-- Posted Thursday, 21 September 2006 | Digg This Article
The title is Latin meaning "You too, Brutus?"
I thought we could also apply it to gold. "Et tu, Gold?" or "You too, Gold?" In the story Julius Caesar has just been assassinated by his close buddies and supposedly these were his last words when he looked up at his closest friend ole’ Brutus and in his last dying breathe whispered,
“You, too, huh?”
The classic betrayal by trusted friends, those we believed in and those whose hearts we shared. That is the way a lot of followers of gold feel today. They are feeling that gold has betrayed them by dropping back below 600 an ounce. Well, as I seek to find the proper words to offer my sympathy and empathy I can only respond in two most appropriate words.
So what.
Anyone out there remember what happens in about 2 month’s time? Yes, the elections. Kind of interesting how the economy seems to straighten up real well always right before a major election, huh? But really I care not a lick why gold has descended recently as it matters not at all as the overall fundamentals have not changed.
700 Gold…Here We Come!
You are worried that gold has gone below 600 an ounce. Whether gold drops to 500 or continues to drop all the way back to 250 it matters not one whit. Why is this? Read the following below.
“Numbers mean nothing…” “He thinks in numbers. But he hasn’t yet arrived at the real answer…” Colleen McCullough, The Grass Crown, Click!
Do not think simply in terms of numbers or the actual present price of gold at the moment. Gold’s price, whatever it may be, at any given time really counts for nothing. Gold represents much, much more than just a simple US dollar price placed on its head. You really want to believe that what determines gold’s true value is what ever the US dollar price per ounce may happen to be?
Give me a break.
So gold drops even to 400 an ounce, 200 an ounce? Let gold drop down to 50 dollars an ounce and it will not remove the fact that gold is in a powerful bull market. What we are concerned with here are long term trends and fundamentals. Oh, at this point you are pointing to a weaker US housing market and/or weakening growth in China?
You still don’t get it do you?
Remember well the bull market of 1980 to 2000? And during those years there was volatility. Yet still that bull marched forward for 20 long and powerful years. It was a force. And a force that continued to gather momentum with each passing year until its culmination in the year 2000.
And I remember well during these years how the pundits and nay sayers all debated whether this bull was near its end or had any life left. But the smart ones continued to invest in those days for “the long term.” The long term then came to a close in the year 2000…after 20 loooong years.
The point I am driving at is that for two decades between 1980 and 2000 there was a fantastic opportunity for anyone to make money who participated in the market during that time. And gold has entered such an era today. Look at the graph below and try to understand what you are looking at.
What the graph illustrates above is a powerful snowball effect that continues to gather force and momentum. And you seriously believe the year 2006 represents the culmination of this force? The energy behind this accelerating force will not stop until it is exhausted. Tell me as maybe I am a bit confused here. Have we entered into the 1,000 year peaceful millennium of Christian tradition? Sorry folks. I had not noticed that we had entered over night into a golden age of peace on the earth. I guess we can all remove the locks from our front doors now, huh?
Again, please give me a break.
But you want numbers, right? OK. I’ll give you some numbers. Look at the RECENT numbers below in the following news text.
“GFMS Sees $700 Gold By Year-End.” “Gold investors unnerved by the recent downdraft may just want to sit tight. That's because investment demand could boost bullion prices to over $700 an ounce by year-end…” 9-14-2006, Click!
You people have got to come to an understanding of what is happening out there. I do not want to sound condescending here but if your goal is to make serious money you need to understand those age old principals behind price movements and cyclicality.
When you get through reading this I want the men out there to go tell their wives to be quiet for a solid 15 minutes and to sit perfectly still while doing so. And for the wives I want them to tell their husbands that they will begin to cut out certain privileges for the rest of the year and then notice what their husbands’ reactions and interests are later that night when the lights are turned off.
Now for the astute of you out there do you begin to understand why gold dropping in price is so long term bullish now?
“Although it may seem paradoxical, a reduction in expected future returns can imply high current returns.” Click!
