-- Posted Friday, 1 October 2004 | Digg This Article
And how did gold do for the week?
Can you say the word “wow”?!!! Gold had been continuing to move at a snail’s pace, but then it decided to surprise us this past week. Just a short while ago the “Master” (Bill Buckler) said the following about gold’s slow, slow crawl:
“As you have probably noticed, almost everything on the financial markets has been "on hold" since the end of August…” “The attitude is that if they can't be scared out of Gold, we'll bore them to death.” Bill Buckler, The Privateer, 9-17-2004
Well, are we bored with this past week’s gold price action? Don’t think so. And if you have not up to this point been taking gold seriously you better begin to do so now for the sake of your financial future & well being.
The ole’ “trends” they are a’ changin’!
“Crude oil rose above $50 a barrel to a record in New York…” Boomberg, 9-28-2004
And while the oil prices reach new highs it appears the housing bubble may be reaching its peak also.
”Is the Housing Boom Over?”
”Home prices have gone up for so long that people think they'll never come down. But the fundamentals tell a different story—a scary one.” Shawn Tully, Fortune, September, 2004
When the “crash” occurred in 2,000 the Fed began creating new money to inflate the economy & all this money has been bloating the housing industry for the past four years.
“For years the debate has been raging: Is it a bubble or isn't it? Two years ago FORTUNE looked at the housing market and saw reasons to be concerned (see Is Real Estate Next?). While home prices nationally were only 5% to 10% overvalued, we said, some frothy markets, mainly on the coasts, were more than 20% above historical norms. Our conclusion: While the trends were worrisome, "for the nation as a whole, no housing bubble exists ... we're not there yet." Shawn Tully, Fortune, September, 2004
“Two years later it looks like "there" is finally here.”
Did you catch the last part of the above text?
“…it looks like "there" is finally here.”
“The housing market is rapidly losing touch with reality. Fueled by interest rates that have remained near record lows, prices have continued to soar, and the gap between home values and the underlying fundamentals such as personal income and job growth is greater than ever.” Shawn Tully, Fortune, September, 2004
But now the lower interest rates are rising & home market values are over priced. And much of this inflated home equity has already been taken out by the home owner & spent.
“The most alarming development, though, is the change in psychology. "The market isn't acting rationally," says Christopher Thornberg, an economist at UCLA. "It's now an emotion-driven market where people are buying on the expectation of future appreciation." Increasingly Americans view houses not primarily as places to live but as foolproof, can't-lose investments. The passionate faith that money poured into real estate will magically multiply is creating a self-fulfilling speculative frenzy that's bound to end badly.” Shawn Tully, Fortune, September, 2004
And what will the home owner do who has tapped out the equity in his inflated home’s value & next begins to watch the value of his or her home go DOWN dramatically if & when the housing bubble pops?
The point to absorb here is that whether you are becoming complacent & “bored out of your gord” our world is undergoing harsh changes even as we read these words. Inaction & complacency on your part will not act to slow the coming economic storms.
Any of you out there have kids?
I stepped outside the back door this last week & I immediately noticed the woods at the edge of the back yard violently shaking. A tall tree was dramatically bowed down & I knew that a child had to be involved. Sure enough as I glanced higher up in the tree there was my little boy hanging about 12 feet off the ground.
Not wanting to embarrass him & take away any opportunity he thought he might have to handle the situation I calmly hollered out “Are you OK?” Well, there was quiet for just a few seconds as my son continued to dangle from 12 feet up in that tree.
After a brief period to swallow his pride he calmly blurted out, “Dad! Can you give me a hand?”
I positioned myself under the tree & told him to let go as I prepared to catch him in his fall. A crisis & broken bones were averted, but we pretended that hanging precipitously 12 feet from the ground high in a tree was an every day occurrence. And I guess it is when you have kids.
Family life at home sure beats any excitement traveling the world over.
And we continue to talk about China’s growing demand for gold & other metals & natural resources. Is this a fact or merely “talk?”
BEIJING, Sept. 27 (Xinhuanet) – “China Minmetals Corp. had entered exclusive talks to acquire Canadian copper and zinc miner Noranda Inc., both sides announced Friday.”
“The deal, mostly in cash, is estimated to cost the Chinese company more than US$4.7 billion. If signed, it would mark China's largest single overseas investment in the mining sector.”
“Its move is part of China's efforts to satisfy its soaring demand for metals, which has fed a year-on-year economy growth of 9.6 percent in the second quarter this year.” http://news.xinhuanet.com/english/2004-09/27/content_2028615.htm
And what further proof is coming out of China pointing to a stronger gold demand there?
