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The schizophrenic dollar, and U.S. bloc''s gold reserves likely exhausted
4:16p ET Friday, May 20, 2005
Dear Friend of GATA and Gold:
GATA isn't in the investment advice business and the
commentary that follows is investment advice to a
large extent, but it also shows how the gold market
is manipulated even without the intervention of the
central banks, and so it is relevant to GATA's work.
If you want to take some encouragement from it for
investment purposes, that's your business. GATA sure
won't object.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Adviser Soapbox: Gold Stock Resurrection
By Jack Adamo
Forbes Magazine Online
Thursday, May 19, 2005
http://www.forbes.com/investmentnewsletters/2005/05/19/cz_ja_0519soapb
ox_inl.html?partner=yahootix&referrer=
Since backing down from the $460 level late last year and closing
lately in the $420 range, gold prices are making gold investors
nervous. Under pressure are the miners.
Taking a look at a chart of gold bellwether Newmont Mining, you'll
notice a high in December, and a series of declining tops falling
sharply through May. In addition, the daily price has fallen below
the 50-day moving average and the 50-day has just broken below the
200-day. Market technicians will tell you that's a bad sign. The
bullion chart looks no better.
But wait a minute. That's last year's chart! Gee, it looks just like
the current one. Maybe a look at what has happened since last year's
plunge will give us a hint about what lies ahead.
Seven months after the depths of the 2004 drop, the price of bullion
soared from $375 per ounce to a new multi-decade high of $460. It has
since pulled back to $419, but that's still firmly above last year's
low, keeping the gold bull market intact.
During the third quarter of last year, when it became clear that the
dollar had nowhere to go but down, every hedge fund this side of the
Cayman Islands got on the same side of the trade; they were short on
the dollar and long gold. That drove the price of gold up too far,
too fast. Whenever you have a situation like that, there has to be a
correction. Despite the roller coaster ride, gold is 12% higher than
this time last year.
With gold, there's always a battle between professional and
commercial traders whose business interests are affected by the price
of gold. The real Insiders are the commercials. They control gold
flow. They feed the fire in rallies, selling into the updraft; then
they short-sell the metal when prices are high. By doing this they
lock in profits and panic the outsiders. When enough suckers are
scared out of the market, the commercials start building their
positions again at lower prices. That's what I see happening now.
The Insider indicators I watch to judge the short-term trend of gold
are now moving back in the right direction. Following them has been
very lucrative in recent years. Hence, I'm recommending selected gold
shares again.
But my fondness for gold isn't based on only short-term indicators.
Even though the Federal Reserve Board has been gradually raising
interest rates, it has, at the same time, been goosing the money
supply, negating the effect. In the decade prior to 2000, money
supply growth (M-3) had approximately equaled gross domestic product
growth. Since 2000, the growth rate of M-3 has been double the rate
of GDP growth. Cheap money means expensive gold sooner or later. I
don't see the Fed tightening M-3. There is too much governmental and
private debt out there to try to pay off with tight money.
Incidentally, when China finally widens the band in which it allows
the yuan to trade against the greenback, gold should have a nice pop.
That should come this year.
Some of the gold stocks have done a round trip this year. High energy
costs hurt most, and the weak dollar drove up expenses for U.S.
miners operating overseas. Conversely, South African miners were hurt
by revenue in weaker currencies being translated back into the strong
rand. The companies that are doing best are American- and Canadian-
based firms whose operations are mostly in the Americas.
Meridian Gold is my favorite gold stock. Important new finds in Chile
are assaying high grades of gold and silver. Moreover, Meridian
finished closing its hedge positions in silver this quarter and
should be getting the full benefit of the increase in silver prices.
In the past, Meridian had hedged its silver output at below-market
prices. The company also has new projects coming on line in Nevada,
Mexico and Nicaragua. The stalled, but the very promising Esquel
project in Argentina is like a free long-term warrant. If
environmental obstacles are overcome, the stock should take a nice
jump.
Other promising stocks in the group are Goldcorp, Barrick Gold, Royal
Gold, and to a lesser extent, Glamis Gold. Although I own both
AngloGold Ashanti and Newmont Mining, I think they'll rise less
rapidly than the others mentioned due to currency and operational
problems, respectively. Speculative asset plays like Randgold and DRD
Gold are too risky for most investors, but I do own some Randgold for
the long term.
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.usagold.com/amk/usagoldmarketupdate.html
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com
Subscription sites:
http://www.lemetropolecafe.com/
http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
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Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
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