Gold -- the eternal short? Message Board

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Strategies & Market Trends : Gold -- the eternal short?

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To: Ed Huang who wrote (47)	6/1/1997 9:37:00 PM
From: rch	of 114

I agree with your comments however the part that is important to understand is that the bear is getting weak and the bull is gathering strength. This does not mean that the price couldn't go lower before it goes up. The problem for us as investors is timing. For now the timing is bad because we have retested a significant low for a third time. While it has not clearly broken that low it has also not broken anywhere to the upside in a way that would indicate a change in trend. It is quite possible that it will reach below 300 and retest the major low of this bear market. It could even exceed it as a last gap move and final washout. At which point volume will collapse and we will see the trend change. Alternatively, having bounced off this recent low, it may consolidate and start to make the moves to the upside to break past the resistance points suggested by one of the later writers $380 and then $420. A strong breakout past $420 will be an absolute confirmation of a change in trend. So the time for now is to stand and watch. Trying to find a bottom now is like trying to catch a falling safe. Lets look for either a run to the previous bottom (below $300) where we can look to invest or look for a breakout to indicate a change in trend. At this point the only safe breakout to trade is at $420. Don't forget Gold has been trading in a range for years which has not exceeded $420 and has not gone below $360 (approx). Investing at $380 could mean you could jump in for small profits only to be knocked out by a huge reaction. Don't forget the hedgers routinely close out positions on up moves. Royal Oak Mines for example recently reported that it made several million dollars on hedging activities while losing money on its gold operations. A place to invest for the long haul would be gold stocks and there are many interesting mature producing companies which are severely under-valued at this time. They have very little downside risk and huge upside potential. In fact I believe one should be moving his investments into gold stocks for safety and growth. Lets face it Gold stocks have not benefitted from this huge bull market in stocks and by holding stock you will not have to worry about timing but still will be able to benefit from a strong move in gold.

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