[P600]Precious Metals And Stones

? About $350 billion U.S. is to be spent
expanding the distribution and generation of
electricity in China.

? About $175 billion U.S. is to be spent
improving railroad infrastructure in China.

Spending over $500 billion in five years will
take a heap of metals. You need iron ore, zinc,
nickel, molybdenum, copper, lead and many other
metals and rare earths for this kind of building.
You need mining equipment and transportation
equipment. Thus, demand for base metals will
remain very strong.

It is obvious to even the densest observer that
China must go abroad to get these minerals, and
that is exactly what they have done and will
continue to do; targeting assets in Africa and
Latin America. When 2010 passes, the projects
will only be about 25% completed. We continue to
believe that China, India and others will be
building out their infrastructure for decades to
come.

By the way, this half of a trillion U.S. dollars
does not include the growth and infrastructure
demand from India, South East Asia, Eastern
Europe, Russia, Latin America and the developed
world; so total global demand for metals will be
much higher.

All I can say is, WOW!

INFLATION

We have been saying it for a long time, but the
mass media is now starting to get it. Please read
this very well written op-ed article from the New
York Post.

HEY BABY, INFLATION'S UGLY
By: John Crudele
July 19, 2007--YOU and I know how bad inflation
really is.

We know every time we fill up our cars, go to the
supermarket, pay a tuition bill or need to see a
doctor.

In fact, even when we want to deceive ourselves
it's difficult because inflation is such an in-
our-face part of everyday life.

It's almost like when your best friend gives
birth to an ugly baby.

You lie and tell her that the kid is beautiful,
hoping that some day he will be. But the parents
aren't blind, and they know the kid isn't going
to be supporting the family by modeling anytime
soon.

Washington has been telling us for years that we
have model inflation - it's a beautiful thing to
behold especially if you don't consider food and
energy costs.

And if you look at housing in a certain light you
can ignore the huge run up in prices over the
years that are now only partially being reserved.

And computers - ah, those marvelous machines -
may go up tremendously in price but can actually
cause inflation to retreat because of a novel
theory.

I'm going to spend some time over the next few
weeks writing about inflation and explaining how
Washington - in cahoots with academics who mean
well and a media that doesn't know any better -
has made the government's calculations of price
statistics resemble a Vegas magician's act.

Wave a stick and price increases are there one
minute, and gone the next.

The government yesterday announced relatively
benign consumer price increases for June - up 0.2
percent whether you count food and energy costs
or not.

You might not have noticed it at the store, but
Washington thinks there was a big drop in
clothing prices. That meant prices were just 2.7
percent higher than last year at this time -
which would be a big no-sweat if people actually
believed it.

In a bit I'll show you some of the ways
Washington makes inflation disappear and why we
should care.

But first, let me introduce you to some of the
supporting players.

First, there's the Federal Reserve whose job it
is to closely monitor inflation because big
changes in prices in either direction will play a
major role in whether borrowing costs should go
up or down.

Right now the Fed says it is still worried about
inflation even though - at just a 2.7 percent
annual rise - you'd think Chairman Ben Bernanke
and his guys would have moved on to more pressing
issues.

But there's a reason.

Bernanke's worried about inflation because he
understands the real numbers - not the ones being
dished out to the public. When he was Fed
chairman in the 1990s Alan Greenspan kept harping
on his fear of inflation, much to the
bewilderment of everyone including me.

The dilemma - or conundrum, as he called it - was
that Greenspan wasn't talking about price
inflation as you and I know it.

Some of us caught on early, others didn't
understand until the chairman himself explained
that it was asset inflation - meaning the rising
stock market - which had him worried.

And in 2000 his worries proved valid.

Today's Fed says it is worried about "inflation"
but - as when Greenspan was in charge - there is
probably something else going on.

Most likely, Bernanke is really concerned about
the value of the U.S. dollar in relation to the
rest of the world.

And he's using inflation-talk to keep from
lowering interest rates in this country or,
almost as important, to keep people from
expecting rate cuts.

With the economy slowing here, an interest-rate
cut would normally be in order.

But Bernanke is hamstrung by the dollar's
weakness and the strength of economies around the
world. Focusing on inflation is an easy -
although not-too-credible - way to snuff out the
debate on interest rate cuts.

Another participant in the inflation game is the
U.S. Department of Labor, which is the keeper of
the inflation statistics.

Every few years the department comes up with a
new theory that invariably cause inflation to
lessen.

Each tick down in the inflation means a tick up
in the economic growth that politicians can tout
on the campaign trail.

The housing market and Wall Street, two other key
players, would love an interest-rate cut.

But as I've explained in other columns, the U.S.
would cause more problems than it would solve by
reducing borrowing costs unilaterally.

Despite too many problems to go over again here,
investors are having their annual summer romance
with stocks and the Dow Jones industrials could
easily hit the 15,000-level by September.

But inflation is a funny thing. Like the ugly
baby, you can deny its existence even as it is
goo-gooing you in the face. But eventually the
truth will come out.

Over the next few weeks I'll show the ways
inflation is being disguised.


Remember, oil, base metals, precious metals,
foreign companies and foreign currencies can all
be good protection from U.S. inflation. This is
one reason why our clients have owned them, and
continue to own them.
Thanks for listening.

At Guild Investment Management, we are finding
opportunities, and we believe our themes are in
sync with what is happening in the global markets.
If you are interested in hiring Guild to manage
your portfolio, please contact us.


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Article Source : Silver Gemstone