-- Posted Wednesday, 9 May 2007 | Digg This Article
A lot is happening now with the U.S. dollar tanking to new lows. And for that reason gold must be tackled as it fights to break through the important resistance level of 700.
Why do we write and read all these short essays? Our goal is to take a picture snapshot of our world and some how bring all these images briefly together. If we can succeed in capturing a quick portrait of the world’s activities we can discern long term trends and make assertions about what lies around the corner and over the horizon. And this is how real money is made when you can study the future and determine long term world trends.
Dave,
“Any points of caution? At what levels/conditions would you call it a certain breakout, with another 70%+ gain on the way as in the previous cycles?” “All in all, gold seems awfully similar to 1974 (minus the risk of a moderate, short term crash in the near future), prepared to make a second, higher phase 1-2 peak around New Year - to around $1000 this time - before a 1-2 year decline (as in '76). This climb to $1000 will likely coincide with a strong test of the dollar index at 80 (also motivated by the above-mentioned moderate stock crash) where it will surely be supported this time.” “Keep up the good work. Thanks!”
Freddy
And let’s now take a look at gold and the present state of the U.S. dollar. You may not be getting this news every evening at 6:00, but these important events are still very real and frightening. Read on below.
Bill Buckler - “So far, the US financial markets and the financial pundits and analysts have been remarkably successful in deflecting attention from the crumbling of the US economy and the US Dollar…” “…the US Dollar is hanging on by its teeth and toenails. Any reduction in official US rates would be a highly likely catalyst for the USDX to sink below the 80 level which has been its floor ever since the "floating currency" era began in 1973.” “And were THAT to happen, any further pretense that the US Dollar still filled the role of a global RESERVE currency would become impossible to maintain.” Click
Kevin asks a good question and wants to know how long “long term” is.
David,
You say that the longer term fundamentals for gold are excellent and will drive the price higher over the longer term. Can you please define "longer term" for me? Do you mean five years, ten years, even longer?
Kevin R. H.
Good question to ask. Well, I feel it is appropriate first to define short term. I would define short term as a few months or maybe under a year or so. Long term I would define as several years out including the next decade or so. It’s easy to become emotionally concerned about the short term because that is what we concentrate on at the moment. To understand a longer term trend helps an individual from jumping into or out of a given situation too soon.
A good example to consider is the present price of gasoline. The price might vary a lot in the short term and even seem cheap at times. But the supply is finite and it is general knowledge that petroleum is a resource that is quickly being depleted. Probably in our generation we will see a significant decline of the supply of oil.
So, back to our original question. What next for gold and uranium? Gold will continue its battle to scale the 700 wall. Uranium seems to still be known by only a small minority of investors. Both gold and uranium stand to gain as more investors take note of their growing important roles in financial circles.
“Even if I knew that tomorrow the world would go to pieces, I would still plant my apple tree.” Martin Luther
More and more investors are turning to gold and uranium as their apple tree of choice strictly because more are coming to the understanding that the world is slowly going to pieces.
Dave!
“It looks there is now big worldwide frustration among gold investors. I operate a German Language gold website: www.hartgeld.com (means Hard Money). It might be a good idea to stress the long term benefits of precious metals investment by comparing them with the high tech boom of the 1990s. If one invested in the early 1990s and exited tech stocks in 2000, a multiple of 1:30 to 1:100 was possible (I myself did it with Intel stock). It is better to go after these big multiples than after a few percents at high risk. This time, I believe similar or even better ratios will be possible. Unfortunately, most people are not investors, but traders, gamblers, etc. Especially they are herd animals. Probably, both of us will continue to preach against a wall until the worldwide common stock bubble comes down. Then, people will wake up. But it could be too late. If the "big money" really goes into gold and silver, probably nothing will be left for the common investor.”
Best Regards from Old Europe,
Walter K. Eichelburg
Vienna, Austria
Let’s return briefly to our discussion of long term and short term. Understanding the difference well can eliminate a lot of grief along the investment highway. The inability to understand these issues will create a lot of needless worry and anxiety as we observe the mighty pendulum swinging back and forth.
“It has been said that our anxiety does not empty tomorrow of its sorrow, but only empties today of its strength.” Charles Spurgeon
Let us never forget that the act of investing and speculating will fill our life with trials and anxiety. And you will notice I always lump investing in with speculating. To me every investment poses a risk and we gauge that risk on a scale of 1 to 10. 1 may be the safest risk and number 10 the greatest gamble. But never forget that there was a time when companies such as Lucent were deemed to be a safe and sure fire investment. And Lucent in its plunge from grace plummeted I believe from 80 bucks down to as low as a few dollars.
“Trials teach us what we are; they dig up the soil, and let us see what we are made of.” Charles Spurgeon
“Blood alone moves the wheels of history.” Martin Luther
Hi David,
“When the Chinese decide to unleash their economic will, the speed at which change will happen will be awesome. They are just flexing tactically now, a wolf in sheep’s clothing, with their commodity and energy shopping spree. THIS WILL CONTINUE AND WILL ACCELERATE. Once this stealth jig is up gold, silver, uranium, oil, copper, zinc, you name it, is where millions will be made because these are the things that a country of 1 billion + people need to expand.” “I have been on this bull run for 5 years now, up 1200% approx, concentrated in gold and silver about 60% equities, 40% bullion.” “I enjoy your readings.”
Kevin M.
And what about the direction of uranium? Today, gold AND uranium are growing together as the two most significant investment vehicles of choice. And there continues to be plenty of room for this growth to continue.
“Fears about peak oil and the concept of uranium as a cleaner energy source have coupled in the industry’s collective imagination AND FORCED THE PRICE OF URANIUM TO TRIPLE IN THE LAST YEAR.” On the supply side experts are alerting the public of shortages to continue to climb as a result.” Click
There is so much more I wish to say, but there just are not enough hours in the day. But to sum everything up in one general point we can say that for us to succeed at any endeavor we must march to a different drummer and not follow the herd. Never forget the story of all the pigs that raced headlong and happily into the sea. We can do the same thing if we don’t take the time to hear a different drum beat.
“While we may not be called to martyr our lives, we must martyr our way of life. We must put our selfish ways to death and march to a different beat.” Michael Tait
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The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2007, Gold Letter Inc.
-- Posted Wednesday, 9 May 2007 | Digg This Article
