Silver Soared 99% in Past 12 months, Gold Jumped 49%

From time to time a profit chart is so remarkable as to need little or no comment. The one year chart for gold at right and silver below certainly fall into the "remarkable" category today showing 49% and 99% profits for gold and silver respectively.

Of all the investments you could have made a year ago, putting your money into precious metals is quite likely to have provided the greatest returns and the least risk of any investment sector.

Clearly, the time has come again to own precious metals! Best of all, it's not too late to get in on the profits.

Radical Change in Investor Sentiment Drives both Gold and Silver Markets
In preparing this month�s Austin Report, we felt compelled to tell you briefly why we believe the financial world, as we know it, is in the midst of a radical change unlike any we�ve seen in the past 30 years.

We�ll explain how we believe this sea change will effect the value of every single investment you own. We will show you what is driving this bull market.

And we will conclude with a simple recommendation on how you can participate in what is clearly the bull market of a lifetime for precious metals!

Gold/Silver Hit Multi-Decade Highs
In April, records tumbled as gold raced to a new 25 year peak, platinum hit a record high and silver spiked to its highest point in more than 25 years.

Commodities are hot! Precious metals are hotter. The long-running bull market in gold, silver, and platinum has regained momentum this spring. The latest buying is coming from three key areas.

MUTUAL FUNDS BUYING GOLD � Metals traders report that mutual fund managers are pumping money into the market and riding the wave up ahead of the end of the quarter. These short-term spurts help the mutual funds to cover up their lackluster performance in stocks by rewarding their clients with gold, silver, and commodity gains.

DEFENSIVE GOLD BUYERS � Reports out of Washington on rising inflation continue to reinforce the need to own gold and silver. Precious metals have historically provided the only real, lasting hedge against inflation. As the buying power of the U.S. Dollar is eaten away by inflation, investors use precious metals to offset losses.

NEW INDIVIDUAL GOLD INVESTORS � We at the Austin Report are convinced that the biggest wave of individual investors moving into the gold and silver markets is yet to come. (continued on page two)

Yes, individuals are, and have been, stashing away gold and silver. But since the first of the year, we are repeatedly seeing larger and larger first time purchases by new clients entering the gold/silver market. Where two years ago, it was common to see $5,000 opening purchases, lately we're seeing more clients buying $50,000 to $100,000 on first orders.

The confluence of these three trends in an already hot gold market combined to push gold over the $600 benchmark. Every time gold crosses a huge resistance level like $300, $400, $500, and now $600 gold, the number of people piling on the gold bandwagon seems to increase exponentially.

Having crossed $600, we predict the gold price will simply explode
through the next resistance levels.

That means we may be looking at weeks with $25 to $50 gains for gold. We can�t guarantee it, but we feel the rush coming. If you need more persuasion than the remarkable run-up for precious metals, we recommend reading this entire Austin Report. We'll explain fully why we feel that the key driving forces for gold and silver are not to be stopped.

We'll also tell you why the worldwide trend of investing in gold, silver, and other precious metals is not nearing an end, but just at the beginning of a bull market that historically lasts from 15 to 20 years.

U.S. Economy is Doing Fine� But is it Really?
Everything has appeared pretty rosy for the U.S. economy in 2006, until the bad news starting leaking out of Washington. Individually, it hasn�t caused a panic, but when you put all the numbers together and mix in a little common sense� then wow! In short, things to us look a lot, lot worse than we are led to believe.

Here are the economic and political problems we see coming to a head in 2006. These are problems that every American family faces until our government decides to decisively change the direction of this country.

1. MASSIVE GOVERNMENT DEBT � In March, Congress was in stealth mode as it quietly raised the U.S. Federal Debt limit to cover the $8.2 Trillion Dollars we already owe and allow for borrowing on the massive budget deficit that the Bush Administration is accumulating this year.

Recently the "AARP Bulletin" explained the problem with debt so simply that no one can miss the point. �Every baby born today in American today comes into the world owing $156,000 of debt.� That�s what newborns will owe in Federal debt alone.

Those babies' parents and grandparents are tacking on an additional $2.5 Billion Dollars of borrowing every day. The government must borrow so it can continue to spend more money than it takes in. We borrow more to pay the interest on the debt we never pay down. Amazingly, each and every day, the U.S. government must entice foreign savers to loan us an additional $2.5 Billion Dollars to keep up with the massive wave of spending.