Recent events change mining forever
DENVER--(Mineweb.com) “An expert in Chinese metallurgical projects told a Denver audience Monday that the events of the past 10 days in China "have been very, very important" for the mining sector.”
“Virginia Kamsky, Chairman and CEO of Kamsky Associates told analysts, institutional fund managers, and mining company executives attending the Denver Gold Forum that the clarification of the role of Chinese leadership, the appointment of a geologist as second in command of the nation, and a major restructuring of mining regulations are just a few indications that –
"we are on the verge of a really interesting and dynamic period."
“China's number two leader Premier Wen Jiabao, who is head of China's Cabinet, is a geologist who worked for a provincial geological bureau and the then-Ministry of Geology and Natural Resources. Wen serves as the top official in charge of all metallurgical projects in China…”
“…the climate for investment in the gold sector will continue to improve…”
Dorothy Kosich, Mineweb.com, 9-28-2004
According to the info we just read above China is serious enough about expanding the gold market by electing a gold mining professional & geologist to the second highest political office in the country. That info definitely has long term very positive consequences for a higher & stronger gold market.
And what other positive gold news is coming out of China?
“Without waiting for Beijing's approval, banks in Guangzhou and several other mainland cities have begun retailing gold bars to investors eager to seek alternatives to China's relatively low interest rate returns and battered stock markets.”
“Mainland retail investors, who have long held gold in special esteem, have responded by flocking to banks in such numbers that one of them had to keep its doors open after office hours.”
“According to the Guangzhou-based Yangcheng Evening News, the city's residents flocked to buy the precious metal after local branches of China Merchants Bank set up counters to sell gold bars to individuals a week ago.”
“At one bank, the queue of would-be buyers was so long that the bank was forced to extend its opening hours.” Olivia Chung, thestandard.com, 9-30-2004
Now keep in mind that the text you just read above is taken from a Chinese news site & did not originate in the “west.” And are you beginning to get a big picture why we believe the long term fundamentals for gold are increasing exponentially?
And China alone with its growing gold market & growing demand is reason enough to begin investing in gold & silver stocks.
Ever hear of a fellow by the name of Jesse Livermore?
The greatest & most successful stock speculator of all time & definitely someone worth listening to. And what were some of Jesses’ good words of advice that is worth repeating today?
“He was a trend follower. He was only interested in following the trend...” Richard Smitten, Jesse Livermore World’s Greatest Stock Trader, 2001
Did I hear that “trend” word mentioned?
“Go with the flow, bend with the trend…” Richard Smitten, Jesse Livermore World’s Greatest Stock Trader, 2001
I think I just heard that “trend” word used again? What is presently in a long term “trend?” And note the fact that we are beginning to hear that “trend” word referred to in news reports. Read the following Reuters text below & see if you can spot them using that “trend” word.
DENVER, Sept 28 (Reuters) – “The price of gold is likely to extend its three-year upward trend next year, supported by a weakening U.S. dollar and the possible diversification by dollar-laden Asian central banks into bullion, international economist and gold price forecaster Martin Murenbeeld said.”
“Murenbeeld ascribed a 55 percent probability to gold averaging $435 in 2005 and a 30 percent chance of a mean price of $470.” Reuters, 9-28-2004
After current events & the news of the week including gold’s movement higher it amazes me that there are still those sitting on the sidelines debating on whether to invest in gold or not.
Bernard Baruch- “I have heard many men talk intelligently – even brilliantly – about something only to see them proven powerless when it comes to acting on what they believe. If action is delayed until the need is apparent to everyone, it will be too late.” Richard Smitten, Jesse Livermore World’s Greatest Stock Trader, 2001
And can “REAL” money be made in this advancing gold bull?
“The market changed paper into gold & created fortunes beyond anyone’s wildest dreams. The market was where $100 became $1,000, $1,000 became $1 million, & $1 million became $100 million. All the trader had to do was call the moves before they occurred…” Richard Smitten, Jesse Livermore World’s Greatest Stock Trader, 2001
Now is the time to begin your education of gold & silver stocks. Gold Letter reviews gold, silver & other contrarian opportunities including Asia & China.
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"We're seeing the beginning of metals pushing on their own fundamentals," said Paul McLeod, a precious metals vice president at Commerzbank Securities.” Reuters, 9-30-2004
David N. Vaughn
Gold Letter, Inc.
David4054@charter.net
Gold Letter Website
October 1, 2004
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-- Posted Friday, 1 October 2004 | Digg This Article
