Buy your nuggets now . . . before the herd rushes in.

Get your Gold Gnome Report today!

Market-Beating Success Year After Year

Since launching Gold Gnome.com, we have had a remarkable record of success understanding trends and piggybacking our investment recommendations on them.

In 2006, we saw the same successful pattern with our average recommendation gaining 27%, while the S&P 500 finished +14%.

Our success has nothing to do with luck or a "crystal ball." We just believe in understanding trends, and riding the right ones at the right time - avoiding the imposters along the way - and then acting on our intelligence to know when it's time to step aside.

But it's not that easy for the average investor to accomplish on his or her own. You need to have a source you can rely on.

Unlike most other financial newsletters, with Gold Gnome.com, there is no hype. There are no absurd claims. It's just thoroughly researched, accurate information, reasonable projections and excellent investment advice from some of the best financial minds in the country.

In fact, Gold Gnome.com is more like a white-paper report that major trust companies send to their billionaire clients.

Most investment newsletters providing this type of stock picks typically cost $200 to $800. Some cost well over $1,000.

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Typically, Gold Gnome Report costs just $29.95 for all three hot stocks.

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