For every dollar of GDP there are now THREE dollars of debt. We cannot overstate our concerns related to debt. America, not long ago, was the greatest creditor nation. Today, we are the greatest debtor nation on Earth. In absolute numbers, the Federal Debt amassed under the Bush administration is larger than the debt accumulated by all former Presidents. This is a trend that we cannot afford to continue.

2. GROWING TRADE DEFICIT � But it's not just government spending that's creating a monetary crisis worldwide. Consumers continue their shopping binge buying foreign goods and charging them to their credit cards. As a result, the trade deficit has simply exploded into a worldwide problem. We're buying stuff and sending foreigners paper U.S. Dollars.

As those foreign dollars pile up in Saudi Arabia, India, Korea, Japan, Venezuela, and communist China the risk of a major decline in the U.S. Dollar looms on the horizon. One morning, one of those countries may wake up and decide they don't want to hold U.S. Treasury notes any longer. Even if one country decides to sell all their U.S. Dollars at once, then look out! That�s when the dominoes start to fall and the risk of a collapse of the U.S. currency is the greatest.

What could trigger such an unexpected event as a Dollar collapse? Events are already leading the Dollar down a path of destruction. The tripling of the cost of a barrel of oil means we now must print and send out three times as many paper dollars to the Middle East and South American oil exporters. The moment they get tired of looking at huge, growing piles of I.O.U.'s in the form of paper U.S. Dollars, we could all be in big trouble.

Even if we are lucky enough to dodge a sudden and sharp crash of the U.S. Dollar, the massive creation of paper money will slowly and surely destroy the U.S. Dollar over time. Sadly, every paper currency in history has failed given enough time. The destruction of the Dollar began in 1971 when President Nixon removed the Dollar from the Gold Standard. Since then, the Federal Reserve has been slowly, but surely, inflating away the value of our paper money.

3. INFLATION � Inflation is more destructive to the economic stability of our country than any terrorists. When the government amasses huge debt and attempts to pay off that debt by printing more and more paper money, sooner or later the value of all that paper begins to decline. That's monetary Inflation... a subtle, cruel tax on all Americans.

The inflation problem is especially difficult to quantify. The government lies about inflation all the time. The CPI figures are rigged and anything but truthful. The Clinton administration changed how inflation is measured to keep the government from having to increase cost of living benefits to welfare and Social Security recipients. That's why we hear that U.S. inflation is only 3% to 4%� and why the official numbers are totally inconsistent with our daily experiences. We know the cost of everything from gas at the pump, milk, bread, insurance, and medical care is inflating at two or three times the "official CPI" figures. That's because the CPI no longer includes the cost of food, energy, or housing.

With the price of oil three times what it was a few years ago, inflation must be rippling through the economy at a 6% to 8% rate, maybe higher. Unfortunately, the 49% rise in gold and 99% rise in silver tell us that the worst inflation is still ahead. The government doesn't want you to know what it's up to. In fact, the new Federal Reserve Chairman, Ben Bernanke, decided to simply not report the huge amount of paper money the U.S. is about to create. That's scary!

In fact, the government is planning on printing so much money they surprisingly announced
the Federal Reserve will no longer report the M3 Money Supply.

Mistruths and underreporting are serious issues. When inflation figures are so distorted, it brings into question all government figures. Some economists feel if inflation is under-reported then economic growth must be over-reported. In fact, if inflation is really 5% to 6% as we believe, and the economy growing only at a 4% rate, we may already be in a negative growth period. We used to call that a RECESSION (before the U.S. government stopped having recessions.)

If we really are in a recession, then we should expect to see an economic slowdown in what were the hottest economic sectors� especially in new housing. So let's see if the Fed's interest rate hikes are really slowing things down.

4. U.S. HOUSING ABOUT TO FALL OFF A CLIFF � For a fact, the U.S. economy has been driven year after year by Americans insatiable desire to buy bigger houses, second homes, even third homes. The liberal zero-down mortgages, interest only mortgages, and low interest rates created a huge bubble in housing that may be about to burst.

Since the 2001 recovery began, the housing industry and real estate has accounted for 50% of job creation. When new U.S. home sales slow down, our economy that's based mostly on consumer spending will come to a screeching halt. That�s why we see poor housing reports shocked the stock market. This doesn't bode well for the future.

