Pop Quiz (from Jim Sinclair):
Re: Chairman's Corner - Thursday, January 16, 2003
Gold Spark + Gunpowder = A Gold Boom
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Do you really want your position lower at the present time?
Not Me!
Let's have a test. No cheating! So all derivatives traders beyond the first derivatives (listed futures) are not to be seated!
Question #1
Great Britain, the only ally of size with the United States, is waffling over supporting an invasion of Iraq. Therefore, an invasion is less likely. Sell your gold shares.
True ___ False X
Your answer is correct. Obviously you know Texas folk well because lack of support only makes them crazier. Anyway, they always suspected that the Legend of the gun fighter, "British Bob," was a fabrication.
Question #2
Loss of support must certainly delay any invasion of Iraq.
True___ False_X_
Again, your answer is correct. The falling away of any vestige of support will, in all probability, trigger an almost immediate stage- three buildup and hasten the probability of invasion. As both Commander & Chief as well
as President, he understands all too well that politics at home enter the equation.
Question #3
Will an invasion of Iraq cause international central banks to take any actions?
Yes___ NO X
Oops, you got that wrong. The major central banks in Europe that did not follow the US Federal Reserve in their rate cuts and significant pump priming by having their own Fed Governor, "Bernanke the Electronic Money
Creation Machine," will join in the "Monetary Inflation Central Bank World Parade."
That is according to statements made this week and reported in a tiny article in the Financial Times. Their rate cutting was timed not to a specific economic event but rather to an Invasion of Iraq by the United
States coalition of one. My Canadian friends are presently not too happy about the bombing of their forces in Afghanistan by a US fighter pilot and probably will abstain in practical terms from this war anyway. Maybe
they'll participate at a later date in an arena where they have a history - Korea being a possibility.
Question #4 Essay question
The positive market in gold is a market predicated on war psychology. Please comment.
Certainly, there is a war premium in gold based on the potential of an Iraq invasion. However, to state that the bull market in gold which started over one year ago is predicated on the invasion of Iraq is glib at best. If you
assume that there will be no war in Iraq, you cannot therefore assume a bull market will ensue in the US dollar. That alone should be enough to disarm the position that the bull market in gold depends on a conflict in
Iraq.
NB- Too short an answer but adequate.
Today I received an email from my e-friend, "WiseBeard" who I visualize as an angry anthropomorphic deity sitting on a cloud now hovering over Vancouver's Burrard Inlet to whom failing to answer would be the instant
cure to the common cold - death.
Dear WiseBeard:
GCJ, the gold contract that I follow, closed at $359.10, coming off a high of $360. Now gold steps up to the $361- $363 level and chops the higher range of a low of $357.00 to $363.00. The next major price objective for
this contract is $372.00 which, in my opinion, will be achieved.
The short answer, O Fearful Whiskered Smart One, is $361.50. Then it will gyrate around for a while so more people can panic and throw their gold shares away after which $372.00 will mysteriously appear. Call me back after that! When few people have any gold shares left, we will move over $400 and gold shares will make their highs for the first wave of a five wave Elliot Wave Gold Bull market that does not waver.
The Dollar, which as I pointed out to you earlier, failed yesterday and acted like a popped balloon after the air was let out today. See chart.
The euro continued its march that is destined to see 1.20 to the dollar.
My friend in Platinum looks real good having completed his switch today by selling to the dealers in the cash market the last part of his gold position.
Those of you that sold your gold position made that decision improperly based on watching the wrong indicator. Sorry, nothing is forever. Be grateful for what it did for you and now forget it as long as gold trends on the daily, weekly and monthly price charts. Chop indicators get nailed to the overbought reading in a gold move. Following a chop indicator in a trending market causes you to miss the big trending up moves.
Sorry about that!
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