Let me bring up something else while I am thinking about it. I have talked about this a lot before. Why are successful people always in the minority? These are not just folks who were willing to take risks. Are you truly up to this game if you find yourself wetting your pants when gold drops below 600 an ounce? Maybe you better take a job at the post office or sack groceries at an A&P. No need to feel shame in this if you cannot take the stress and all.
“Big rise, big correction, violent moves are not for the feint hearted.” Click!
But quite simply we are talking about speculating and taking significant risks here and these risks will bring migraine headaches and a rush to the medicine cabinet for a bottle of Maalox. And yes, you just may find yourself wetting your Sunday pants from nervousness when the market opens. You sure you can handle this type of stressful environment? Are you sure you are ready for the possibility of abject failure and having to start at the bottom all over again?
Hello David,
“This sector is simply too huge to research on my own, and I have been doing it all day every day for the last month solid. I'm exhausted, and I'm making costly rookie mistakes…” “But I have no experience, no plan of HOW TO SELL and WHEN! Then tonight I read your article that had just appeared, and you kicked me out of my delirium. YOU KICKED MY #@$%&! And you are completely right.”
Richie M.
Are you beginning to understand why I so ardently push for you to subscribe to as many respectable and credible newsletters as you can afford? Sure, it may look easy when you hear of a stock that climbed from 50 cents up to 20 bucks a share but do you really know what that speculator endured to get to that point?
Hi David,
“I am a doctor (most professional money managers would see us as earning good money but not necessarily being smart with our investments!). With that in mind, what I do appreciate is that the 'smart' money is usually well ahead of the game (is this because of superior knowledge, inside info or both?) and by the time a crisis happens, they are already positioned to make the most use of it.”
David C.
Australia
I’ll share with you one individual whose judgment and understanding I have learned to trust. And since my long study of this fellow for over 10 years I have witnessed a very successful track record for those many years. Anyway, the analyst is Doug Casey. I understand him to be a little arrogant and proud at times, but I suppose you can afford to exhibit these personal traits when you are making money for a lot of people...a lot of money.
Dave,
“I am going to Casey's Gold and Silver Stock Summit in Vancouver next month and the New Orleans Investment Conference in November.” “Most people want something for nothing as you stated. They want to make "millions" but do not want to pay $150.00 for an annual newsletter subscription or put the time in to study the market.” “Before I invest anything substantial I am going to these conferences…”
Kevin P.
But Doug just touches the tip of the iceberg of the talent out there waiting to be tapped by those with brains. There are others as well that bring their own individual unique strengths and perception to the financial table. You want to be a brain surgeon? Oh, so you are spending time reading the medical journals in the doctor’s waiting rooms when you’re taking a dump. I’m proud of you. Give me a break here and get real.
Hi Dave,
“I saw your article on xxxx and it reinforced
several things I have learned (the hard way) over the
last several years.” “…buy 10 companies that look good to
double in the next uptrend, and then take profits and
put them in other stocks. Your article clarified my thinking and reinforced a couple other points.”
Eric M.
As a matter of fact I really do wish to encourage many of you to get out of investing in precious metals period. If you are not going to play this game the correct way and give it your full attention and personal resources you need to stay away. Go find a comfortable mutual fund drawing 2% a year or a bank CD drawing 3%. But stay away from the precious metals markets.
This is where the big boys and girls play and fingers do get pinched here.
These are real speculative ventures with no guarantee of success. And yes, Grace, you can lose the family grocery money. This game requires an investment of time, study and an investment in quality research. Personally I believe if you are not totally committed to these 3 principals then you need to pack your bags, close out your portfolio and go home and watch Katie Couric evening news.
Philip Klapwijk - “Gold may cross $700 by year-end.” “…growth in investment demands in the fourth quarter will drive gold through $700, overriding the short-term weakness.” Click!
Personally, if you want my honest opinion I am glad to see gold dropping so low. In my estimation the most powerful bullish factor weighing on gold now is to watch its price descend under 600. And this market correction removes the bed wetters.
Yes, I will not be happy until I see gold hit 50 dollars an ounce.
