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-- Posted Monday, 13 December 2004 | Digg This Article
By: John Mackenzie
Projection
We are approaching a KEY and pivotal Event in the next 8-10 trading days.
I am 100% non-repentant in suggesting Gold is about to begin an extraordinary move up. We are very close to an important and pivotal reversal lasting six months.
This will happen very soon and yes, again, I was wrong in suggesting it would begin last Thursday morning, but the necessary adjustments have been made. Hedging my position is not something I do. They are absolute in Direction, Scope & Scale of the Move and have been exceedingly accurate. I made the mistake of using a midpoint and allowing no fudge in my prior target for Thursday reversal. Again, I do apologize for this error on my part, it will not happen again. I am very excited by what I see and my emotions certainly took hold to issue a stark and contrasting call on Gold/Gold Shares.
I am not going to couch, hedge nor issue pithy platitudes toward my positions, so here is what is in play:
The Dollar
Our Federal Reserve Note is going to plummet to 66 or less in the June/July 2005 time frame; I have a likely bottom near the third week of June. The range is the First Week of June out to the second week of July.
This recent reactionary reversal is about as “Weak” as it gets in my opinion and will not last. It will top very quickly and be heading south again with Force down to 75 before another sharp counter-trend reversal, but then fail and commence a steeper drop to a maximum objective of 66, perhaps 62-64 with 62.66 – 62.84 as the exact bottom.
The YEN will be the currency of choice in my opinion, outperforming all else by a wide margin. My “Hong Kong Fighter Pigs” are coming home to roost, as I believe we are witnessing the very formative stages of the ASEAN Currency Block. To add insult to injury, China’s trading partners are demanding for the Dollar Peg removal. The Din has reached a fever pitch, and when China de-pegs in early to mid 2005 Our Federal Reserve Note will find yet another catalyst for its abysmal descent.
The Ten Year Note
Our United States Treasury’s 10 Year Note is going to come unglued and race far higher... For those of you still listening to Sir Alan Greenspan… Please Stop! Adjustable Mortgage Rate Vehicles are going to face punishing abuse as Yields spike higher. If you own real estate, by choice or design, please protect yourself. When the 10’s yield spikes 50% in short order, the Housing Bubble will have picked up plenty of momentum to the downside. This should be accomplished by the same June/July time frame.
2005 is going to be an Ugly Environment for Fixed Income Vehicles, do not chase yields. The underlying Fundamentals are absolutely Horrific. Sell your bonds now; it is the prudent thing to do. This market is entirely contrived, an illusion that only exists on paper and very bad paper promises at that.
Which brings us to my favorite subject… the Anti-Confetti
Gold
My word, the outright bearishness in Gold/Gold Shares has reached a new Zenith in the Absurd. The Gold Boat inhabitants tip all too easily from one side to another. This is classic Bi-Polar behavior. Shame on all of you!
But, in fairness, this occurs with good cause… from illusory effect.
We will experience wild intra-day volatility in order to remove the last weak holders of Gold/Gold Shares, count on this, but this will resolve itself very quickly and seem a minor annoyance in a few weeks time.
The effects have been a steady grind of “Confusion & Delay,” as Gold/Gold Shares are under heavy accumulation while our Bag-Holding Dollar Counter parties are quickly unloading United States Federal Reserve Notes during this current Dollar reversal.
Key to my analysis is very simple tenets:
- Long Term Trends are the Guiding Light
- Ratios are Exceptionally Important.
- The Herd is usually WRONG.
I roundly disagree with the Gold Advisers, Gurus and the Goldbug Herd at this juncture as they have made many critical errors in their assumptions. Convention applies to the line items 1 through 3, the rest is noise in my opinion.
Cycles extend.
Fundamentals overwhelm.
Volatility fools most everyone.
Gold is setting up to teach the teachers a rather stark lesson… Let us hope they learn something from this important lesson in Hubris. Convention is not at play in anything other than the Long Term Trend, and although there is very little evidence presented for an explosive rally in Gold/Gold shares, that is precisely what I believe will happen.
Allow me to present my targets and one piece of incriminating evidence. As a friend suggested some time ago… “ when you piece the Gold Market together, lock yourself in a dark, windowless room. “
Good advice.
The long term trends are quite obvious, Gold made a bottom in early 2001 and has begun a very clear and direct reversal. No picture needed here, simple obey the trend reversal as it is the KEY. Yes, there will be immense volatility and yes there will be painful retracements, but the TREND is YOUR FRIEND and the TREND is SCREAMING HIGHER.
Amex Gold Bugs Index Ratio to GOLD
The Mining equities are setting up to outperform GOLD on this next measured move.
These targets will have been met or exceeded by June/July 2005:
HUI targets: 344 minimum, 412 maximum
Gold price Objectives: $512-558 to 608-622.
I would strongly suggest investors sell into this rally, take profits and sit on the sidelines for 18 to 20 months. We will see mining equities collapse from this high for a number of reasons, reasons I that are beyond the scope of this document.
Converting all hard fought Profits into physical metals for a long term store of value is an excellent idea; here is why:
The second Phase of the Bull market in Gold will NOT begin until we have successfully back-tested the entire move to the 50% retracement level of the entire Bear Market in Gold. This will occur at the $556 - $558 price level.
From this price level, I fully expect we will being a very severe correction in Gold equities once this has occurred with Gold again back-testing the breakout level at $424.20 - $433.30. Do not sell your physical metals! Hang onto them and add when this retracement is approached.
Silver will suffer a far greater correction in percentage terms than Gold and when it was bottomed over the ensuing 18 to 20 months of correction, it will begin a multi generational BULL MARKET along with Gold that last the rest of my natural like and I am 43 years old by way of numbers, although a pre-teen disaster in spirit.
Projections for the coming BULL MARKET in precious metals for the TRUE BULL MARKET, the second phase, puts the following price objectives in play:
Gold: $4400 - $4700
Silver: $258 – $335
As you can clearly see, Silver is going to outperform Gold.
This is only the price objective for the second phase of a multi generational BULL MARKET.
The third phase is higher still. After a very deep, serious correction we will begin the final phase, which I suspect has four zeros behind the price of GOLD.
We have many years to enjoy the coming generational storms on the horizon with respect to Precious Metals. They will be the subject of endless debate and quite likely one of the greatest BULL MARKETS of all time.
Keep the Faith, do not be discouraged by the volatility over the coming days. There will be at least one additional attempt to pry our Gold/Gold Shares from your grasp. Hold tight and do not be fooled, we are going much, much higher.
My Core Mining Equity Positions are as follows:
GSS
EGO
NG
GG
MDG
PMU
CALVF
LALOF
As an aside, I would NOT BE SHORT the Broad Equities Markets at this point in time.
My “windowless room” is open to subscribers @ jrmfl@adelphia.net
Kind Regards & Happy Holidays to one and all,
John Mackenzie
M2
-- Posted Monday, 13 December 2004 | Digg This Article
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