Dear Subscribers,

The Federal Reserve voted to leave the Federal Funds rate, the interest that banks charge each other, at 5.25 percent, where it has been since last June, while once again repeating the central concerns about inflation.

This had been the expectation despite the fact that the U.S. economy is exhibiting better-than-expected growth. While the Fed had been expected to start cutting rates later this year, economists are now worried that the central bank may feel the need to resume raising rates for fear that inflation pressures will not keep easing.

The rate action was supported by a unanimous 11-0 vote of the Federal Reserve Open Committee, the panel of Fed board members in Washington and regional bank presidents who meet eight times a year to set interest rates.

At the previous four meetings, Jeffrey Lacker, the president of the Richmond Fed regional bank, had dissented in favor of a further boost in rates. However, he is not a voting member of the FOMC this year.

The action means that banks' prime lending rate, the benchmark for millions of consumer and business loans, will remain unchanged at 8.25 percent.

Gold quickly jumped on this news and is now trading $652.85 per ounce in the spot market, up over $6.

As we've pointed out, the interest rates are just one of the forces driving gold. The fact is that M3 growth, which is no longer being reported by the Fed and has been maligned by many Wall Street Economists as being "irrelevant", is STILL growing at 10%. We don't think of monetary growth as being irrelevant and suggest you don't either, especially when you consider that this is now truly a global economy.

As Fari Hamzei pointed out yesterday on the 21^st Century Alert Radio Show, "The printing presses are not just running around the clock here in the United States, they're running on over time ALL over the world".

Bottom line: This liquidity is the grease that will eventually drive gold past its historic highs.

Best Wishes,

James DiGeorgia

Editor