Remember the principal of the power of a spring? Or maybe a balloon. Ever tried real hard to compress a balloon? Or ever tried real hard to hold a balloon under the water? This is what is happening to gold presently. And the further and longer the air filled balloon is held under the water… Well, I think you see my point.
Larry Edelson, Weiss Research, Inc. - “…the charts and the fundamentals of both gold and oil are telling me that higher prices are ahead ...” “…You Should Get Ready To Load Up On More Gold Shares.” “Gold’s chart clearly shows that the bull market is far from over.” “Despite a recent decline back to just below $600, the long-term trend of rising prices is still fully intact.” “…the long-term fundamentals driving gold higher are getting more powerful…” “…we’re approaching the last chance to buy gold at the $600 level. A few months from now, we could easily be staring at $750 gold. That means gold shares, which have had their first decent pullback in over a year, are big-time bargains.” Click!
Do me a favor the next couple of weeks.
Go to Kitco.com and look periodically at the gold chart. Even when the gold price is kicked down you will observe how the little wiggles and such show the blasted thing struggling to rise again. Just like that balloon some idiot attempts to hold at the bottom of the pool. Let gold be pushed all the way down to 10 per ounce for all I care. What we are witnessing are literally the most bullish forces that can be applied.
Look at those swiggles up above and even the mentally impaired can observe that gold is fighting to travel higher. And I say let it be pushed down. Cause just like the balloon held under the water you will see it rise again…and a very dramatic rise at that.
As I have said before I am not a gold bug so my hope is to see gold plunge to 50 dollars an ounce. Cause I know what is happening internally via the mechanical mechanism and concept that ultimately drives a price higher…any price higher. Yes, let’s all pray together that we will see gold drop all the way down to 40 bucks an ounce. I’m serious here people. Yes, let’s get one simple fact straight this very moment once and for all.
Numbers mean nothing
The present price of gold right now doesn’t mean a thing…for those in the know. And I know you would wish to argue with me here on this all day until the moon comes up.
World Gold Council, Jill Leyland, – “Generally I am optimistic about the long term fundamentals.” “…there is a steadily increasing interest from the long-term investors given gold’s role as a dollar and inflation hedge, a portfolio diversifier and safe haven. As I said earlier, my personal view is that the investment demand by pension funds and other institutions is still very much in its early days. There is much more to come. The short-term movements are more difficult to predict. But when there are periods of relative calm in gold prices, this will allow the underlying strength of the gold market to come through.” Click!
What gold is and always has been is more than any simple definition our markets can give it. Gold and what it represents exits outside the normal financial dimension. And this is what the creators and followers of our fiat banking system understand better than anyone. And this is the reason gold is so feared today by banking institutions and governments. Anyway, I have said enough on this subject.
Almost…
Now here is another issue I have to dredge up yet again. And that is the practice of currency devaluation and manipulation. We some how think that this idea, the idea of a paper based money system that can easily be manipulated, is something new. No, that’s not how it is. This idea of currency manipulation, currency devaluation and all associated with it has a history stretching back several thousand years.
Politicians understand this concept as a means to raise new funds that previously were not there. The bankers see the practice as a means of making easy huge sums of money…loaning money that actually does not exist yet making a profit off this non existent money. So believe me when I tell you that politicians, bureaucrats and bankers are very much aware of these concepts and principals. And why do these folk in turn despise gold and all hard money so?
Because it is very much more difficult to manipulate “hard” currency as opposed to a “paper” currency.
Let’s go back in time for a moment and to the days of the Ancient Roman Republic. This age is before the age of imperators and Rome was ruled each year by two elected Consuls who served for only a year. During the Republican era these Toga clad folks were very much more conservative before the corrupting age of Rome’s emperors. But these guys understood money and were no idiots.
“And how, Marcus Livius, do you propose to pay for this magnificent largess?” drawled Lucius Philippus. Drusus smiled, “I have it all worked out, Lucius Marcius. As one part of my law, I intend to devalue some of our normal issues of currency.” The House stirred, murmured: no one liked to hear the word “devaluation” mentioned, for most were intensely conservative when it came to the fiscus (financial policy). It was not Roman policy to debase the coinage (during republican era), the device being condemned as a Greek trick. Only during the first and second Punic wars against Carthage had it been resorted to, and then much of it was due to attempts to standardize coin weight. Radical though he was in other ways, Gaius Gracchus had increased the value of the silver currency.” Colleen McCullough, The Grass Crown. Click!
