Fri Jul 25, 2003
Gold Market Summary
Author: James Sinclair
Gold
You have already seen this morning's "Gold Community Heads Up" alerting you to the probability that we are in a situation technically that has come only a few times in gold. This set up which is a product of Kenny's proprietary internal number series has the ability to launch gold strong, hard and up. Kenny & I have worked together for many years and this set up of occurred three times to my recollection in the 1970 -1980 experience.
A to A to A to A to A to A represents the present up channels for gold bullion.
B to B represent the active down trend line. The flag like construction is the Fibonacci Support and Resistance lines. Armed with (his information you are prepared for the potential that Kenny & I feel is now in the market place. The next few weeks could be quite rewarding.
My strategy would be to temporarily close down all selling. I would most certainly rate the action of all the shares you hold in the portfolio against RGLD and NEW. As gold moved over $400 I
would have a strategy of weeding out the bow-wows and staying with the strong performers.
Canadian Dollar
There is a possibility that hard currency in markets which have awoken from their small dollar rally and are now appreciating against the dollar might gain more individual strength. The Euro has been the leader against dollar weakness but as I told you it is not fundamental. It is a game of inverse mirrors. By this I mean that although the Euro will appreciate you might get more market internal strength into the Cando and Swissy. The Swissy because it is traditional and the Cando because US people still labor under the misconception that Canada is a state so they feel at home, eh?
The following chart is from "Commodity Price Charts" (800-221-4352). This is a very long-term continuous chart. You should subscribe because as you can see clearly in the Cando, you are in the dark about key support-resistance and long term formations unless you look way back for reference. You can now understand why .75 stonewalled the Cando in the last rise.
I believe in time the Cando will take out .75 shocking the Canadians and move into the .812 to .82 5 area of resistance. This market has every possibility of .90 and higher. I will share with you my long-term price objective when it is appropriate. I do not want to lose all my Canadian friends with one posting. Anyway the Northern State statement was enough for this posting.
As a note all your Canadian mining companies trading on the TSE or any other Canadian exchange will deliver to you the benefit of being long in the Canadian dollar plus or minus their price action.
Euro
The parade to 1.16 is still on. As you can see there will be opposition just above 1.16 so that is an area of potential stall.
Long Bonds
The Fifth Element required for a Long-Term Bull market in gold certainly appears in. I reviewed in recent Q&A a reader's misgivings on this. You might like to review it. The down side pressure is continuing to eat up the limited 20 day opportunity in time that this market had from the day it hit its first low to demonstrate a recovery. The longer that recovery fails to materialize the less possible it is.
US Dollar
I have questioned almost daily the ability of the dollar to sustain a significant uptrend for a significant period of time regardless of the over sold condition developed in the fall from 1.22 to .9238 because of the lack of fundamental. The fundamental for a solid dollar rally is not a hot stock market which can be the product of the illusions produced by government and the madness of the crowd. It is Balance of Trade, Current Account and the Federal Budget Deficit position among others. Currency markets are generally the part of the crowd that you cannot fool all the time.
Fri Jul 25, 2003
The Royalty Rule
Now that Royal Gold is back into the Fibonacci Gap wherein the old high is reasonably in target, it is time to review what we have learned.
1/ Do not allow a Barren's article of an anti-gold nature admittedly spoken to Barrens by a short seller or for that matter any anti-gold publication to stampede you. I am your watchman. I am here for you. Ask me to opine. If the (article points out a true weakness in an issue, I will certainly confirm it. If it is total hog-wash, I will confirm that to. Those of you that hurt yourself at a horrible cost, then and of future opportunity paid too high a price for a market lesson in fortitude. Your loss has caused me severe pain.
