Dear Jim:
A number of analysts are suggesting a serious financial accident will result in a stock market meltdown. What do you think will happen to gold stocks in this environment? My impression from 1987 is that they also went down. Many people reference the crash of 1929 and Homestake. However, there were very few alternatives then and we did have a gold standard. Is it better to own gold itself in a crash. I think my question would be relevant to many people in your audience.
Sincerely,
CIGA G M:
Dear GM:
The important concept to hold is that a serious decline in general equities has most times to do with lower earnings expecations. First, we need to see the equity disaster pundits proved correct. So far, there is a lot of egg on many faces in that department. If you accepting the premise of a serious decline in general equities the formula is: Lower earnings = lower Federal receipts = a growing Federal Budget deficit in the hands of managers that have no policy in place to offset this impact. What this adds up to is a lower US dollar which equals higher gold and gold shares.
Comparisons to 1987 are made when gold and gold shares were simply performing in a counter trend rally in the 22 year bear market for gold and gold shares. So, the comparison is invalid.
Regards,
Jim
Dear Jim:
Thanks for your wonderful commentaries each day. I was wondering what you think will happen to RGLD since it passed your last chart of $34.00 $36.00.
Do you expect a pullback or will it go to $41.00 and to $43.00 which is a chart you gave us November 25, 2005.
Thanks again
Russ
Dear Russ:
I just read the technicals as they were at that time. As long as a situation holds its power uptrendline, it is trending higher. Royal Gold is the only senior gold royalty company out there. One of a kind and the right kind makes for good interest.
You know why I feel royalty is the only way to go. I will again get a price objective once we have a formation consolidation, but now it is pure trend line analysis.
Winners tend to continue to win and dogs simply remain K9s.
Regards,
Jim
Dear Mr Sinclair:
I would like to take this time to thank you for all the wonderful advice you have given us in 2005. I look forward to a continued collaboration for the New Year. Also, please advise if the $1650.00 target is still valid, and if so when?
All best wishes,
J R
Dear JR:
How are things at the Dynasty ranch, JR? Yes, $1,650 is still a valid target for this generational bull market.
Regards,
Jim
jsmineset.com
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