Dispatch Date: December 31, 2004 Dear Subscriber,Scratching the...

Dispatch Date: December 31, 2004

Dear Subscriber,

Scratching the surface — that's how I'd describe the current situation in the bull market in gold. To put it another way: You ain't seen nothin' yet.

I've outlined in the past that gold is one of the only time-tested stores of wealth ... and that the dollar is headed off a cliff, which is very positive for gold.

I'm not going to rehash those points today, other than to say, as I pen this piece, the dollar appears to be headed to close out 2004 at or near new record lows against the euro.


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But here's another force that should drive gold to $500 ... then $600 ... and higher in the years ahead: The enormous buying power of the Chinese.

According to Reuters, on November 19, a Chinese department store sold out its inventory of gold bars with the Chinese new year, the Year of the Rooster, in just hours. After there were no more to be had, 3,000 customers put their orders in for the next delivery.

Gold is becoming increasingly popular in China. The Shanghai Gold Exchange, which opened just two years ago, is on track to trade nearly 50% more gold in 2004 than it did in 2003.

And with China's economy continuing its white hot pace, more Chinese consumers should be flush with cash and will likely pick up more gold jewelry as well as invest in the yellow metal.

But here's the kicker: China's government owns a tremendous amount of dollars, $515 BILLION worth.

As those dollars continue to lose value throughout the world, China could very well increase its gold holdings to the same levels as the European Central Bank.

Should that occur, the Chinese government would buy roughly 4,000 tons of gold — that's nearly 3% of all the gold ever mined! Think that might have an impact on gold prices?!

Near term, I also expect an increase in demand for gold in Asia due to Sunday's horrendous earthquake and tsunamis. In the past, investors tend to rush to gold during periods of calamity. For example, Japanese gold demand jumped nearly 20% in 1995 — the year of the devastating Kobe earthquake.

Finally, I want to wish you and your family a happy and healthy New Year. To make 2005 even sweeter, you should have just cashed out of your shares of Teekay Shipping, chocking up another winner. The recommended sell stop of $42.07 was hit on Monday.

You should have banked up to 14.5% gains on Teekay, in just six months. If you purchased the 300 shares that we recommended, you should have gains of as much as $1,600, less your broker's commissions and fees.

Not a bad way to ring in the New Year.

Best wishes for a healthy and happy New Year,

Larry Edelson
Editor, Real Wealth Report

P.S. The tragedy that has hit Southeast Asia is beyond comprehension. As of this moment, the death toll is 114,000 and almost certain to climb higher. An estimated 5,000,000 people are now homeless. It is one of the worst natural disasters in recorded history.

I have personally made two financial donations to assist: one to the Red Cross, and one to the United Nations Children's Fund.

If you would like to donate, you can do so at the Red Cross http://www.redcross.org On the left side of the Red Cross's home page, go to the "Help Now" section, then click on the "Donate Now" button. Please be sure to earmark the funds under "International Response Fund."

You can also donate through the United Nations Children's Fund at http://www.unicef.org. Click on "Disaster in Asia. Donate Now" in the center of the screen.

Thanking you in advance,

Larry Edelson
Editor, Real Wealth Report


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Larry Edelson's REAL WEALTH REPORT
15430 Endeavour Drive, Jupiter, FL 33478

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