This is a copy of a recent letter to a member of my group. Thought others might be interested. Bull

Sanchez, Ultimately, gold's strength is based on people's view of it as a store of value. Therefore if the dollar is falling, then gold will rise. There really is no inverse relationship between the Dow and gold, although historically when people panic out of paper assets, they tend to go into hard assets like gold and silver.

Kimber is a different story. Kimber is a miner, or rather a potential miner, and should continue to do well regardless of what the Dow does. Why? Even though the dollar is temporarily strong right now, it must weaken. The laws of supply and demand will eventually overwhelm any attempts by the government to overrule them. By this I mean that eventually the massive increases in the money supply will have to weaken the dollar. You cannot keep creating more of something without cheapening it, especially if that something requires no resources or effort to create.

As the dollar starts and then continues to weaken, gold will rise. The advantage we have over the great majority of the population right now is that most of them have no idea that this is happening. They do not understand supply and demand. They do not understand the idea that America cannot just keep using up resources and printing money without short or long term consequences.

We do understand this, I hope, and this gives us an advantage. Kimber will rise quickly, in my view, once the great majority start to understand what is really going on. Most people think the Dow dip is just that a temporary dip in the markets and that everything will return to normal soon. They could not be more wrong. Still they don't understand this yet and are holding on to a false hope that things will pan out "for the best." Things will indeed pan out for the best, but unfortunately for most people, the best is the dollar going to zero and gold going to the moon.

Eventually the great majority of people out there will start to understand that the market is not going to recover for a long, long time and that gold is the only reliable way to store their wealth. When this happens, the gold market will take off in earnest and the gold miners will take of as well. I believe, agreeing with James Dines, that the ensuing boom will rival or even exceed the internet boom in magnitude.

For those waiting for the markets to come back... I would like to remind them that Japan's Nikkei average was at 34,000 in 1989. It is at 7,000 today, 20 years later. Those who bought stocks in Japan "for the long run" failed to realize just how long the long run can be.

There are no investments for the long run. Everything requires constant monitoring and study. Change in inherent in all aspects of life, and to achieve wealth or wisdom, one must be constantly able and willing to change plans and expectations. In other words, there are no buy and hold investments. Only buy and watch very, very carefully. This involves work. If one does not want to work, then one will be poor. This is as it should be. Don't you think?

In any event: Two things can happen with the Dow now. The increase of the money supply could drive people into it and cause a massive run-up. This will only happen as the money supply increases and therefore will also be good for gold and gold miners. A second possibility is that the Dow will continue to fall and people will look for other investments like gold and commodities and this will be good for gold and miners. I can't tell you which of these scenarios will happen. I have no idea. I like to focus on parts of the equation that I can be more certain of, like the increase in the value of gold in terms of dollars.

What you and I need to focus on here is not stock values either involving the Dow or KBX. What we need to focus on is money supply. Obama is a very enthusiastic guy, but he doesn't have the slightest idea what he is up against. He is a career politician. He knows how to get elected, but he's never really run a business or been through a significant crisis. He's in big trouble, as is his entire team. I feel badly for all of them. What they are doing will not work. What we are doing, however, will work. This is all that is important.

One last thing. The strength in the dollar right now is illusory. This affects Kimber directly also, because Kimber is ultimately priced in Canadian dollars. The dollar cannot continue strengthening for reasons outlined above. Something to keep in mind about the dollar is that it has two roles right now. The first is its role as money a means of exchange. With all the "Printing" going on, i.e. the increasing in the money supply, it seems that the dollar should be collapsing in value. It is not yet. I believe this is because the dollar has another important role, that is that it acts as the world's reserve currency.

The best way to think of this is to understand that the entire world is no longer on a gold standard as it was throughout most of human history. It is temporarily on a dollar standard. In the old days, people could cash out their currency from whatever country they were doing business in and convert it to gold, then take that gold to another country and use that to buy the second country's currency. Today after the Bretton-Woods accords in 1944, the US Dollar serves that purpose. It is the de facto reserve currency for the world. In other words, people need to "get into" dollars in order to do a lot of international transactions. This gives the US dollar a second role. It acts like an admission ticket to get into an amusement park. If people want to play the Big Money Game. They need a ticket to get in, and that ticket, for now, is still the dollar.

Therefore, the more people that want to play, due to the laws of supply and demand, the more the apparent value of the dollar will rise. So the grand illusion that we are seeing now involving the dollar's strength is in fact a true punishment for what was wrought involving Bretton-Woods. We are blind to what is happening. We cannot tell whether al the people getting into the dollar are getting in because they love it or hate it. They are not buying it because they want to, but because they have to. When this type of situation occurs. It can be nothing but bad for the dollar, because there is no quality control.

You know as well as I do that when people are forced to buy something, the quality of that something will go down, because there is no incentive to improve it or worries about competition. This is what has been happening to the dollar since 1944. And just like GM, the U.S. is about to hit the skids because of it. The U.S. Dollar IS the stock certificate of the United States Incorporated. And it is a piece of crap.

You are going to be glad you met me in another few years. Not only will you be very wealthy, but you will know why you are wealthy. This is what is important: Knowledge. I appreciate your patience involving everything. It would be nice if things went straight up and down, but this just does not happen. All things will play out as they must, however. Of this we can be certain. Bull