So, if you read real well the text above you understand that the Ancient Romans were very much aware of the practice of currency manipulation and devaluation. And sometimes this is an OK thing. Particularly when you have an enemy at your front door with a herd of elephants wanting to destroy your city and your way of life and you need to raise lots of money real fast for defense purposes. So currency devaluation can be a good thing and/or a bad thing. It really is up to those governing officials and banker dudes and how they wish to play the game.
But ultimately currency devaluation is a complicated means of robbing the common folk and middle class of their hard earned savings. And these are the roles we see most often applied today.
“However, it is too early to become bearish on the yellow metal. Despite the softness in recent weeks, analysts are optimistic that gold will cross the $700 an ounce level before the year-end…” Click!
The US dollar is headed lower and mining production is falling, falling, falling! Gold will climb higher again. Just have a little patience. Subscribe to Gold Letter to receive emailed alerts of under valued gold, silver and resource stocks. When you order you will receive a report covering 21 gold and silver mining stocks to consider buying now.
click here to order
Oh, let me mention…
I only post these letters on the quality websites. If you are considering what additional newsletter writers to subscribe to those mentioned on this website are very reputable and credible. If you see me on a website then generally that site is OK and one whose writers and subscription publications you can trust. The respected gold professional John Doody preaches the following excellent advice below.
John Doody – “Never, never, never buy just one gold stock, 4 - 6 is a minimum…”
Click!
I like to add a slight variation to John’s theme with the following below.
“Never, never, never buy just one gold newsletter and/or financial publication, 4 - 6 is a minimum…” - David Vaughn
Doug Casey, “The Great Bob Bishop”, Brian Lundin, John Doody, Paul van Eeden, James Dines, John Kaiser, Richard Maybury… these are all financial writers whose work you can trust and whose advice you can take to the bank- literally. If you can afford to purchase every one of these guys’ newsletters you won’t go wrong. It will definitely be a better investment than the new TV you were considering buying.
“The world’s demand for oil and other resource commodities is rapidly increasing. China and India especially seem to be snatching up each new resource supply that enters the market. Oil, gold, silver, copper, zinc, nickel, and many other commodities, have all recently set multi-year or -decade price records…” “The Bible speaks of a time when America will be besieged by its enemies. America’s over-reliance on foreigners for essential needs is a sign that time is drawing near.” Click!
What did we say earlier about having a “selling” strategy? What happens when you sell? That’s right! You lock in your profits and after all isn’t this what this game is all about? Making money?
Dave,
“Thanks for the review!” “I was doing just as you said. Holding on, not taking any profit. Finally, I read one of your articles…and in it you talked about having a plan. Boy! I needed a plan!” “TOOK your advice. Sold shares of the ones that had doubled. Purchased additional stocks, sold etc. etc. Assets growing because of your advice.”
Again, thanks,
God Bless!
Harry M.
Now where did we say gold was heading by the end of the year 2006 and into the New Year, 2007?
“Gold forecast to breach $700 per ounce by year end.” “New Delhi, Sep 15 (IANS) Gold is expected to cross the $700 per troy ounce mark before the year end due to significant investor demand despite the short-term weakness…” Click!
And, again, where did we say gold was headed by year end?
“Investors to push gold through $700/oz.” “INVESTORS were likely to push gold higher in the second half of 2006…” Click!
I, I’m sorry, getting a little hard of hearing. Could you repeat what you just said please?
“Gold prices could pass $700 an ounce by year-end…” Click!
Now let’s have a quick summary of why gold investments are so important to your personal portfolio today as never before. Read on below and see what may just be over the horizon.
“If our inflation should come even close to what happened in the 1960s and 1970s under Presidents Johnson, Nixon, and Carter, a huge part of the purchasing power of your personal savings will evaporate. When that occurred in the earlier period, more than half the value of people's lifetime savings for children's education and retirement was washed away in the inflationary deluge.” - Tom Brewton, Click!
