"Gold is now preparing for its next major move ... to new record highs ... and ultimately, to at least $2,300 an ounce," forecasts resource specialist Larry Edelson.

The editor of Real Wealth suggests, "My view is that investors should listen to gold and what it's telling you. I have absolutely no doubt in my mind, whatsoever, that the next phase of Bernanke and Washington's plan to devalue the dollar is now in motion ... I consider it absolutely essential that your portfolio is invested in core gold positions."

This post was written by Minyanville contributor Lance Lewis.

Just after the close yesterday, Newmont Mining (NYSE: NEM) guided up 2009 production and guided 2009 cash costs lower. NEM also announced that it would be purchasing the remaining interest in its majority owned Boddington Mine from Anglogold Ashanti (NYSE: AU) (which equates to 6.6 mln reserve ounces). That's an increase of 8 percent in NEM's Proven & Probable (P&P) reserves at a price tag of $1.2 bln, which will be raised via an equity offering of 19 mln shares.

Based on NEM's 441 mln shares outstanding, we're looking at dilution of just over 4 percent. Thus, in theory, the deal is not even dilutive, given the 8 percent increase in P&P reserves that the company is acquiring with only a 4 percent dilution in equity. Based on what I have seen so far, this looks like a spectacular deal for NEM.

Minyanville contributor Lance Lewis dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

Professor Lewis,

Interesting times, eh what? Is gold being sold -- as the dollar trips down beneath 106 yen -- to raise cash?

For example, was the hedge fund world heavily invested enough there to make gold vulnerable as the ill effects of Lehman work themselves through the system?

Also, any current thoughts about Golden Star Resources Ltd. (NYSE: GSS), Yamana Gold Inc. (NYSE: AUY), Kinross Gold Corporation (NYSE: KGC), and the NYSE gold ETF (NYSE: GLD)?

Cheers,
Minyan Bill

MB,

I think you are just seeing gold (and gold stocks) flag a bit here.

Now that we have a deal from Congress, I expect everything is likely going to melt up, but gold and gold equities should rally more (and even make new highs) given the inflationary nature of this deal. Meanwhile, the rally in stocks is likely to just be a bear market rally. This $700 bln will keep the financial system functioning, but it's not a cure-all. It's also going to further cement the stagflationary forces that are pressing in from all sides. That's good for gold but not good for much else.

As for the dollar, I'm not sure we'll see new lows because the G7 will no doubt try and support it, but we could see the DXY move back to its July lows potentially after this bill has passed.

As for thoughts on GSS, KGC, AUY, and GLD, I like them all at these prices.

Prof. Lewis

The chief strategist of CLSA, a brokerage owned by Credit Lyonnais, made a bold prediction heard in gold markets around the world.

On Tuesday in Hong Kong Christopher Wood said gold prices could surpass $3,400 an ounce in the next three years. The analyst said that the precious metal would be a safe haven for investors seeking cover from volatility in financial markets.

Quadruple in three years may be optimistic, but to be sure, prices are on the rise. Since 2005, gold has recorded a 60% gain, to $721 where it was on mid-day trading on the New York Mercantile Exchange on Wednesday.

MOST NOTEWORTHY: Today's most noteworthy downgrades included Armor Holdings, Inc (AH), Alcan Inc (AL), Advance Auto Parts, Inc (AAP) and Reuters Group PLC (RTRSY):

• Armor Holdings Inc (NYSE: AH) was downgraded to Neutral from Overweight at JP Morgan based on the news that the company will be sold to BAE Systems PLC (BAESY) for $88 a share in cash. The firm expects the deal to close with no higher offers. Bear Stearns cut Armor Holdings to Peer Perform from Outperform and Friedman Billings cut shares of the vehicle armorer to Market Perform from Outperform.

• Alcan Inc (NYSE: AL) was cut to Neutral from Buy at Bank of America and DA Davidson following the Alcoa (AA) bid.

• Baird cut Advance Auto Parts (NYSE: AAP) to Neutral from Outperform following CEO Michael Coppola's resignation. Kevin Dann downgraded Advance to Hold from Buy to reflect an increased level of uncertainty following Mr. Coppola's departure.

• Lehman Brothers downgraded Reuters Group (NASDAQ: RTRSY) to Equal Weight from Overweight pending further information on the Thompson Corp (TOC) bid; Credit Suisse cut shares to Neutral from Outperform and Deutsche Bank cut shares to Hold from Buy.

OTHER DOWNGRADES:

• Matrix downgraded UST Inc (NYSE: UST) to Sell from Hold.

• Needham cut Entegris, Inc (NASDAQ: ENTG) to Hold from Buy.

• UBS downgraded shares of Golden Star Resources (AMEX: GSS) to Reduce from Neutral.

• Wachovia cut Rowan Cos (NYSE: RDC) to Market Perform from Outperform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Resources expert Larry Edelson has just completed a six week tour of Asia; from his final stop in Dubai, he writes, "Gold is being gobbled up like it's going out of style."

The editor of Real Wealth notes, "In my 30 years in the gold market I have never seen the volume of gold trading and the lust for the precious yellow metal like I saw in Dubai." Here's his latest buys in the sector.

He explains, "The major fundamental forces behind high gold prices haven't changed. The U.S. dollar is very weak in the knees and inflation is rampant, despite what the government's numbers say."

He notes that the U.S. dollar continues to lose value against other major currencies. He points to both private and public debt problems as the root cause, along with troubles in the real estate sector and "political infighting" that is maaking foreign investors "think twice" about putting their money in the U.S.

He forecasts that the dollar's decline will continue, which in turn, will push up inflation. He notes, "All you have to do is look at your monthly bills and regular purchases."

To protect against inflation, he believes the best strategy is to invest in gold. And in this sector, he offers two new mining recommendations.