As usual, we don't have to look any further than regular SI
posters for well informed opinions that R far better than anything begin put out by the pump n dump WS investment banks:
<How Deep The Correction?
By Claude Cormier
January 12, 2005
www.ormetal.com
(excerpt from issue # 177 The Ormetal Report)
The year 2005 is off a weak start! Since our year-end report, gold is down 3.4%, silver 4%, the XAU 5%, The HUI 5.3% and the TSX gold 5.9%. During that period, our list of 46 favorites is down 3.4%. But our top 10 money makers are up 0.4% and our top 10 long term holds are down a small 0.5% thanks again to a few of our best juniors.
Gold has come down significantly in the last week and much faster than we would have thought. It is now rapidly approaching strong support. The old 1996 high at US$414, the 200-day moving average at US$411 and the very important psychological level of US$400 form a price range that is likely to keep the long term trend intact while the bear market rally on the US dollar does what it has to do. Silver, on the other hand, is already below its long term trendline and may already have bottomed at US$6.35
As we have repeated so many times in the past, nobody can be sure exactly how prices will unfold in the future. So keep in mind that this rally in the US dollar could get much stronger even if the fundamentals do not suggest it should. Therefore, gold could get much lower as, for now, it remains the mirror image of the US dollar.
Unfortunately, there are still too many market players that take short term decisions based on technical analysis. Yet, we remain convinced that what really counts are the facts of economics. And the one simple fundamental fact you must be aware of is that the world is sitting on a mountain of debt surrounded by a sea of fiat paper. More fiat papers will be needed to pay back this debt. Over the long term, this can only be very positive for real things such as gold. With that in mind our 3-point strategy is as follows:
First, accumulate Goldmoney which, in our opinion, is a great way to own physical gold (see goldmoney.com). Only physical gold is a sure thing. You know that your grams will be there in the future and you know that, in the long run, for each gram you sell, you will obtain more and more fiat papers when you need some for your daily spending habits.
The next best thing is gold in the ground that is being discovered and developed economically. This is the kingdom of junior gold exploration companies. They are the ones that create value through the drill bit and eventually are taken over by the mid-tiers and seniors. No matter what gold does, juniors that discover economic deposits will always make you very happy. Buy them.
And finally, be patient but get ready to buy back the Glamis, Meridian and Newmont of the world once this correction is over. We bought them in 2001 and we will buy them again once this bull is back in full motion.
Claude Cormier
Editor, The Ormetal Report
Bruce Robbins
Consultant geologist> |
