America today has an economy built upon a house of cards. Only a patchwork quilt woven with massive government spending, prevented a recession after 9/11. Now Katrina has struck America, with a vengeance. Only a nuclear terrorist attack could exceed the devastation.

An economy fragile three weeks ago has taken a major �body blow� as Hurricane Katrina struck the Gulf Coast. Victims are still reeling, oil production is off three million barrels a day, more than a million people have been displaced geographically, and 400,000 jobs have disappeared.
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No amount of government spending can quickly repair the lives of the victims or rebuild their homes in a floodplain below sea level. The effects on the economy will be harsh and unrelenting for years to come. As an investor, you must consider the �worst case scenario� should the Katrina crisis take down the house of cards.

Lies and Damned Lies
The failure of government at all levels to respond is creating growing fears among Americans that we are misled, often lied to, and face perilous risk. Despite massive spending after 9/11, the government still cannot save us from a hurricane� and certainly not from the next terrorist attack.

All that kept the U.S. economy afloat after 9/11 were ridiculously low interest rates and a flood of paper dollars into the system. This propped up the stock market, creating massive debt. Now, inflation is a big problem forcing the Feds to raise interest rates. Now, how can the Feds keep the economy afloat and stop inflation?

We�ve spent a fortune in Iraq that�s served as an excuse for Congress and the President to spend even more money to prop up the economy while borrowing ourselves into the poorhouse.

Piling Massive Debt on the Fragile House of Cards
Before Hurricane Katrina, government spending created an illusion that the country is OK. But, any individual, business, or government that builds their foundation on borrowing, borrowing more, and borrowing to pay the interest can only be doomed to failure.

Like a house of cards, the weight at the top, sooner or later, will collapse everything. Today, both the U.S. Dollar and the stock market are suddenly gravely at risk. You simply cannot borrow your way to prosperity. Neither can you expect the rest of the world to loan Americans the money to live extravagantly forever. Foreigners now loan the U.S. Government $1.2 Billion Dollars a day to keep our country going. With Katrina and rising interest rates, they will have to loan us more and more. Will China and Japan maintain their generosity or could they shut down the loans and trigger a short-term dollar squeeze?

After the events of the past three weeks, we hope and pray that our Austin Report readers will be honest with themselves to see how the house of cards can�t go on borrowing and spending forever. There will be a day of reckoning. And when that day comes, you will need to have a vested interest in gold, held privately, to be assured that you can save yourself and your family.

Why Katrina May Change Everything
The American economy was fragile before we ever heard of a Hurricane named Katrina. Historic forces were in place that were already creating fear and doubt among the well informed.

Let�s take a logical look at the facts before and after Katrina.

1. The U.S. economy runs on cheap energy. Before Katrina, it looked like natural gas prices would double before winter and gas at the pump was selling close to $3.00 a gallon. Oil was trading between $60 and $70 dollars a barrel. At that level, the economy was bound to grind to a halt. After Katrina, Venezuela is predicting oil could reach $100 per barrel because of limited reserves. That would translate to over $5.00 a gallon for gas, a potential depression trigger for the U.S. economy.

Hurricane Katrina halted the supply chain of natural gas and oil as over 711 rigs were idled in the Gulf of Mexico. Huge refineries were shut down completely. It will be a month before we realize how much production capacity has been destroyed and how long it will take to bring oil back online. Meanwhile we are using three million barrels of oil a day from the �Strategic Oil Reserves.� This solution to the oil crisis is temporary like putting a Band-Aid on a broken leg.

Conclusion: High energy prices will continue into the foreseeable future. Before long, consumers will drive less, shop less, and spend less. In today�s consumer driven economy, shoppers can stop U.S. economic growth on a dime. And that could spell disaster to the stock market.

2. An unbelievable wave of destruction. Katrina destroyed one of America�s great cities and dislocated a million Americans. More people were geographically displaced in 10 days than were forced to move from the Midwest �Dust Bowl� during the entire decade of the 1930�s and the Great Depression.

An estimated 400,000 Gulf Coast jobs are lost; most employers are gone for some time from New Orleans. People are homeless. Jobless claims will soar to record highs. In our opinion, after the events of 9/11, the U.S. economy is simply too fragile to handle a disruption of such a massive proportion.

