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0920 EDT Tuesday April 18 2006

Good Morning: A creeping complacency has been evolving since 911 among those who choose ignore the wake-up call warnings and the increasing threats and storm clouds that seem to gathering around the current unfolding Nuclear standoff. The Gold market is not ignoring the warnings and just as we predicted many months ago: It's deja vu all over again as the increasing anxiety and tension Worldwide is now driving Precious and Base Metals extremely sharply higher just as occurred in 1979 and 1980, the last time we had to deal with this crisis.

The unfortunate facts of life are: It is no longer business as usual anymore and never will be, for the rest of our lives. The Nuclear Genie is out of the bottle and can never be put back and it is only a matter of time before there is a another Nuclear arms race amongst the second tier nations that have just newly acquired such weapons or are close to and within a decade or two, it will be third world nations all the way down to your local terror training camp that will be trying to get their hands on this stuff, so they can exercise their right to Nuclear protest.

We have used the same analogy to describe how Gold's days as a cheap and unloved metal are over and that this is not going to be your father's bull market in stocks over the previous 2 decades and neither will Gold and Silver remain dormant. Just as those who choose to view future markets like those past, the next 20 years are going to be drastically different for all markets, and complacency will not be the 'Master of the Game'. It is going to require pro-active hedging and asset protection, because we simply cannot contemplate how bad things might get, but there are going to be market moving events that could make everything else we've seen throughout history appear obsolete.

To quote Jim Rogers from his recent interview with Peter Shiff of Euro Pacific Capital Inc: "In the final analysis, there are growing shortages in commodities and the shortages are only getting worse". That pretty much defines the future as we know it, as far as the eye can see... And, according to Jim, he sees, as we do, an average length commodity bull market that could extend anywhere from 2018 through 2022.

Having first published our report: The World is running out of Gold several years ago. For a long time, we were kind of scratching our heads trying to figure out why Gold and Silver were not responding to the growing shortages that have only recently, finally started to become a major factor behind the recent stunning price rises. Even though it was fairly obvious that a supply demand deficit of some 1,000 tons or so was already evident, it seemed that somehow the difference was made up through Central Bank sales and other factors and the price may have been artificially depressed by others. But that has now clearly changed, inspired in part by the fact that Oil has since risen by seven fold, borrowing from Gold's own past behavior of rising by a factor of 7 fold, twice during the 1970's, that culminated in a 20 fold rise overall.

Now, with Gold's ratio versus Oil hitting extremes along with the Gold-Silver ratio, we are seeing an unfolding rally of truly enormous power develop, as Gold begins to play massive catchup after decades of inactivity and as we have recently reported, the measured moves off of these 25 year bases could be nothing short of staggering, especially as these shortages begin to seriously bite, as we believe they are just starting to exhibit today as the multitudinal confluences of inflation, world tension, nuclear fears, currency debasing and now rampantly growing shortages all conspire to drive Gold, Silver, Copper and other metals sharply higher. But this time it's really going to be different, very, very different. There are no longer the deep South African mine's unlimited reserves and potential: Slowly but surely, these and many of the World's foremost producing mines are being mined out and risk of some extreme shortages in the coming years cannot be ruled out.

Incredibly, following our exceptionally bullish forecasts on Oil several weeks ago, saw Crude touch $70.88 overnight. We warned how the Oil producing nations were near maxxed out and now we discover that even the once mighty OPEC cannot even meet its own quotas of 28 Million Barrels per day, because one quarter of Nigeria's crude production is shut in due to internal strife and militia activity in that country.

Russia apparently is also having trouble meeting demand along with others and even the so called good news of a 2 Million inventory build in Crude announced over the past, week was quickly overwhelmed as prices shot higher, within just cents of making new contract highs. In fact, the technical situation is such with a weekly new contract high close, that new all time highs in Crude Oil may not be that far away, so that with all the drama of the past few days out of the Middle East, we are once again near boiling point in many of these markets and that magic 85 Million barrel per day worldwide demand for Oil has already been reached and the oil producers cannot deliver sufficient supplies.

It would be wise to heed Jim Roger's warnings. He's been forewarning us for years now in his book 'Hot Commodities' and he's been right...
Investors who do not own copious amounts of Gold today, preferably through proven resource mining issues, will in all likelihood not only live to deeply regret not restructuring their portfolios to significantly include precious metals exposure, they may be risking their very future.

Trade Well
From the Desk of Savant

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