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The consequences of last weeks political winds of change in Washington are likely to be felt for years to come and the US and the World at large could well end up paying a heavy price, depending on how decisions and events begin to unfold. In all likelihood, a heavy price increase may well be manifested in the price of Gold and if anything like the rhetoric and renewed threats of the past week were actually to become a reality you can pretty much bet on a $1,000 Gold scenario unfolding very soon. Still this does not preclude that a pullback could occur following a recent sharp run-up and this should be greeted with enthusiasm.

One of the best traders of our time has been a strong proponent of what he refers to as "Free Exposure" and another as to patience being rewarded, when assets are transferred from impatient investors at low prices, to patient investors who have the tenacity and forebearance to see things through and ultimately see the valuations they envisage, become reality. Many Gold bulls have awaited their day in the sun for years now and the sun shined brightly on Gold in '06 and is likely to shine even brighter in the years ahead. The writing is on the wall and there are just too many forces coming to bear on Precious Metals in general that should be reflected in sharply higher prices down the road. Although it was not immediately apparent to many at the time, in many respects, a great many stocks and investments in general have represented free exposure over the past few years as the recovery has continued and we've all been enjoying: 'The Best Econonomy Ever'. And Gold and Silver too, have also represented free exposure for those who've been well invested over the same period but the fact that Gold and Silver not only represent a tangible form of insurance policy on a very uncertain future, but also by almost all measures, appear to be extremely undervalued, means that they continue to represent free exposure for investors, because, it is quite possible, if not probable that one day we could wake up to a $1,000 price overnight. Gold Investment More Appealing Alternative Very rich investors have a tendency to be less speculative and more intent on preserving their wealth and for many of these newly minted Billionaires, they are probably eyeing Gold as significant protection for their assets, especially through the new convenience of the ETF's and other available derivatives. And along with them China, Russia and other surplus or oil rich nations are thinking the same, especially in a World where, experience has shown that we have to: "Expect the Unexpected" because its happened before. December 7, 1941 - A day that will live in infamy - The US is surprised by a sudden and deliberate attack by the Empire of Japan. August 02, 1990 - The entire World and the Kuwaitis, are totally suprised by a sudden and deliberate attack by Saddam Hussein. September 11, 2001 - In one of the most dastardly attacks ever. The US is completely surprised by a coordinated terrorist attack. Gold has been rising methodically since then, because the World is beginning to realise, that the frequencey and intensity of such attacks is sadly an inevitable fact of life today and if threats of the past week are carried out, will ultimately have dire consquences. There are myriad of scenarios that could cause Gold and Silver to literally skyrocket overnight and we all know what those are and we outlined many of them in our top ten reasons to own Gold, some time back. These are the fundamental security related reasons why Gold and Silver are poised to move higher, but the political changes of last week, could also cause Gold and Silver to actually begin to accelerate higher and possibly even more dramatically higher, than most investors are prepared for and that is why Gold at even these higher prices could represent free exposure for investors. Remember, we are still $250 away form Gold's all time record of 26 years ago, but one thing is for sure: Once old records are broken, expect dramatic upside accleration at 10 times the Dow's... Raising Minimum Wage - Inflationary? Perhaps one of the most important items on the Democrats agenda could turn out to be one of the first significant new catalysts or driving forces behind any new upward moves in Gold and that is the raising of the minimum wage. A highly inflationary influence. A break in stock prices could also cause Gold to rally as the bull market thus far has been powered by a 24 year bull market in US productivity, that appears to be coming to an end, with the first zero productivity growth number in eons and the largest increase in wages curiously enough, in 24 years. And, just as Moore's Law dictates that processors can actually double their output every 18 months or so and amazingly processors have pretty much proved this theory correct. Have you noticed how this time tested theory appears have run into a little trouble in recent years. Ie: Intel has been unable to maintain this pace of development and has had to modify its chip design to the dual core technologies to improve efficiencies and overcome overheating and other problems that ultra-high speed chips were exhibiting. Could they have a surprise new 5 Gig Chip coming in a Pentium 5 series? Perhaps but there has not been much buzz about that of late and while anything is possible it sure looks like Moore's Law has reached some early limits. Disinflationary Era Ending? What this could mean, is that the disinflationary impact of a 25 year bull market in technological advances could also be coming to an end or pausing to some extent. There's a limit to how low computer prices can go and Dell computer itself is a casualty of trying to sell computers too cheap and being caught by component shortages, memory shortages and rapid price increases and the like. While conventional everyday items from house prices to groceries, or from tootpaste to newspapers, stamps, sporting events and especially energy have all soared over the past 25 years at a rate many times that of Gold, to some extent Gold has been subdued by the disinflation in technology... But, that may be about to end and along with the increasing scacity of resources Worldwide, a new bull market in components may be unfolding and the ability of some of these items to rise exponentially, could in turn become almost hyperinlationary as they would tend to have an unexpectedly large impact on monthly producer and consumer price indices. US Dollar Rallying - Further Breakdown could be Critical The US Dollar has also been notably weak since mid-October and appears set to close 2007 close to its all-time lows. A weaker US Dollar means higher component prices, especially for high tech items from Asia, where the Chinese Yuan is also being forced to revalue higher and the Democrats are likely to continue badgering China to reverse its exploding trade surplus trend, this could also have an unsettling effect on World trade. The US Dollar has had some multi-point declines of 7 - 10 point magnitude since 2002: A 7 to 10 point decline from here in the US Dollar Index could put us somewhere between 78 and 75, creating 10% added inflation. On top of that the tightness in the employment market and the continuing growth Worldwide could create component tightness too. S&P Displaying Classic Topping Formation? Market Indices in general appear vulnerable to a sudden downside breakdown. This week could spell the confirmation or a negation: The S&P could still poised for some further upside, if the topping formation created either side of the election is negated by a surge beyond this formation. In contrast Friday's lows are an important reference point of support in the event of any downside developing. Last week, India's Sensex index topped 13,000 setting new all time record highs along with Mexico and many other World bourses and some of these are starting to look decidedly, if not dangerously overbought and therefore a switch into Gold seems very logical. Trade Well From the Desk of Savant

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