By Brad Zigler

real-time Monetary Inflation (per annum): 8.5%

There's a little bit of tarnish on silver now. Silver spent the first five months of 2009 building strength against gold. The gold/silver ratio, which started the year at 80-to-1, slumped to a 61 multiple at the beginning of June. It's been rebounding since then and now has breached its former breakout level at 68x.

I’m not so much interested in the return on my money as I am the return of my capital." (Will Rogers)

In this extraordinary environment, preserving your personal wealth becomes priority one. Before you make another major financial decision, it is imperative to understand the big picture by recognizing and understanding three critical issues. First, we are in a secular bear market for financial assets (stocks and bonds). Second, the consequences of the global bailouts will likely be highly inflationary. Third, we are at a pivotal point in the long-term investment cycle.

Unemployment Graphical Analysis
While there are many ways to gauge unemployment, a great parameter to look at was brought up by David Rosenberg in a piece published over at The Big Picture (click for larger view):

Number of Unemployed per Number of Job Openings

I can back this up.

Gold: China has requested that a new global currency be discussed at next week's Group of Eight meeting in Italy. The news sent the dollar into a downward spiral and the price of gold rallied above $940, confirming its status as a currency hedge. The dollar has strengthened slightly today resulting in a small drop off in the gold price to $926.70. China has been pushing this agenda for some time now and while the dollar is unlikely to lose its reserve currency status anytime soon – uncertainty regarding the international monetary system should result in gold remaining in strong demand.

Silver: Silver has reacted to today's dollar strength as well, dropping to £13.31.

Energies traded lower today once again. Our only exposure with clients is long natural gas via October call spreads. We will continue to hold, thinking the market will turn higher soon. It will take a close back above the 50 day moving average to turn the trend up: August at $4.06.

The US dollar was lower with all currencies benefiting. Our favorite play is long the Loonie, stops below today’s low .8576. Option play buy the September 85/90 call spread.

The first reason is obviously valuation - I mean this is the stock market after all. It recently acquired Silverstone, increasing previous guidance of 14m/oz to 18m/oz. The company will then reach 25m oz in 2010, 29m/oz in 2011 and 33m/oz by 2012.

Our two main topics today are silver and oil. Silver is a precious metal, but much more. It is in almost every electronic piece of equipment produced in the world. Oil is in everything produced in the world, period. Energy, without it, you would need a horse walking in a circle. I have called crude oil the trade of the year. We may be facing a soft period ahead for a week or two, but who cares?

The Gold Report recently caught up with newsletter writer and analyst Lawrence Roulston of Resource Opportunities, who's been travelling to learn more about the state of mining worldwide. In this exclusive interview, Roulston provides his thoughts on the outlook for the economy and what factors impact gold and other metal markets. "As the Western world gets back on track," says Roulston, "commodity prices will continue higher."

The Gold Report: Lawrence, you have just returned from trips to Dubai, Hong Kong and Europe. What does the rest of the world think of the health of the U.S. and European economies?

As of this posting time, August crude oil’s daily range is $4.48 range, $4,480 per contract. No thank you, not for me! If the US dollar does manage to rally from here expect to see oil setback to $62/64. The 50 day moving average comes in at $63.66. Natural gas is lower by 2.5% trading to its lowest level since 6/4. We’re still advising clients to buy October $5/6 call spreads. Today’s price is approximately $1900 per.

Wait for the dust to clear before establishing fresh currency exposure. The dollar may rally only because no one thinks it will. In other words, too many feel the dollar is going to collapse, and usually when a trade is so one sided, everyone is wrong.

I am often asked at this time whether it is a good idea to be in the precious metals market during the summer period known as the "Summer Doldrums", in which demand for gold dries up temporarily while farmers in India plant crops and wait for the monsoon rains. When they harvest in the early September, demand for gold picks up again as they are anxious to convert their profits into gold.

After looking at the seasonal effects on gold, one might think it prudent to wait through the summer in hopes of entering the market at lower prices.

