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How to remonetize the precious metals so that good money might drive out bad
Is gold's gut check over?
By Peter Brimelow
CBS.MarketWatch.com
Tuesday, May 25, 2004
http://cbs.marketwatch.com/news/story.asp?guid=%7B49513082%2D504B%
2D4FA7%2DAB7C%2D91F40D255838%7D&siteid=mktw
The gold geezers have remained grimly determined
through the metal's $50 break -- and now they're even
starting to grin. Slightly.
The gold geezers is my name for the six letter editors
who were around at the time of the great gold blowoff
in 1980 -- and the subsequent decline, which they
generally navigated quite well. I follow them on the
theory that experience counts.
When I last wrote about them they were all basically
bullish, except Elliott Wave Theorist's Robert Prechter.
Gold did spike higher, reaching a multi-year high of $430.
But then it broke.
Richard Russell of Dow Theory Letters summed up like
this on Friday:
"It appears that gold has gone through another 'gut
check,' which is a powerful reaction calculated to
separate all but the most dedicated from their positions."
The gold geezers did not flinch. In fact, they're slightly
more bullish now than they were then. Michael Burke of
Investors Intelligence has increased his gold mutual fund
exposure from 50 percent to 75 percent. (He favors
Fidelity Select Precious Metals Switch Fund.)
This has happened before. The geezers were notably
unshaken when gold broke in early 2003. As it turned
out, they were right.
On the other hand, the geezers remained very calm
when gold reached $400 last fall. And, of course, gold
did fall back.
They're in it for the long haul.
Nevertheless, in March some geezers were showing
short-term stress -- correctly. For example, both James
Dines of the Dines Letter and Harry Schultz of the
International Harry Schultz Letter were concerned about
bullion, and particularly shares.
Not any more. Dines headed his latest gold
pronouncement "OVERSOLD AND OVERDUE FOR A
RISE."
He wrote:
"There have been a number of these scary gold and silver
drops since the major bull market began in 2001, and the
current consolidation has been deep enough that it should
be ending somewhere around these levels. Such declines
are always discouraging, which is why it's difficult to buy
near bottoms, so please keep in mind Dinesism #42
(DITER) in which the very function of declines in a major
bull market is to keep investors out -- until the top. Also
see Dinesisms #28 (DITAKE) and #36 (DIMOTION)."
I don't know exactly what these acronyms mean (although
I'm pretty sure what the "D" stands for). But you get the
point.
Harry Shultz also writes that "the gold correction may be
ending." Both gold shares and bullion, he argues, "are at
mid-2003 support levels."
His currency charts, he says, "imply gold back up to $430,
by which time I hope the chart will indicate the next wave
target. But I'll take at least half profits at $430, as it
will be a triple-top, which usually means a hesitation in
price. Then I'll rebuy after a convincing break above $430.
If/When."
Shultz lists his "personal favorites, based on charts:
Wheaton River, Gammon Lake, and Yamana Resources.
Frankly, there aren't many!"
Dow Theory Letters' Russell also echoes this cautious
optimism. His technical work, he says, "makes me believe
that the gold correction has come to an end, and that the
direction of gold and gold shares will now be to higher
levels."
Monday night, he added: "Gold plodding higher. ... Gold
shares appear to have bottomed too. But it may take
more consolidation, backing-and-filling for gold and the
shares to assume a truly bullish profile."
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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.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.kuik.com/KH/KH.html
(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)
Subscription site:
http://www.lemetropolecafe.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
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11742 Manchester Road
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info@mocoin.com
314-965-9797
1-800-280-9797
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Resource Consultants Inc.
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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
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