-- Posted Wednesday, 15 March 2006 | Digg This Article
Gold continues to show clear evidence of a major bull market.
And extreme volatility both up & down are the hall marks of a strong & robust bull market. But no matter how far the price pendulum swings south gold just rebounds that much quicker higher.
Now look well at the gold graph above.
As the graph illustrates gold just cannot be held down. And this is evidence of a very strong price momentum in play that continues to advance ever higher & higher still.
Gold is definitely showing tremendous strength as the price action is so much like a lion being caught in a net. As the net is drawn tighter the lion just fights that much stronger to break through. And make no mistake that the lion will break through the net.
Dr. Clive Roffey comments on gold’s volatile price action this past week.
“What a week!!”
“A gold share sell off so typical of the Elliott final collapse wave in a classic a-b-c correction.” “The fundamentals remain rock solid for a large move in the gold price based on falling global production combined with sharply rising Far East demand in addition to an increasing distrust of the dollar as an investment currency. Sure the gold market is going to have sharp corrections. It is the nature of the yellow metal to move from buying euphoria into selling stupidity in a matter of days. Traditionally it keeps you hanging on by your finger nails before it changes course. But it does not matter. We are into the big wave III that must go above the tops of wave I in 2002. So that any short term sharp correction is just another superb buying area, not a panic selling one.” - Dr. Clive Roffey ü - click here!
Listen below to what Clive says concerning the recent rise in interest rates.
“The sell off hit all the commodities based on a sudden rise in interest rates in the US that theoretically should strengthen the dollar. I have news for you. Technically, interest rates in the US will certainly rise but the bullish effect on the dollar will be negligible. Rising interest rates implies falling bond and equity markets as well as inflation. But the problem will arise in terms of Japanese and Chinese investment in bonds. Will they be happy to see their US investment capital eroded??” ü - click here!
Excellent point there Doc. Let’s repeat what the good doctor just stated so we can drive home its relevance.
“Will they (Asia) be happy to see their US investment capital eroded??”
And to sum up Dr. Roffey’s predictions concerning the gold price read below.
“This remains a major BULL Market in gold stocks and corrections such as last week are ideal buying areas for traders and investors alike.” “The current gold price correction is a weak reaction as the second low has failed to move under the first low. This implies a strong forward move after this correction has ended.” “…I expect to see further upside potential going forward.” ü - click here!
Ever heard of C.S. Lewis?
“…being in love doesn’t last. I don’t think it was ever intended to. I think it’s a sort of explosion that starts up the engine; it’s the pie crust, not the pie. The real thing, I understand, is something far deeper – something you can live on.” C.S. Lewis
Right on Mr. Lewis!
Let me bring up an issue here that needs to be addressed concerning gold & silver stocks.
As the great & venerable Doug Casey says over & over we do not invest when we purchase a precious metals stock…we speculate. Doug reminds those who will listen that these are not the types of “investments” that we purchase & hold onto until retirement. And this is not just because we are dealing with an extremely volatile sector either.
The very nature of this business is such that all mining companies are dealing with non renewable products. Once any type of mineral discovery is made then it is only a matter of time before that mineral is exhausted & new mineral deposits else where must be found & the entire process of exploration, discovery & development must be repeated. And for the mining company to be continually successful over the years this process must be repeated for the life of the company.
Now, all that being said let me repeat another verbiage that Doug Casey repeats over & over with a great deal of enthusiasm.
Doug Casey - “We get paid well for risking our capital.”
Basically, what Doug is saying here is that you can (& many people do) get quite rich from “speculating” in gold & silver stocks. And my personal take on “investing” is that in today’s changing & volatile world I do not believe you can really consider the purchase of any company’s share any longer as an “investment.”
If you purchase shares in BellSouth, the automobile companies, AT&T, Microsoft, Winn Dixie, Xerox, Lucent, Apple, banking stocks, you name the industry or sector – ALL business is rapidly changing today! In this 21st century our world is very speedily evolving & so are the dynamics of wealth & prosperity.
Whatever you purchase on Wall Street you better not be buying with the intent of forgetting about the purchase with the expectation that when you are ready to retire your investment will have been quietly growing over the long years. If you do not pay attention to what you buy on a daily or weekly basis you might just open your portfolio statement one day to find the company you “invested” in no longer even exists.
Now all that being said let us say here with a great deal of enthusiasm that the very nature of volatility is that wise investors taking advantage of that volatility can become very rich. Yes, you can become incredibly broke or incredibly rich. Rich preferably, but broke for those lacking common sense & discipline.
Things are continuing to look very interesting concerning Iran’s nuclear weapons program.