Gold
Gold was trading in the mid $930s in Tokyo overnight but buying in Europe this morning took it over the $940 level. With increasing concerns regarding the sustainability of the fabled "green shoots" and whether the recent recovery in equity markets can be sustained, gold will continue to be well supported - especially as the relative merits of the individual major currencies (EUR, USD, JPY and GBP) look increasingly like an ugly sister competition. Gold is currently trading at $942.2/£570/€671.

Silver
Silver also dipped overnight to $13.96 but proved to be made of hardier stuff in late morning trading and has pushed upwards to be currently trading at $14.10/ £8.53/€10.04.

As the Federal Reserve continues to print money, the “hyperinflation trade” seems to be a crowded one.

Gold: Gold regained a lot of ground Thursday, breaking through $940. News from the Federal Reserve, that they are to keep interest rates at record lows put the dollar under pressure and it gave up some of its recent gains. If the dollar remains under pressure, which is almost certain given the Federal Reserve’s continuing cheap money policies, then the outlook for gold remains bullish. Many investors internationally will look to move some of their wealth into the safe haven asset to hedge against inflation. Gold is currently trading at $943/€672/£573.

Silver: Silver also rebounded with a healthy kick Thursday and moved through $14 and is currently trading at $14.18/€10.10/£8.63

Natural gas runs higher on the close to trade above the 50 day moving average; $4.06 in August. Buy the October $5/6 call spreads and sit for the next 60 days. We’ve been preaching this trade all week …did anyone get involved? No exposure currently in crude with clients because we cannot figure out a short-term direction - a break below $67 or above $72 should determine the next leg.

If the dollar closes below 80.00 in September, all international currencies should move higher. We will be exploring that in more detail in our weekly commentary next week. We advised clients to take their July 93.00 Swiss franc calls off at 44 points today, a bit short of our objective of 60 but we did not want to deal with time decay over the weekend.

Let's face it: The dollar's in bad shape right now, and it's not clear when a rebound might be in the cards. But for John Rubino, the greenback's current troubles are no surprise: He and colleague James Turk predicted this would happen back in 2004's eerily prescient "The Collapse of the Dollar, and How to Profit From It."

A Wall Street veteran and longtime financial commentator, Rubino has written three other books, including his latest "Clean Money: Picking Winners in the Green-Tech Boom" (Wiley, December 2008). He now writes for CFA magazine and edits the popular blog/news sites Dollar Collapse and Green Stock Investing.

The actions of the Federal Reserve are coming into question, justifiably so. Inflation/deflation at this point it is semantics…the bottom line is that commodities should be in your portfolio.

A correction in crude oil comes into question as today it bid higher for the third day running; use $67 as support $72 as resistance in August. Get long natural gas, buy the October $5/6 call spread. Risk the premium, which is approximately $2,300, and your max profit is $7,700 ($10,000-premium paid if held til’ expiration which is 9/29 if the futures price is above $6.) Great risk/reward dynamic.

click to enlarge

Above we highlight our trading range charts of gold, silver, platinum, and palladium. The green shading represents between 2 standard deviations above and below the commodity's 50-day moving average. As shown, all four of these precious metals are currently trading right in the middle of their trading ranges.

Gold: Gold is trading at $933.50 and remains subdued overall. Near term resistance and support are currently $944 and $913 respectively. Direction may be poised to come from EUR/USD moves and the EUR/USD is maintaining equilibrium despite a positive world economic outlook from the OECD.

This positive news is paired against continuing geo-political risk and negative USD comments overnight from a senior Chinese official.

FOMC leaves the rates unchanged but it appears they have removed deflation from their comments; does that mean it will be replaced with inflation in coming meetings? [Minutes]

Treasury market is still trying to digest the Fed meeting - when the market figures it out we will delve back in. Stand aside on the long end but continue to sell rallies on the short end; puts in the March 10′ Euro-dollar or short futures.