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Gold is falling, coming into New York early Friday morning.  The bears don’t want gold to finish the week strong on a Friday, a usual tactic of theirs.  More of the same rigged paper market – but there is next week to look forward to.

If you wonder where the gold comes from to meet the strong demand from China and the East, be sure and read Chris Powell’s excellent explanation which is found today in Jim Sinclair’s section below.

A friend of mine, who trades in the precious metals markets (against my advice), and who by nature always takes the most negative position on gold (and on everything), sent me the following email.  He draws his conclusions from an article from Insider Wealth Alert by Lombardi.  Lombardi is touting the Dow at 30,000.

Here is what he wrote:

Like I tried to tell you, in 6-12 months the NYSE will be set to move up big time! This may send gold down to fair market value, around $700.

And my reply to him:

Five years ago, according to Shadowstats, the inflation-adjusted price of gold was $6,030.  Obviously, it is much higher today.  What kind of fool would claim gold’s “fair value” was around $700?

Most of the newly mined gold is heading east, to China and India and they are buying all they can get at current prices.  “Fair value” should be $700?  Who would believe such nonsense?  Unfortunately, a lot of people!

The cost to mine an ounce of gold is, reportedly above the current price, so how in the world could gold fall hundreds of dollars below cost?  “Fair value” of $700 is an insult to your intelligence. 

If you think my email will have any effect on my friend’s decision-making process, well it just won’t happen.  In fact, when gold explodes through $1,500 he won’t even remember he made such a ridiculous statement.

Now, I’m waiting for Larry Edelson to release a buy signal for gold.  The latest smash was triggered by Bernanke’s comments that the Fed would consider easing later this year or in 2014.  His comments on Wednesday said the opposite and gold is rising fast.

QE to infinity, as described by Jim Sinclair leads to hyperinflation, gold above $3,500 and the USDX moving below .7000

One last comment on Lombardi’s Dow 30,000 prediction.  If hyperinflation does hit in the summer of 2014, and the dollar loses its “Reserve Currency” status, and half its value, then the Dow 30,000 is the same as Dow 15,000 today.  There is no other way that I can see it happening.  We are far better off with Dow 15,000 than Dow 30,000 and a loaf of bread costing $8, a gallon of gas $8 and gold at $2,500 – $3,500.

Be sure and read Bill Holter’s remarks today.  He hits it out of the park!!!