Gold, Silver and Other PMs

Top 531. Aug 14, 2005 6:58 PM

» Normxxx - Buy ASAP!

SKI Gold Stock Prediction: Buy ASAP, says the robot

By Jeffrey M. Kern, Ph.D. | 14 August 2005

The gold stocks fell perfectly last Monday and Tuesday (for the expected 4-day run down) into the SKI MASTER BUY SIGNAL signaling the possibility of a truly impulsive and lengthy rise over the next many months to years. The signal was executed at USERX (the gold mutual fund) 8.07. I had recommended waiting one day to insure that the gold stocks wouldn't continue falling. Therefore last Wednesday was clearly a buy day at USERX 8.21. The subsequent and instantaneous explosion confirmed the buy signal to the nnnth degree: If you still are not fully invested (whatever "fully" is to you) I strongly recommend completing your buying instantly, as soon as possible. I almost always recommend waiting for pullbacks after a sharp rise. I dare to say that this time is different because we are on the greatest buy signal that my system can generate, the one that I've talked about for years. I have made the largest buy in my life and have already more than eradicated my small losses for this year in a span of 2 days.

I have friends/relatives who have called this weekend to ask if they can still buy. They "missed" the buy day because of various life reasons: being out of town on vacation, not paying attention, or not having their monies/accounts ready (as I had warned people to prepare for on Wednesday 8/3/05 in the Special SKI Update). My answer to them is as I have just stated: Buy ASAP. This signal should witness a rather constant and continuous flow of new money waiting to buy a dip that may not come as people chase the gold stocks higher. If it gives you any courage (or perhaps it should give you fear), I have made the largest investment ("bet") of my life (so it's really scary to be so confident but read below) and I completed my buying last Thursday (10%) despite the large rise that day.

Emotionally, you are about to experience a strong roller coaster and heightened volatility. The gold stocks frequently, yes frequently, have 4-8% daily moves up or down during '92-96 index rises.' Try to become emotionally prepared. My own emotions right now are strong but on a cognitive level they do not exist. It's like I am a robot with no emotion (cognitively), yet I can feel my physiological arousal and observe/analyze it. This, I believe is a key to executing. It is good when your body becomes anxious and you can behave/execute the way you are supposed to (whether the decision ends up being right or wrong), when you act the robot. I can do that only if I have a clear plan (e.g., 8/8/05 Update: "I am calm because I now know what to do"). Frankly, I am writing this Update trying to show and instill confidence and I am still feeling no cognitive emotion, but I AM VERY ANXIOUS: On Friday morning (8/12/05) I couldn't refrain from watching the gold stocks rise to fill a downside gap from March(?) around XAU 100.5, knowing that the 100.5 price was going to be resistance. As I watched them start falling on cue, my body began to sweat and my heart began to pound. I noticed fantasies/images of the gold stocks plunging into a '92-96 sell' signal and the shame that I would have with my family, friends, and community. I observed and noticed my reaction, called my colleague to report it, and we both concluded that that was probably a low! and the stocks would close a little higher by the end of the day. Try to avoid this kind of watching if your visceral reactions are too much to endure. I suggested 10 days ago to go into "suspended animation for 6 months". I have never been able to do that completely, but I promise to try by: Not talking to my colleague about gold stocks unless it's an emergency, Not talking to anyone about gold stocks, and Not checking my account balances. My use of the word "try" indicates that I will not be entirely successful! The problem is that I MUST record the closing prices for the day because I'm the one that has to compute the index and write the SKI Updates (similar perhaps to the trouble in losing weight because you can't entirely avoid food; one has to eat a little and I have to see the gold stocks a little).

THE ST 'BUY SIGNAL' has just barely started. Such runs have extended unbroken to 16 trading days and have never marked a low AND a high. Since this one clearly marked a low, the end of this run will be nothing more than a several day to week top. Sure, it may end already on Monday, but that will just make it better for my last friends to buy. This is the time to simply buy and hold for a minimum of 5 months and probably much longer.