� The Commerce Department reported February housing starts dropped 7.9%.
� Multifamily construction plunged 30.4% in February.
� Starts fell 23.5% in the U.S. Northeast, biggest drop since May 2001.
� Construction declined 11.2% in the South and 10.4% in the Midwest, but rose 7.9% in the West.

We cannot overly stress how totally dependent the U.S. economy is on home building. If the rise in housing inventory continues and housing starts keep declining, we may face a long, hard recession during a time of rising inflation.

5. GLOBAL ANXIETY � How people abroad feel about the U.S. has a lot to do with why they like to invest here. We hear frequently from people who travel abroad attending high level economic meetings. The one story they are all telling us concerns the growing anxiety and hatred abroad toward America. In Dubai, the United Arab Emirates are furious over losing the ports deal. We can't afford to lose any friends in the Middle East.

Our so-called friends in communist China have pretty well told us to clean up our own financial act before we start telling them how to run their country. Most Arabs hate us, Iran would nuke us tomorrow if they had one. The North Koreans are building nuclear weapons and we can't figure out how stop them. Venezuelan President Hugo Chavez openly declares that Bush is a tyrant and the U.S. government is a menace to the world.

Blame Bush diplomacy, the War in Iraq, or whatever, when people start investing elsewhere in the world and stop loaning us an additional $75 Billion Dollars every month to fund our twin deficits, we will be in big, big trouble.

6. LOSS OF FAITH IN GOV�T LEADERS � Investors at home are also frustrated. Many downright mad at President Bush. 65% no longer support his Iraq War. Only 35% approve of the job he�s doing, that�s worse than President Nixon�s numbers before he resigned in face of the Watergate scandal.

Many fiscal conservative feel betrayed by Bush and the Republican Congress. Spending is clearly out of control in Washington. Iraq is a political quagmire and a financial disaster for all of us.

In just three years, we�ve spent more on the War in Iraq than we did in Vietnam in 13 years!

Sadly, we don�t have the money to waste on Iraq. The money has to be borrowed and the bill given to our grandchildren.

American Returns to the Economy of the 1970's
Wow, to me this all seems somehow very familiar. There was another time when gas prices were soaring, Arabs were mad at us, we were fighting an unpopular war in a hostile country, and Americans lost faith in the President. Oh yeah, it was from the 1970's to 1981 when, coincidentally, gold soared from $35 to $850 and silver topped $50 an ounce.

Things got really bad. We had recessions, interest rates over 19% at times, inflation out of control at 16.8%. We had a U.S. Dollar that the world did not want to own. The world wanted gold and silver, precious metals that have real, tangible lasting value. Fear that we are again headed in the wrong direction has triggering this latest demand for metals.

We can sense it, smell it in the air, and hear it every time the phone rings at Austin Rare Coins & Bullion� people are worried. As their level of concern has risen, the price of silver has tripled and the price of gold has more than doubled. In the past year alone, silver was up a remarkable 99% and gold up over 49%. Before you decide where to leave your money in 2006, consider this. What investments do you own, other than precious metals, that have any chance of producing 49% to 99% returns this year? While past performance is no guarantee that precious metals will maintain those returns, the profits are so remarkable that no one can afford to simply ignore gold and silver any longer.

How Long Will the Bull Market Last?
We must never forget that all markets run in cycles. The 1990's were a lousy time to own gold and silver. But all that changed sometime after 9/11. Here in the 21st Century, precious metals have proven to be most rewarding.

Many of us who research precious metals for a living believe gold is in a Mega-Trend Bull Market tied closely to inflation. The Aden Forecast sees this as a long-term phenomena. "Mega-Trend up-moves generally last about 22 years on average going back to the early 1800's. This coincides with bull markets in tangible assets. Since the current Mega up-move started around 2000, it could continue for another 10 to 15 years, based on these cycles."

This article could easily have filled eight pages with facts and opinions on why the gold and silver markets are so hot today. Rather than take up more time or space, we would like to summarize our current recommendations.

MAY 2006 RECOMMENDATIONS

� Balance and diversify your portfolio with a 10% or larger holding into precious metals.

� Buy gold while it is still trading in the low $600s.

� Lock up a safety deposit box full of silver now.

Anything that�s real, tangible, and offers lasting value is what you want to own during times of high U.S. government debt, the Dollar is at risk, periods of higher inflation, rising interest rates, the economy is slowing down, and when America has a total loss of confidence in our nation�s leaders.

The final word: Buy gold. Buy silver. We firmly believe that you�ll be glad you did this time next year!