“Cheney Warns of 'Consequences' for Iran on Nuclear Issue” “Vice President Dick Cheney declared Tuesday that the United Nations Security Council would "impose meaningful consequences" on Iran if it proceeded with uranium enrichment activities…” "For our part, the United States is keeping ALL OPTIONS ON THE TABLE in addressing the irresponsible conduct of the regime," he said of Iran.” “WE WILL NOT ALLOW IRAN TO HAVE A NUCLEAR WEAPON."
ü - click here!
To which Iran replied with the following statement below.
“Iran's President Warns West Will Suffer” “Iran's hard-line president on Thursday warned the West will suffer more than his country if it tries to stop Tehran's nuclear ambitions…”
ü - click here!
And then Israel responded with the following threats below.
“Former Israeli armed forces chief Moshe Yaalon said Thursday that Israel has the capacity to strike Iran and delay its nuclear program by several years, Israel TV reported.” “Yaalon told the Hudson Institute, a Washington think tank, a single assault would not be enough, and Israel was not limited to an air attack, a possible reference to submarine-fired missiles.” ü - click here!
And what is our response to these statements?
It is obvious that as we enter further into this 21st century that a great deal of posturing is going on between all the world powers. And as this posturing intensifies & becomes eventually “action” gold will only strengthen as the worlds growing preferred currency.
And after commenting on these facts I can only state the following below.
Today I wore short pants for the first time this year…just the second week into March & the temp today is expected to reach the low 80s. Don’t you wish you lived in the Deep South? We don’t even know what a rough winter is anymore as the winters every year appear to be getting warmer. Is there something to global warming after all?
“RIO Tinto has given the jittery mining sector a confidence boost, saying current market conditions may result in a longer period of above-average commodity prices than ever seen before.” “Rio's chairman, Paul Skinner, said in the group's 2005 annual report, released yesterday, that the company was continuing to experience strong short-term demand for its metals and minerals.” "Overall, we expect supply-demand balances to remain tight in 2006 with prices continuing to track above the long-term trend." ü - click here!
Let’s get back to C.S. Lewis below.
“I think you can be madly in love with someone you would be sick of after ten weeks: and I’m pretty sure you can be bound heart and soul to someone about whom you don’t at that moment feel excited, any more than you feel excited about yourself.” C.S. Lewis
The following below is an interesting email comment from a reader concerning where to invest your money in this market.
“Where do you go with the proceeds? That's a big problem. There's nothing else out there that I want to buy . . .unless you're talking about some very risky yet unproven junior exploration companies. And even these that have anything going have already doubled or tripled???”
TH
That is the million dollar question & my reply is the simple fact that in every type of market there are always still those companies that appreciate in share value. And the secret of course is determining which of these shares will appreciate.
Peter Grandich - “The U.S. trade deficit hit another record in January amid increasing political jitters in Congress over rising imports from China and America’s increasing reliance on foreign capital.” ü - click here!
And why are above average returns in the gold sector more important than ever for investors?
“Analyst: Better pay can't keep up with inflation” “Are America's workers getting ahead?” “…James Parrott, chief economist for the Fiscal Policy Institute, a labor and foundation-backed group in New York, said, "The gains for workers are significantly lagging earlier periods and the wage gains haven't yet moved into positive territory." “Inflation rose 4 percent from January 2004 to January 2005, Parrott said, while wages rose by only 3.3 percent, preventing many from keeping up with inflation.” "That's a point that I'm concerned about," Chao said.” ü - click here!
The following bit of info below is very interesting to consider.
"Currently, given the rising gold price, the gold mining industry does not seem to be enjoying anything that resembles resurgence as it once did in the early eighties, a period that led to the discovery of several new gold deposits. Instead we are hearing of a shortage of new projects, of declining production…” Le Metropole, Professor von Braun
And of course what the text above suggests is further evidence to the fact that the world’s resources are being used up much faster than we really want to admit. And of course this will only result in higher gold prices still.
The following below is an astute comment from a reader concerning China.
Hi David,
"The Detroit Free Press reported last week that US automakers are pushing to have the Chinese Yuan revalued to match underlying market fundamentals. Chinese government policy has been to peg the Yuan against a basket of Western currencies, of which the US Dollar is by far the most important. Should the political pressure from Washington continue to mount, the result could be a rapid devaluation of the Yuan against the US currency. The result for Chinese investors having primarily Yuan-based assets is that the Chinese currency could lose up to 70% of its value relatively quickly. Naturally, the Chinese investment community will make every effort to slow a revaluation push by Washington. However, should the Chinese change their current policies due to political and economic factors, one important result could be a shift toward hard asset investments such as gold."
Vernon Helvey
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