The 'sell stop' is a '92-96 sell signal.' Those back prices keep falling. Hence the stop is actually falling and I reported that this trade had a 20% maximum and unlikely downside risk (that is now a 26% risk at current prices). Folks, the risk is there, but the odds of any loss occurring are approaching zero. The index and system have never lost that much, the system is on the best buy signal, and the market has just shown an explosion instantly following the initiation of the trade. It doesn't get any better than this. In fact, since the 92-96 back prices (the decisive, irrevocable stop on this buy signal) won't rise to current price levels for 92-96 days (by mathematical definition), I take this as clear evidence that the current rise has to last at least 92-96 days and probably won't generate a '92-96 sell' signal for MORE than 7 months (it could go for 2 years, I don't know).

In terms of additional entry points or buy signals, I have seen two types of SKI buy signals inside a great bull 92-96 index trade that is on the Path. In the late 1970s and early 1980s bulls, the market corrected down to a 16-20 buy signal and then continued down to a 35-39 SELL signal (actually several of those signals occurred simultaneously, as usual!). Corrections, therefore, took about 2 months of declines, with prices falling 15 to 38% in that time frame. The rule is to buy the start of the next impulsive wave up that HAS TO BE marked by a fresh '35-39 index buy' signal (that has to be off the Path since the Path will forever stay on the 92-96 index). That rule is perfect until the bull is in the process of ending; The final '35-39 buy signal' will quickly fail at a small loss and prices are about to fall, selling the 92-96 index and ending the bull.

The second type of bull market corrections have occurred during the 1993 bull and during ALL of the impulsive legs up since 2001. These corrections have only fallen to a '16-20 index buy' signal before rising back and THRU the ensuing '16-20 index sell' signal. During the 1970-1980 bull markets, when a '16-20 buy signal' was followed by a '16-20 sell' signal, ONE SOLD because that marked the start of the 2 months IT decline down to a '35-39 sell signal.' [If you understand this discussion, you have mastered the intermediate level of SKI information. If you can't understand it, most people learn to understand with increased time and effort. This can't be given to you on a simple platter. Yet it is not nearly as complex as Elliot Wave Theory (I actually believe that SKI indices mark the beginning and ending of such waves in the gold market and that the current signal marked the start of a large wave 3 up).]

Please keep this in mind for the future understanding of Updates. I will repeat it, if I can remember to. I WILL BE GUESSING THAT THE PATTERN OF DECLINES DURING IT BULL RUNS SINCE 2001 WILL CONTINUE. I mean it just happened again to some degree: we got a '16-20 buy' signal on the Path (at the low of 7.49-7.52 on 7/19/05, but I avoided buying), only to see the rise continue through the ensuing '16-20 sell' signal. In other words, during this decade (as well as 1993), bull run corrections have taken a different form: They have been briefer and less severe than during the 70s-80s. I will therefore be suggesting buying or leveraging further on the next '16-20 buy' signal. The history of those will be reviewed in perhaps 2 months from now when there becomes any possibility of a price drop (note my bullishness: forget about any SKI signals coming for months, except maybe the questionable 439-443 that is not well-validated).

Readers ask me to project price targets for the up-leg. The system can't project any price targets, although I logically expect 100%. I appreciate the outflow of emails offering presents and the naming of first-born children, but as the TRUE saying goes, "You ain't made nothing until you've sold". In terms of price projections, I've noticed how the SKI system causes me to project time periods more than price. I've recently read from Ron Rosen, how Gann appeared to emphasize that time was more important than price. But then as time and price CONVERGE TO THE CRITICAL POINT, the SKI indices appear to mark that exact interaction of price and time. That is what I assert if you are trying to "understand" the indices.

I anticipate and hope that I will not have to write a SKI Buy Update (I like the sound of putting the "Buy" in the title!) until next weekend and the frequency of my writings may now be able to slow back down to its normal (or slower) pace as the goldies just rise and my primary profession begins its Fall semester.

Enjoy.

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

Top 532. Aug 14, 2005 8:04 PM

» Normxxx - Lumber Real Estate ==> Gold!

Lumber and Real Estate

By Sol Palha | 14 August 2005

Extracted from the August 9, 2005 market update.