Massive spending and a quick recovery for New Orleans are just government promises that offer false hope of a quick solution. The Gov�t spending of money we don�t have will depend on massive borrowing that is sure to take the National Debt to unimaginable highs, pushing the economic house of cards closer to collapse.

3. The psychological impact will hit the economy worse than Katrina�s hurricane force winds. On September 15th, President Bush�s approval ratings hit yet another low. A Wall Street Journal/NBC poll found Bush's approval rating fell to a new low of 40%. We can only compare that to 1973 when President Nixon�s approval rating at the height of the Watergate scandal reached a low of 39%.

Today, consuming confidence is falling. The University of Michigan's preliminary September 2005 consumer confidence index fell from 89.1% to 76.9% in August. Compared to July of 1973, consumer confidence was 77%.

When Americans lose faith in their government, they buy gold and the price can rise quickly. In January of 1973, gold traded at $65 an ounce and closed the year at $122 � for an 87% gain. Over the next five years, gold hit an all-time high of $850 per ounce. People who realized what was happening in early 1973 made gains of 13 fold.

Are these numbers only coincidental or is history about to repeat itself? Is the price of gold on the verge of doubling? Let�s look where we are only three weeks into the Hurricane Katrina disaster.

4. Gold hit a 17-year high on Friday. The President stands in Jackson Square and acts confident about the New Orleans recovery, but the price of gold reflects the reality. When Americans lose confidence in their government, the stock market suffers, the future of bonds becomes unclear, and fear grows of a dreaded collapse of confidence in the U.S. Dollar.

� In a flight to safety, the world�s only dependable currency is gold.

� Without a doubt, the only winner in the worst of times is gold.

� The world�s only star performer in uncertain times are people who own gold.

� In a crisis, the �full faith and confidence of the U.S. Gov�t� to pay its debts becomes doubtful.

� Gold, once again as it has throughout history, will replace fiat paper money as the currency of last resort.

Today�s Recommendations
There has never been a more crucial time to own a balanced and diversified portfolio that includes gold. The natural disaster of Hurricane Katrina could very well become a financial disaster for many Americans. Maybe the economy will be resilient and the foreign influx of loans will continue, but don�t bet your life savings on it.

� If you don't own gold at all, now is the time to take a position before gold closes above the crucial $500 level. Many financial experts recommend a core holding of 10% to 15% of your assets in gold as an insurance policy against loses in other areas of your portfolio.

� If you already own gold, but less than the recommended percentage, consider diversifying into Pre-1933 Gold Coins as recommended by a trusted gold dealer. This area of the gold market typically provides leverage to gold bullion, an advantage that typically increases returns while gold prices are rising.

� For those speculating on gold to maximize returns, you may want to exceed the recommended levels. You can replace speculative stocks or other speculative holdings with gold. You should do this only with money that you can afford to lose. While gold will never become worthless like airline stocks and bonds, there is downside risk to consider.

Gold Could Almost Double in Price
From here, gold could rise significantly, especially if another crisis piles on the house of cards. The past market high for gold is $850 per ounce in 1980. If gold can rise only to that level, you would have an 85% gain from today�s price. Past performance is no guarantee of future returns. You and I both know that no two economic climates are ever exactly the same.

Should You Sell Everything and Buy Gold?
We absolutely do not recommend that anyone overload themselves with gold. Owning too much gold is just the same as having too many risky stocks. Think balance. Seek appropriate diversification for your personal situation.

We do no act as personal investment counselors, but recommend you consider the facts and make up your own mind. Please take into consideration that the world has changed rather dramatically in the past three weeks. Gold prices have already hit 17-year highs and the future of almost every other investment remains in doubt.

We would like to assist you personally in putting away any amount from $5,000 to $100,000 in private and non-reportable gold. Austin Rare Coins & Bullion has served collectors and investors since 1989. We have Gold Specialists on call weekdays and all weekend from 9am until 9pm.

In just a few minutes, we can take your gold order and discuss all the details. The process is simple, easy, and we would be happy to answer all your questions. Our Gold Specialists are on call at 1-800-928-6468 to take your orders and assist you. They are professionals dedicated to serving your needs. Be sure to ask about cash and quantity discounts for the absolute lowest prices on gold.