You know there is so much we attempt to understand.
We struggle and bang our heads against the wall when we read the papers and watch the evening news and attempt to make sense of what is happening in the world. And no man can predict the future. So what do you do? What can you do? What avenues are open for you to consider? You want to protect your family. You want to protect your livelihood. You want to know what will or will not have value tomorrow. So you read and you talk to different people. You listen to the radio to all the good financial programs. And to tell you the truth the more time you put into study the more confused you become.
Well, I can tell you what you can do.
It is true that technology is changing the world we live in today very much. More than “much” as everything is changing around us DRAMATICALLY. But as you see the world change around you try to differentiate between technology (that changes) and time proven old principals that always remain the same. Does that make sense to you? Some things change while other things will always remain the same. Try and break things down simply.
- The population of our world is growing at a progressively non linear rate today.
- The world’s major powers are scampering today to begin accumulating resources for their own people.
- If you believe we have a growing world population what does that tell you concerning where those future folk will derive their mineral resources from?
- Their copper? Their tin? Their zinc? Their uranium? Their gold? Their silver? Their iron? Their nickel? Their rare earth metals?
“WORLD MINING EQUIPMENT DEMAND TO EXCEED $ 27 BILLION IN 2009” “Global demand for specialized mining machinery and equipment (including separately sold parts and attachments) is projected to increase 9.3 percent per year through 2009 to $27.5 billion.” Click!
So as you try to understand what is happening in the world today concentrate on the simple known facts that are non debatable.
“The estimated value of all mineral materials processed in the United States during 2005 totaled $478 billion, 8% more than in 2004…” “The United States is increasingly reliant on foreign sources for raw and processed mineral materials…” “Imports of raw and processed mineral materials increased by more than 14% from the previous year’s level to a value of about $103 billion.” Click!
And yes, we always have to consider Asia and China. And regardless of whether a depression comes to Asia growth will continue as these folks are still going to have to eat and live in constructed homes. And the last I heard China, India and the other Asian powerhouses are still making babies…lots of babies.
“If 2004 was the year that the world awoke to the possibilities of rapid economic growth in China and other developing countries, 2005 may be remembered as the year the world began to adjust to the realities of that growth.” Click!
I know, I know, you want to remind me how far gold has dropped recently again. You just cannot get that off your mind huh? Well, my friend consider the unalterable fact stated below.
“The price of gold was slightly more than $420 per troy ounce in early January of 2005; by December it reached $500 per troy ounce.” Click!
Did you get what you just read above? No, I can tell you did not so I’ll spell it out for you. Gold just passed the 500 mark a scant 9 months ago. You still don’t comprehend this? Gold only crossed the 500 dollar an ounce thresh-hold a mere 9 months ago. So in the time it takes to make a baby gold has climbed from under 500 an ounce to OVER 500 dollars an ounce. Personally, I think those are pretty good statistics. When gold climbed up wayyyyyy past 700 per it was really getting ahead of itself. Gold is doing quite well now thank you.
Do you want more statistics?
“A number of analysts have argued that metal markets are in the beginning of a “supercycle” in which metal prices can be expected to appreciate for a long time.” Click!
Let me mention one more thing before I close.
Investing in precious metals really is an exclusive club only for those special individuals with higher standards who can set themselves apart from the herd. This select association is not for everybody and you really need to do a careful personal examination to determine if you really can make the team and pay the dues.
Did I leave anything out I should have brought up? Let me know.
David Vaughn
Gold Letter, Inc.
David4054@charter.net
9-22-2006
Readers are advised that the material contained herein is solely for information purposes. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Gold Letter, Inc. is not a registered financial advisory. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment related advice. All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Authors of articles or special reports contained herein may have been compensated for their services in preparing such articles. Gold Letter and/or its affiliates may receive compensation & or stock options for the featured company’s right to publish & reprint & to distribute this publication. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
-- Posted Thursday, 21 September 2006 | Digg This Article