"Gold could suddenly become the commodity of choice; the number one commodity so far has been real estate. The money that leaves this sector will eventually have to find a new home and even if a portion of it enters the Gold and Silver sector it could have far reaching implications as in huge price moves. Its been our experience that the biggest moves occur in stocks that look good on a Technical and psychological basis and ones that most have not heard off; there are few such stocks in the Gold sector, but when the time is right we will mention them."

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 533. Aug 17, 2005 5:26 PM

» Normxxx - THE HUI - XAU INDICES

<img width="550" src="http://www.financialsense.com/Market/ios...">
THE HUI - XAU INDICES

By Ike Iossif | 16 August 2005

The index has broken above 2 resistance lines and it is getting ready to challenge the third one at 220, while both the ADX, and, the Aroon Indicator are on a "BUY" signal. If the pattern continues to hold, we expect to see a pullback lasting between 2-6 days, and then another push to the upside.

Gold could easily come down to test support at $440, which would facilitate a pullback in the HUI.

The XAU closed the gap at 100.51, and if the pattern continues to hold, then we ought to see a pullback to the 97-96 zone to be followed by another rally up to the 102.5-103.5 zone.

The Gold/XAU ratio suggests that a pullback in the XAU ought to be expected.

The minor divergence implies that a pullback can be expected at this point.

The McClellan A-D Oscillator has formed a very similar pattern to the one that accompanied the rally in late July-early August of last year.

The A-D Summation Index has formed a very similar pattern to the one that accompanied the rally in late July-early August of last year.

The Volume Summation Index has formed a very similar pattern to the one that accompanied the rally in late July-early August of last year.

The Cumulative Volume has formed a very similar pattern to the one that accompanied the rally in late July-early August of last year.

The Volume Thrust Oscillator has formed a very similar pattern to the one that accompanied the rally in late July-early August of last year.

CONCLUSION:

All the indicators have formed patterns that three out of five times turn out to have a bullish resolution. In fact the very same patterns were observed last year between late July and early August as the HUI, and the XAU embarked on a 20% rally. In addition, the price action of both the HUI and the XAU is defined by rising channels and predictable oscillation between channel support, and channel resistance. The advance has been confirmed by the Summation Indexes, the A/D line, and the Cumulative Volume. All in all, up-to-now, it is quite difficult to find rational reasons to be bearish. Could this "perfect picture" possibly turn out to be a fake-out and a bull-trap? Yes it is possible, anything can happen in the markets, however, it is not very probable. As long as the XAU, and the HUI are making higher lows, and higher highs, we ought to be bullish and continue to add to our positions during pullbacks near support.

Given the price action of late, the odds are better than even that gold will pullback to $440, the XAU will pull back to 97-96, and the HUI will pullback to 212-210. There is a chance that the XAU may pull back to channel support at 94, but ideally that shouldn't happen. If it is embarking on a multi-week rally, it should be moving away from channel support, and staying towards the mid-point, which is in the 97-96 zone.

If the XAU pulls back to the 97-96 level and then it reverses back to the upside, we would expect it to rally up to 102.5-103.5, before it pauses again. We would use any pullback to the 97-96 zone and a subsequent reversal to the upside as an opportunity to add to our long positions.

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

<img Width="520" src="http://www.321gold.com/charts/seasonal_gold.gif">
Click Here, or on the image, to see a larger, undistorted image.

Top 534. Aug 18, 2005 9:32 AM

» Normxxx - Gold: 30-yr Seasonal

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

<img Width="520" src="http://www.safehaven.com/images/aden/3637_a.gif">
Click Here, or on the image, to see a larger, undistorted image.

Top 535. Aug 18, 2005 8:45 PM

» Normxxx - Metals Looking Good!

The Metals are Looking Good!

By Mary Anne & Pamela Aden | 18 August 2005

The recent rise in gold and gold shares has confirmed that a strong, renewed rise is underway. This means that over the coming months, gold has a good chance of rising to new bull market highs. And considering the U.S. dollar is declining at a time when the strongest intermediate rise in gold is due, reinforces the likelihood of a decent run in both gold and gold shares.

The Decade of Tangibles

Looking at the big picture, a strong mega upmove in tangibles is also taking place and it could last another decade or so. This will cause price inflation to rise and it usually means the dollar will lose yet more value over time.