As I pointed out then, all you needed to do was to look at the sale of Franco Nevada to Newmont and you had you model for valuation. I recall that I did a valuation using the Franco Nevada model and published it. It was at the time of the Barron's article in the area ofUSD$56 for Royal Gold using the Franco Nevada's sale to Newmont hard model. Yet many panicked and threw their shares away at a deep discount to the market. Granted no everyone reads this site that trades in Royal Gold. Pity!
The rule is "If you lack the Courage to be in gold, simply don't be!" You are about to have, IMO, an opportunity to get out whole with your profits. If you are not willing to study the why of gold and then decide if you adhere to it, use this upcoming strength to exit the gold investment field completely, PLEASE!
2/ "Demand that the management of your company have the determination to defend the rights and cap value of their shares as it belongs to the stockholders." If a company is attacked, without basis, that company should not defend. Defense is for wimps. The only defense that works is an ATTACK! The Marines know this well. If you are the enemy and ambush Marines they will simply attack you with everything they have. People not afraid of death or loss are the most formidable enemy. Therefore to ambush Marines is dangerous. Attack me or mine and you should be ready for the fight of your life. I never count the cost of a fight as it pertains to me. If the aviator that carries into battle a picture of his/her family dies he does neither his/her country nor his/her family proud.
I am delighted that Royal Gold has new management since the Barron's incident. The old management never had the courtesy to even acknowledge Harry Schultz's or my direct communication with them. That was total bad form. A member of our community sent me a copy of a letter that said that if the community member knew of anything done wrong by Barron's then please inform them.
I trust that the new management of Royal Gold will stand ready to defend those that like the situation and those that are shareholders, from any repeat of that baseless debasement by
the press.
Fri Jul 25, 2003
TECHNICAL HEADS UP
Author: Jim Sinclair/Kenny Adams
Dear Gold Community members,
Here is in my and Kenny Adams' opinion, the skinny. Hang on to your hats gang. We are on the threshold of a Damn Big up move in both gold and silver.The general equities are not the hot hand any longer! Therefore, IMO, even on your worst precious metal dog or con-racket junior, shut down on the selling. You will, I believe, get better prices.
Here's what Kenny has to say in his unique uppercase style:
GOLD AND SILVER ARE BOTH MAKING PATTERNS THAT ARE NORMALLY THE PREPATORY PATTERNS FOR MASSIVE RUNS UP, WHEN IN A RISING BULL AND LEAVING A FLAT CHOP - (OR DOWN), WHEN IN A BEAR AND LEAVING AN EXTENDED FLAT CHOP. IN THIS CASE, WE ARE IN THE BULL.
WHAT IT MEANS TECHNICALLY:
TECHNICAL PATTERNS CAN BE EXPECTED TO FREQUENTLY MOVE UP AT NEAR 90 DEGREE ANGLES AND THEN HAVE NARROW, SIDEWAYS AND ESPECIALLY (INSIDE DAY CORRECTIONS), LASTING 3 TO 5 DAYS ONLY, AND THEN FOLLOWED BY FURTHER SPIKES UP - OVER AND OVER AGAIN, UNTIL REACHING MAJOR UPSIDE PROJECTIONS.
SUCH PATTERNS CREATE A MAJOR, PSYCHOLOGICAL PRESSURE TO TAKE PROFITS AT EACH CORRECTIVE POINT. HOWEVER, THE CORRECTIONS SELDOM FALL EVEN TO MINIMUM EXPECTATIONS - NOR FOR THE MINIMUM EXPECTED LENGTH OF TIME - THEREBY FORCING THE TRADER TO HAVE TO CHASE THE (APPARENTLY PREMATURE) RESUMPTION OF THE BULL, AND FREQUENTLY HAVING TO BUY IN ABOVE THE POINT WHERE THE LAST OFFSETS WERE TAKEN.
THE CATCH IS WHETHER UNDERLYING FUNDAMENTALS WILL SUSTAIN CURRENT INDICATIONS AS THEY HAVE IN THE PAST AND WITH PRECEDENT.
