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With the Dollar hitting an 8 month low as it continues to decline: "The Greenback could be facing a rough road ahead. All of the ingredients that have been causing the Dollar to weaken have, if anything become intensified and we have no national policy that is going to do anything other than weaken the US Dollar over time".

Warren E Buffett - Chairman and CEO - Berkshire Hathaway

0920 EDT Tuesday May 09, 2006

Good Morning: We had been predicting the inevitability of the Dollar's decline for some time and in fact, back in early to mid-April, we wanted to write a special update on the Dollar entitled: "The Beginning of the End of the Dollar", but unfortunately with so much going on we were not able to fit it in, especially since we were reporting on Gold and Silver rising almost daily. Still, we did allude to the sharpening decline in the Dollar, in particular, pointing out that once the downtrend became clearly defined, the last time around, the Greenback had plummeted and that it might do something similar this time too, having already started to break down from higher levels of consolidation. In almost an exact Deja Vu, the Dollar has declined in a veritable freefall as support levels dissipated and only yesterday managed to show some strength of a sustainable rebound from the 84.50 level, after falling from above 90. We did suggest that this level might proffer the last stand for the Dollar, as it tries to re-bound in the formation of a possible right shoulder of a major multi-year reverse head and shoulders formation... The bad news is, if this formation does not take hold or gain traction, then new all time lows look to be the likely destiny for the US unit and that could mean ultimate declines to as low as 75 on the index, equating to sharply lower all time record lows. We had in fact originally forecast that we would see such lower levels later in this Decade, probably bottoming out around 2009 ~ 2010, at a time when we could potentially see Gold prices soar to well over $1,000 per oz or even higher in the event that the US Dollar were to slump into some kind of panic decline perhaps to the mid-60s, 50's, or even at an extreme stretch 45 on the Dollar Index. While such extremes might usher in the mother of all Dollar rallies over much of the next decade, not unlike how the Australian and Canadian Dollars have rebounded super-impressively from their similar abysses. To summarily dismiss the possibility that it will not happen because of the often misguided perception that the once almighty Dollar will remain so forever, it is much better to be prepared for such an eventuality in case it happens and the easiest way to be doing that most probably is through being exposed to undervalued Gold companies with proven in-ground reserves, an aggressive exploration and acquisition agenda, and the potential for significant and production over decades to come as Gold becomes increasingly scarce, as the realization combined with weak currencies that the World really is running out of Gold. Speculation is likely to be rampant by then and as one well known Gold commentator recently stated, "You will not believe how junior Gold issues, that once traded at $0.20 Cents trade at $2 plus and Gold issues today that trade between $1 and $2, will likely be trading up to $20 by then.

Remember, the sheer power of the trend demonstrated so far in 2006 is likely just a hint of what's to come. We've only just begun this rise.

Trade Well
From the Desk of Savant

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