One main reason is China's ferocious appetite for raw materials as it continues to grow into a world power. Its entrance into the global economy has been fast and it'll continue to affect the Western economies for years to come.

China's impact is coinciding with the 200 year cycle in commodities. Chart 1 shows that commodities are starting a major wave up for the first time since the 1960s and 1970s. That is the start of the sixth major upmove since early 1800, which is not trivial.

As you can see, each major upmove of the past also coincided with a major war. And the current one is no exception. The war on terror will drag on for years with oil in the middle of the tension while supplies decline and world consumption jumps up.

This is the biggest problem the world faces today. We recently saw some of this with the death of King Fahd (supply uncertainty) and the latest terror threat in Saudi Arabia, which caused the U.S. embassy to close. This put more upward pressure on oil and over the long-term, rising oil prices will also help push up other commodity prices.

Gold: Onset of renewed rise

India is the largest consumer of gold and China's demand is growing more as each year passes, which is providing a solid base for gold.

Gold's major trend remains solidly up above $420 but it's been declining and consolidating this year since its peak last December. Gold's decline we call D is the worst decline in the recurring intermediate cycle and it tends to take some life out of the gold bulls. The most recent decline was no exception because gold formed a double D bottom in February and early June, which frustrated the bulls.

<img Align="right" hspace="10" vspace="5" src="http://www.safehaven.com/images/aden/363...">But it looks like the worst may be over as a renewed gold rise we call C is now starting (see Chart 2 which shows the intermediate A through D moves in gold and its leading indicator). The C rises are the best rise in a bull market when gold tends to rise to new highs. This means if gold's bull market stays on track we should see gold rise above the December highs before year end while the indicator rises up to the C peak highs.

Keep an eye on $428 because gold will remain in a C rise above this level. Gold had three stepping stones to overcome before a strong bull market C rise was underway, which were $444, the June high, $447, the March high and $456, the December high. Gold recently broke above the first two resistance levels, which is good action. But once the December high is surpassed, gold has a good chance of reaching $500. On the downside, major support is at $420, the 65-week moving average.

Gold Shares: On the rise

<img Align="Left" hspace="10" vspace="5" src="http://www.safehaven.com/images/aden/363...">Gold shares bottomed well before gold did, which is usually the case. Chart 3A shows that the XAU held at its 2004 low, the prior D low, and it's been rising, recently reaching a five month high.

Gold shares have further to go on the upside as the leading (medium-term) indicator is now rising from a low area and it has plenty of room to rise further before it's too high (see Chart 3B). Gold shares are also stronger than gold and this rise could be as strong for gold shares as it was in 2002 and 2003. We recommend buying and keeping your gold shares.

Silver Looks Good Too

Silver has formed an over one year triangle since reaching a peak in April 2004 (see Chart 4). The 65-week moving average provides major support at $6.81 while the topside of the triangle is at $7.40. A break either way will clearly tell the next trend direction. We suspect it will be on the upside because silver's leading (medium-term) indicator is basing near a low area (not shown).

<img Align="right" hspace="10" vspace="5" src="http://www.safehaven.com/images/aden/363...">Once $7.40 is broken on a close, $7.60 and $8.00 will be the next stepping stones to overcome. Strong resistance will come in at $8.20, the 2004 high. Buy and keep silver and silver share positions as well.

[Normxxx Here: But go easy on the leveraging; PMs are nothing if not volatile. ]

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 536. Aug 23, 2005 10:44 AM

» Normxxx - SKI Buy Update

SKI Gold Stock Prediction: SKI Buy Update

By Jeffrey M. Kern, Ph.D. | 22 August 2005
Email: skigoldstocks@yahoo.com

The SKI system remains on its true bull market buy signal from 8/9/05 at USERX (the gold mutual fund) 8.07. I remain long from 8.21, the first up-day after the master 92-96 index executed its "true bull market" signal in years. As I reported days before the execution date, the stop on this trade is far below the current price and is FALLING. This coming week the stop will fall to below 7.00 (current price 8.22).

