one man's view of the us ecomomy.....

.....The Real Wealth Report, from Larry Edelson.

Morning all,
This makes for an interesting read.
Enjoy the weekend,
Carl

Dispatch Date: September 24, 2004

Dear Subscriber,

Here's what the esteemed Federal Reserve had to say about the U.S. economy this week:

-- Inflation is at a very moderate 2.5%, according to the CPI data.

-- Inflationary pressures and expectations have eased, despite the rise in energy costs.

-- The economy is "gaining traction."

Now, here's what the markets are telling you:

* Gold is pressing up against 14-year highs.

* The Philadelphia Gold & Silver Index (XAU), a basket of the best mining shares, is up over 4% in a week!

* Oil is approaching 24-year highs!

* Stocks are starting to get hit hard!

So, which picture is the correct one? The Federal Reserve's? Or the market's, which is comprised of hundreds of millions of investors, ranging from those who invest $50 per month to the mammoth institutions and savvy investors like George Soros and Warren Buffet who control billions of dollars?

I always listen to the markets. I take all of my clues from them. The only thing that matters is price action.

The markets are making it perfectly clear that ...

** The dollar is becoming worth less and less; hence the continued strength in gold.

** Inflation is here to stay, and likely to increase sharply in the months ahead.

** Energy prices are heading much higher. Heck, even news of the release of some oil supplies from the Strategic Petroleum Reserves failed to push the price of oil into negative territory yesterday.

** The economy is struggling, probably headed for another sharp decline (witness all the earnings warnings recently, from the likes of Coke ... Colgate Palmolive ... Texas Instruments, and dozens more).

I'm heading to Asia next Friday, October 1. As you all know, I consider Asia, especially China and India, ground zero of the natural resources boom that's going to last for years.

I'll be hitting Shanghai, Bangkok, and Bombay among other great Asian cities. I'll be meeting with top brass at key natural resource companies ... important government officials in China and Thailand ... and even visiting the Bombay Bullion Association, where some of the largest physical gold trade in the world is transacted.

Stay tuned ... I'll be sending you important dispatches, alerts, and in-the-trenches analysis from the front lines ...

Best wishes,

Larry Edelson
Editor, Real Wealth Report