IF PRECEDENT IS FOLLOWED, WE ARE ON THE EDGE OF A MASSIVE, MASSIVE, RISE IN THE VALUE OF GOLD AND POSSIBLY EVEN MORE SO - SILVER.
IF PRECEDENT IS NOT FOLLOWED, ITS POTENTIAL PATH WILL BE TWOFOLD: EITHER IT WILL BE TERMINATED BY INTERVENTION BY WAY OF DECREE, AND THE IMPOSITION OF GOVERNMENT INTO MARKETS, AS WAS THE CASE WITH SILVER 20 YEARS AGO - AND SOME 48 YEARS EVEN BEFORE THAT, (WITH ROOSEVELT'S CONFISCATION OF GOLD) - OR IT WILL EXPERIENCE A MOVE EVEN GREATER THAN PRECEDENT IMPLIES. IT WILL NOT LIKELY TRADE ONLY TO A MATCH OF THE LATE 60'S, AND AGAIN IN THE 70'S, AND 80'S.
IF THIS BULL PHASE IS TO BE GREATER THAN PRECEDENT, THEN IN ITS UNFOLDMENT, ONE SHOULD BE MINDFUL OF THE FACT THAT: HAD ANY GOVERNMENT EVER EXISTENT BEEN THOUGHT OF AS TRUSTWORTHY, THERE WOULD HAVE BEEN NO NEED FOR A CONSTITUTION AND A BILL OF RIGHTS - AND ITS SPECIFIC DEFINITION OF THE PROPER DISTANCE BETWEEN THE STATE AND THE INDIVIDUAL. ONE NEED LOOK NO FURTHER THAN TO ANY GOVERNMENT'S ISSUANCE OF FIAT (PURE PAPER MONEY BACKED BY PROMISES THAT ARE INDISTINCT) MONEY, IN ORDER TO DETERMINE THE EXACT DEGREE OF RESPECT THAT GOVERNMENT HAS FOR ITS CITIZENRY.
IF THIS IS THE EDGE OF, AND THE BEGINNING OF A MASSIVE RISE IN PRECIOUS METALS, THEN THIS IS (POSSIBLY) THE EDGE OF, AND THE BEGINNING OF A MASSIVE DROP IN THE VALUE OF THE EQUITY MARKETS (RELATIVE TO PURCHASING POWER) - IF NOT IN THEIR FACE VALUE, AS WELL. (THIS WOULD OBVIOUSLY INDICATE A DOLLAR FALLING FASTER THAN THE FACE VALUE OF THE EQUITY MARKETS.)
EQUITIES:
THE EQUITY INDEXES HAVE STILL (NOT) YET GIVEN A SIGNAL TO VERIFY A CHANGE IN TREND TO AN INTERMEDIATE BEAR, AND WE ARE IN THE (8TH) WEEK OF THE (EXHAUSTION) SIGNAL - (WHICH SETS A NEW RECORD FOR EACH WEEK BEYOND 6 WEEKS OF AN EXHAUSTION SIGNAL, WITHOUT A VERIFICATION OF TREND REVERSAL). HOWEVER - THERE HAS NOT BEEN SUBSTANTIAL PRICE APPRECIATION SINCE THE (EXHAUSTION) SIGNAL, WHICH CONTINUES TO SERVE ITS INTENDED TASK VERY WELL, BEING: (NO ADVANTAGE TO THE LONG SIDE).
HOWEVER - THE (VNT - very near term) CURRENT INTERNALS IN THE EQUITY FUTURES STRONGLY INDICATE THAT THE MINOR RALLY TO YESTERDAY'S HIGH (TAIL UP/CLOSE DOWN), WILL BE THE FINAL RALLY, PRIOR TO A ROLL INTO FURTHER CORRECTIVE ACTION.
IF THIS IS A FINAL RALLY, I WOULD EXPECT THE VERIFICATION SIGNAL OF TREND CHANGE TO OCCUR SHORTLY.
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