The gold stocks fell this week (because?) of SKI's robotic euphoria from last weekend, dropping about 4.5%. I experienced true fear this week beginning on Tuesday, when gold rose $5 on a key reversal upwards (a lower low than the prior day while closing at a higher price than the prior day's high) and the gold stocks fell. I often mention that I dislike key reversals because they are tricks about 45% of the time. When precious metals assets plunged as anticipated on Wednesday, I was truly fearful on both a cognitive (intrusions of impending disaster) and physiological basis (sweating and heart rate increases). But behaviorally, I did not act (i.e., sell to end the pain at a 1 penny profit). Is courage the ability to behave properly in the face of fear? It didn't and still doesn't feel courageous to me. It felt "bad". I mean, the gold stocks could have fallen further that day or then plunged 7% the following day to hit the 92-96 index back prices in the 7.60 area. It truly could have happened to end this trade quickly at a loss, but it shouldn't have (based upon the buy signal), and it didn't! (thank nature).

My wife states that she can't remember me ever making money without first experiencing significant fear/pain. I'd agree with that, but the key factor is the duration of the pain; sometimes it's only for one night, other times it's for 4 weeks. The duration of the pain, I believe, is more difficult to cope with than the severity of the price drop. Hence, time in markets is probably more important than price. By the way, the indices were partially predicated on the theory that the direction of the price change is also more important than the amount of the change (i.e., when comparing current prices to back prices, the indices just record "higher = +1" or "lower = -1").

I cannot, of course, promise that Friday 8/12/05 wasn't the major high of the up-leg that began this past May. But it is not supposed to be the high based upon the 92-96 index that projects rising prices for many months. I will now provide my positive observations (higher prices ahead) and negative observations (lower prices ahead).

On the positive side, prices have kept moving to higher highs and higher lows. The index bought the 8.07 low and prices have not declined below that price. That 8.07 could be used as a sell-stop, and prices may really decline on a move below 8.07 (my fear). Interestingly, the 16-20 index back prices (i.e., support) will be rising by Thursday to 8.29. It would be typical if current prices were below 8.29 to hit that support. But frankly, I am not expecting any more 16-20, 35-39, or 92-96 index signals for a long time. Early stages of other bull runs have shown that as the 16-20 index comes close to a buy signal, the gold stocks literally shoot ahead 15% in a week. Therefore, to avoid a new 16-20 index buy signal (off the Path), prices must go to new highs (over 8.59) within 12 trading days.

A second positive note is this past Friday's (8/19) rising gold stocks coupled with falling gold bullion prices. That was the first positive divergence since last Tuesday's negative divergence.

The current run pattern has both bullish and bearish potential. We have seen 3 consecutive up closes into the 8.59 high and then 4 consecutive down closes into Thursday's 8.14 (low, I hope). Such runs (3 Up and 4 Down) can mark highs only, highs AND lows, or just lows. Note: The bullish case REQUIRED A DOWN day on Thursday to form a fourth day down; 3 Up and 3 Down would have extraordinarily scary. Therefore, my desires for a fourth day down, stopping above 8.07, followed by a decent up day, were fulfilled. But my fear, I believe, will remain powerful until a new higher high (above 8.59) is accomplished.

The negative observations included: (1) I checked my account balances last weekend, as did my colleague (who bought 100% at 8.07), (2) A relative who never buys, calling to say that he's buying on Monday (8.50) and my agreeing, (3) The ratio between the gold stocks and gold bullion rising to hit its downtrend line from the highs in December 2003 (check a chart of USERX:$Gold, or $XAU:$GOLD, etc.), and (4) The gold stocks topping right before a highly favorable earnings report from Goldcorp (GG), with professionals "selling the news" after new annual highs were achieved, a classic sell signal. I have also received many emails expressing concerns regarding the historically large commercial (smart money) gold short position (Commitment of Traders). I was aware of it and it was and is a negative.

So I can't promise that prices aren't going to plunge to the stop, a 92-96 index sell signal. But I actually view the falling stop as a good sign. It increases the risk, but it makes it less and less likely with each passing day that this 92-96 index buy signal is wrong. Such buy signals can lose money, but what are the odds that it'll lose 15-20%? My colleague and I have already talked about giving up all of our indices and work if that happens. How could we have faith in this research if it experienced that kind of an extended fall?

