Future Headline: Gold up $100 Today as U.S. Dollar Crashes

Profit Confidential, the popular stock market e-letter predicts gold bullion could rise over $100 a day when the third phase of the gold bull market sets in.

According to Profit Confidential, "the popular media is slowly starting to pick up the gold bull market story. Investors are getting interested, the smart money is buying in, but gold is still only in the second phase of its bull market. Once the third and most speculative stage sets in, we will see big single-day price rallies in the metal."

Writing in Profit Confidential, Michael Lombardi, MBA, says, "So far for October (2010), the majority of the rise in the price of gold can be related to the decline in the price of the greenback compared to a basket of the world's other most popular currencies. If you've looked at a chart of the U.S. dollar lately (against other currencies), it reads like a straight line down."

Gold bullion prices are up $1,000 U.S. per ounce since Lombardi started recommending the metal as a buy back in 2002.

The report says, "By pushing interest rates so low in the summer of 2004, Greenspan not only succeeded in starting the devaluation of the U.S. dollar, but he also unwittingly set the stage for the greatest real estate bubble in American history?a bubble that eventually burst, causing the worst recession since the Great Depression."

Lombardi believes, "To fight the recession, the U.S. government increased debt to record levels, putting more strain on the U.S. dollar. Gold has many 'thirsts' that fuel its rise. One being a falling U.S. dollar. The second being increasing U.S. national debt, because a currency backed by a lot of debt is a currency in trouble. Both thirsts are being fed to gold right now."

Several years ago, two senior analysts at Lombardi Financial wrote a report on how they believed former Fed Chairman Alan Greenspan had a secret plan to reduce interest rates to bring the value of the U.S. dollar down to help American exporters. Lombardi's realization was that, as the U.S. dollar fell in value, the 70% of world countries that use the greenback as their reserve currency would get squeezed and would look to abandon the U.S. dollar as a reserve currency. Their only alternative: gold.

Lombardi continued in Profit Confidential on Friday, "The Dow Jones rallies big-time yesterday, gets close to breaking past 11,000 again, and the media is all over it (but no big deal for readers of PROFIT CONFIDENTIAL, because I've been telling you all year that the bear market rally that started in March 2009 was still intact), but, in reality, the rallying stock prices are just an illusion.

Why?

If we look at a chart of the Dow Jones Industrial Average, yesterday, with the index rallying just short of 11,000, the Dow Jones was trading at about the same level at which it traded in the year 2000. Ten years later; stocks are the same price level. And economists say that Japan had a lost decade!"

According to the article that appeared in Profit Confidential last week, Lombardi believes, "It's been a busy decade for the U.S. in that we had a dot-com crash in 2000, a real estate boom that peaked in 2005, a hard real estate bust that started in 2007, and a credit crisis that developed in 2008, but, for stocks in general, it really has been a lost decade. The poor fellow that bought a straight index fund or plain-Jane equity mutual fund in 2000 is no better off today with that investment than he was 10 years ago. In fact, he is worse off, because of fund management fees.

Is it any wonder that the great majority of retail investors have missed the bear market rally that started last spring? They just don't trust stocks anymore."


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Profit Confidential is Lombardi Publishing Corporation's free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com