Schaeffer's Media Outtakes: Gold at Historical Highs With Room to Run
Bernie Schaeffer 10/10/2005 8:37 AM ET
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Read how Bernie dissects the news using his contrarian analysis to provide his unique take on what's really happening in today's market. Click here to view the archive of Schaeffer's Media Outtakes.
"Gold on Monday struck its highest level since January 1988, peaking at $478.50 a troy ounce in early trade as the dollar weakened, and on fears of rising inflation fuelled by higher energy prices. The new high represents the longest bull run in the gold market since the precious metal was freely floated in 1968 ...The rise in gold prices follows further speculative buying, according to the latest data from the Commitment of Traders report by the Commodity Futures Trading Commission (CFTC). The CFTC report showed the net longs rose by 860,000 ounces to 20.27m ounces. 'A result that leaves many market analysts anxious about the potential for a significant sell off,' said Paul Merrick, vice president of commodities and foreign exchange at Royal Bank of Canada. 'However, the fact that net longs are now nearly four times as large as at the end of May has not, to date, impacted on gold's bullish run. The market has shown capacity to absorb the additional interest without suffering from nervous price dips,' Mr Merrick said in a report. Alan Williamson, precious metals analyst at HSBC, said ongoing inflation concerns have been used to justify buying of gold, notwithstanding the fact that the link between inflation and gold has been overstated."
----(Financial Times - 10/10/05)
Schaeffer's addendum: There is plenty for contrarians to like about gold, including the ongoing skepticism in the face of powerful price action as expressed in the piece quoted above. And the gold stocks have their own contrarian allure, with just 29 percent of analysts rating them a "buy," the lowest consensus "buy" rating over the past 18 months.
Bernie Schaeffer
schaeffersresearch.com |