As you can tell, I have not been able to "hibernate," but I continue to advocate either hibernation or suspended animation. We are only 8 trading days into this buy signal that will hopefully last for hundreds of days. I did experience significant peace while helping my younger son move to college in Tucson Arizona this past Thursday through Saturday. I swear that I did not look at any financial market from Thursday night until this Sunday morning, and when my wife asked me whether the gold fund rose or fell on Friday, I told her that I didn't know and didn't want any financial news in any form.

Hopefully I won't have to write again until next weekend. I enjoy writing, but an earlier Update would mean disaster (see my change from euphoria to fear; you can use me to gauge market sentiment.)

Best wishes.

8/21/05
Jeffrey M. Kern, Ph.D.
Email: skigoldstocks@yahoo.com

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 537. Aug 24, 2005 11:48 AM

» Normxxx - PM Market Timing

Precious Metals Market Timing—
Will Gold and Gold Shares Rise or Fall in the Near Term?

[Normxxx Here: Is this a genuine difference of opinion here? But note the ST top in the gold seasonal chart (in posting above) in early October and subsequent nadir at the end of October — early November. Remember, too, you are likely to get less than a day's 'warning' of a 'major' regime change, so it might be prudent to be a little early with some portion of your gold investments. One can get altogether 'too cute' in timing the gold 'bottom.' Just don't load up on leveraged and time limited gold futures. ]

By Ron Rosen | 24 August 2005

"Time is more important than price; when time is up price will reverse." — W.D.Gann

There is much being written about the imminent rise in the price of gold and gold shares. There are numerous reasons why I believe there is more corrective action ahead before gold and the gold shares rally and the next more powerful second phase starts.

Four of the most important reasons are;

1. Delta turning points
2. Thirty year Gann Master Cycles
3. The Quarterly gold chart
4. Monthly wave count

I have discussed these four items in previous reports and will continue to keep you updated on their progress. In addition we have an alternate plan for reentering the market in the event a clear and undeniable move up takes place. We need evidence that the bottom is in place and the next bullish phase has started. Without the evidence we are guessing that the bottom is in. From what I read a lot of folks have been guessing for about two years.

That is not satisfactory for us. I would rather pay the insurance premium of higher prices and know that the move has started. The next phase, if history is any indication, will be substantially greater than the last phase. The "insurance premium" will help us avoid further sideways and downward action of both the bullion and the shares.

[Normxxx Here: Or, one could "buy-in" with a "core" or "starter position," if they had sold all of their gold holdings, as I had. ]

If we are sufficiently patient we may enter close to a genuine bottom. It's either near the bottom or hop aboard after the train has started to move in the right direction. Either way we are keeping our check books and money "holstered" until we hear and or see the starting gun. I don't hear it or see it just yet. If it surprises us our plan of entry will get us aboard using a proven and successful method. So, we wait.

This is the chart that, when the clearly defined more than 20 year trend line is breached, will cause a greater than volcanic eruption in price and attract a vast amount of buying. It will most likely drag the entire precious metals complex with it. If the shares perform their usual job of rising before the metal we will have an early warning sign.

I mean rising on huge volume where blocks of hundreds of thousands of shares are printed on the tape and an occasional million share trade takes place. It will be mayhem in the gold pits but we are not there yet and we must be patient. It appears that the much ridiculed W.D.Gann observation that years ending in the number 5 are up years for the stock market may be keeping the stock market from declining.

2006 may not be so fortunate for the stock market. We have a Delta Long Term low in gold

[Normxxx Here: stocks? ]

due between Sept 2005 and July 2006.

QUARTERLY GOLD CHART
click image to see chart
<img Width="520" src="http://www.321gold.com/editorials/rosen/rosen082405/1a.jpg">
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The pattern and formation in the gold charts 30 years apart are remarkably similar. There is a Delta medium term # 5 low due in October and long term # 4 low due in February 2006. If long term # 4 decides to arrive with medium # 5 low there could be a vicious drop. However that would be the end of this two year correction.

