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 Dear Investor, On Wednesday the World Gold Council confirmed what I've been saying for months — in every corner of the globe, demand for gold is incredibly strong. There are myriad reasons — jewelry purchases, inflation hedge, and geopolitical fears are just a few. Let's look at the numbers. In the first half of this year:
Reduced output from mines in South Africa and Indonesia, along with declining Central Bank sales were the key factors in lower supply levels. So the numbers from the first half of the year are impressive. But will this trend continue? I believe the answer is definitively yes. The forces that led to this increased demand show no sign of letting up. Economies in China and India are still incredibly strong. India's GDP jumped 8.5% in the past fiscal year. Jewelry sales were up nearly the same amount. As Asians continue to gain economic ground, they will likely run out and buy symbols of their new found status — gold jewelry, among other things. It's not just the large Asian powerhouses that are seeing increases in demand. Vietnam saw increases of 50%, Turkey reported a 36% rise in gold jewelry demand, while demand in Saudi Arabia climbed 12%. But there are a few other important reasons that I am confident gold will continue to rise — inflation and geopolitics. Despite the lower Consumer Price Index number reported in the United States this week, gold soared to $410 an ounce, its highest level in four months. What does that tell you? Gold is a leading indicator of inflation, not lagging. The rise in gold prices despite a recent downtick in CPI is signaling inflation should heat up soon, making gold an even more important store of wealth. Current events, terrorism, war, and other geopolitics also point to higher gold prices. During uncertain or downright scary times, investors rush into gold as a safe haven. Unfortunately, things don't appear to be getting any better in the world at this time. In fact, they're getting worse. Iraq is a mess. Our intelligence agencies continue to uncover new terror threats. Iran is reportedly working on a nuclear bomb. The Pakistani-Indian situation is still unstable, and more. And not from nothing, but the price of oil is also soaring! As long as these types of situations dominate the headlines, gold should remain extremely attractive to those of us who are concerned about world events. I've laid out the fundamental reasons why gold should head higher. Now, I've asked analyst Marc Lichtenfeld to examine the charts — a true measure of supply and demand in the markets. --------------
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 Gold hit $410.40 on Thursday, a four month high. You can see that gold is making higher highs and higher lows, a sign of strength. That means whenever gold retraces, buyers are stepping in at higher prices and the sellers are waiting for new highs before they take profits. It won't be a straight line higher for gold. But both the charts and the fundamentals driving gold are clearly very BULLISH! Larry, I know that you look at charts too. What's your forecast? Thanks, Marc. All my work shows that $500 gold is quite possible — by the end of this year! Next year, I expect you'll see at least $550 gold, then, even higher! But I have to tell you, I like the action in the gold shares even better than I do in gold bullion. For instance, my cyclical projection models are now showing a long-term target for Goldcorp of over $26 a share. That's more than a double from its current price of $12.85. Other gold shares show even more potential for gains. Holey moley, I love this market. It reminds me of the stock market bull in the late 1990's. The gold market is now in a "buy the dips" mode. Weakness should be bought, in gold bullion and in gold shares. That's the approach we're taking in Real Wealth, and I believe it's going to serve our subscribers well. Virtually all natural resources are exhibiting the same bullish patterns as gold. Price dips ... followed by rallies. CLASSIC bull market behavior. Plus, one of the most important forces in the gold and natural resource boom is back — big time! Foreign direct investment in China jumped 15% in the first seven months of this year, to over $38 billion. Moreover, "Contracted investment" — a sign of future investment — soared 40 percent to $82.7 billion. On top of that, employment in China's urban areas increased by 552,000 to 109 million in the first half of this year. The average worker in China's private sector earned 7,446 yuan ($900) in the past six months, a 9.6 percent increase over the first half of 2003. Why do I bring this up? Simple: As I've pointed out in Real Wealth, the pundits on Wall Street have it all wrong. They said China would crash when Beijing started to slam its brakes on hot sectors such as steel, mining, real estate, construction, and more. I said "no way." I was there in Beijing ... I met with the Chinese Banking Regulatory Commission. I had the inside scoop. All China was attempting to do was weed out overinvestment and get rid of excess. The Chinese economy would slow, but not crash. That's exactly what it did in May, June and July. But now, the Chinese economy is set to pick up steam again. Along with the rest of Asia, including India — this is a force that will drive gold and natural resources higher for years to come. Real Wealth subscribers — stay tuned to your issues ... any flash alerts I send you ... and your complimentary dispatch I'm sending to you every week. The balance of this year is going to be one heck of an exciting market. Most of the positions in your portfolio are starting to surge again. Hold them all! To your health and wealth, Best wishes, Larry Edelson Editor, the Real Wealth Report P.S. Your free website for Real Wealth is now up and running! Please visit www.LarryEdelson.com and see our daily commentary, daily Q&A, charts & tools, and much more! Real Wealth subscribers, look for an email from me today with your personal username and password. You'll be able to read the August issue of Real Wealth days before you receive it in the mail! --------------
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