Mining strike raises concern about South Africa''s image

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Friday, July 25, 2003

Dear Gold Community Members,

Here is, in my and Kenny Adams' opinion, the skinny.

Hang on to your hats, gang.

We are on the threshold of a damned big up move in both
gold and silver.

The general equities are not the hot hand any longer.
Therefore, in my opinion, even on your worst precious
metal dog or con-racket junior, shut down on the selling.
You will, I believe, get better prices.

Here's what Kenny has to say:

* * *

Gold and silver are both making patterns that are
normally the prepatory patterns for massive runs
up when in a rising bull and leaving a flat chop (or
down) when in a bear and leaving an extended
flat chop. In this case, we are in the bull.

What it means technically:

Technical patterns can be expected to frequently
move up at near 90-degree angles and then have
narrow, sideways, and especially (inside day)
corrections lasting only three to five days, followed
by further spikes up -- over and over again, until
reaching major upside projections.

Such patterns create a major psychological
pressure to take profits at each corrective point.
However, the corrections seldom fall even to
minimum expectations -- nor for the minimum
expected length of time -- thereby forcing the trader
to have to chase the (apparently premature)
resumption of the bull, and frequently having to
buy in above the point where the last offsets were
taken.

The catch is whether underlying fundamentals will
sustain current indications as they have in the past
and with precedent.

If precedent is followed, we are on the edge of a
massive, massive rise in the value of gold and,
possibly even more so, silver.

If precedent is not followed, its potential path will
be two-fold:

Either it will be terminated by intervention by way
of decree, and the imposition of government into
markets, as was the case with silver 20 years ago
-- and some 48 years before that, with Roosevelt's
confiscation of gold -- or it will experience a move
even greater than precedent implies.

It will not likely trade only to a match of the late '60s,
and again in the '70s and '80s.

If this bull phase is to be greater than precedent,
then in its unfolding one should be mindful that had
any government ever been thought of as trustworthy,
there would have been no need for a Constitution
and a Bill of Rights and their specific definition of the
proper distance between the state and the individual.
One need look no further than to any government's
issuance of fiat (paper money backed by promises
that are indistinct) money, in order to determine the
exact degree of respect that government has for
its citizens.

If this is the edge of and the beginning of a massive
rise in precious metals, then this is possibly the edge
of and the beginning of a massive drop in the equity
markets (relative to purchasing power) if not in their
face value as well. (This would obviously indicate a
dollar falling faster than the face value of the equity
markets.

Equities: The equity indexes have still not given a
signal to verify a change in trend to an intermediate
bear, and we are in the eighth week of the exhaustion
signal -- which sets a record for each week beyond
six weeks of an exhaustion signal without a verification
of trend reversal. However, there has not been
substantial price appreciation since the exhaustion
signal, which continues to serve its intended task very
well, being no advantage to the long side.

However , the very near-term current internals in the
equity futures strongly indicate that the minor rally to
yesterday's high (tail up/close down) will be the final
rally, prior to a roll into further corrective action.

If this is a final rally, I would expect the verification
signal of trend change to occur shortly.

* * *

JIM SINCLAIR