WEEKLY GOLD CHART 2005
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<img Width="520" src="http://www.321gold.com/editorials/rosen/rosen082405/2.gif">
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WEEKLY GOLD CHART 1975
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<img Width="520" src="http://www.321gold.com/editorials/rosen/rosen082405/3a.jpg">
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The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 538. Sep 16, 2005 2:44 PM

» Normxxx - Gold smoke, economic fire?

Gold smoke, economic fire?

By Katie Benner, CNN/Money | 16 September 2005

NEW YORK (CNN/Money)— When gold prices jump, it usually means trouble lurks.

Gold hit a 17-year high above $460 an ounce Friday as fund managers and investors around the world— worried about a possible pickup in inflation, a faltering dollar or geopolitical uncertainty— placed their bets on the precious metal.

"Gold prices have been resurgent, following oil, inflation data, and fretting over global economic imbalances," Citigroup analyst John Hill said in a note Thursday, adding that gold could easily break $500 by the end of the year.

Hill's forecast is supported by independent gold analyst James Turk, several fund managers and some economists, as inflation concerns, uncertainty about the dollar and strong demand for the metal in China and India all spur gains.

Inflation won't hurt us

Gold prices have jumped to $465 from $425 an ounce in just two months as inflation jitters have lured buyers, according to David Meger, senior metals analyst with Alaron Trading. Hard assets like gold are considered a safe haven against inflation, which can erode the value of other assets.

The last time a gold rally was tied to serious U.S. economic trouble was in the late 1970s when out-of-control inflation, unrest in the Middle East and an oil crisis pushed the precious metal from $150 to $810 an ounce.

But inflation crippling enough to push gold prices to such heights is not necessarily being reflected in the most recent economic numbers, said Meger.

And gold investors have shrugged off things that would usually dim the metal's luster, such as the recent decline in oil prices, which are still up sharply over the past year, however, and the dollar's surprise rally this year.

Meger notes two other reasons for gold's recent rally: physical demand and speculative buying.

"Reports from the World Gold Council and the consultancy GFMS have cited strong demand," said Meger. The council, an industry group, said last week that demand for gold jewelry in the 12 months ending in June hit $38 billion— the highest ever recorded for a 12-month period, he noted.

Both Meger and Hill also cited strong demand in India and China

"The Asian community has historically had an affinity for precious metals, and in the current environment that demand has risen in the last year," said Meger.

Technical strength leading to speculative fund buying has also fueled the rally further and faster, Meger said.

"Fund traders traditionally watch technical indicators, and this strong technical environment along with the backdrop of physical demand is enough to draw large fund trading into gold," he said.

Dollar in distress

While inflation is cited by many for the gold rally, some analysts are willing to go further.

"Gold isn't a hedge against inflation. It's a flight from the dollar, which is much more profound problem," said James Dines, a market analyst and editor of The Dines Letter, a 35-year old metals newsletter.

"Alan Greenspan's rate hikes aren't just to hold down an economic boom. He's trying to bring investors back to the dollar," said Dines.

For example, Citigroup said Middle Eastern oil producers are not putting their petrodollars back into dollar-dominated assets, instead investing in gold.

The shift comes as many investors around the world, including some foreign governments, move away from dollar investments due to worries about the long-term outlook for the U.S. economy.

While the dollar has rallied this year, surprising many investors, it's still lost about 30 percent of its value against other major currencies over the last four years, according to Turk, who also founded the online gold brokerage GoldMoney. "We're still in a long-term, downward trend" in the dollar, said Turk.

That dollar weakness could be inflationary in the short run.

But if it persists, and the U.S. economy weakens, a handful of economists worry that it could actually spark a broader trend of weak growth and falling prices— in other words, deflation.

"We are seeing the early warnings of the dawn of international deflation," said Dines. "Gold prices are rising because it's a refuge."

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The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 539. Sep 16, 2005 4:33 PM

» Kirk - Gold at New Multi Decade high

As of 9/15/05 the Total Return for "Kirk's Newsletter Portfolio" since 12/31/98 is Up 174%
For 2005, Kirk’s Newsletter is Up 5.5% YTD vs QQQQ down 1.3% YTD vs DJIA down 1.3% YTD

-- posted by Kirk