A thought on gold from kitco
<Date: Mon Aug 31 1998 02:39
farfel ( OLDMAN & GOLD... ) ID#17077:
Copyright c 1998 farfel/Kitco Inc. All rights reserved
As I have said in the past, I believe the Oldman is a shrewd trader, although he was late in recognizing the Bear
Market this summer. However, I remain firmly convinced that his assessment of gold and silver is completely off the
mark.
As I have oft mentioned in the past, I always felt that goldbugs would fail to recognize the paradigm shift when it
finally arrived. In fact, to date, I have been proven correct.
The paradigm shift in general equities was NOT sparked by goldbugs nor bears. It was sparked by ultra-bull Ralph
Acampora...it took a major stock Bull analyst to concretize the paradigm shift we are now witnessing. No surprise
there. Goldbugs and chronic bears are members of a minority and I always contended that the paradigm shift MUST
be instigated by a change of heart in the leading members of the majority, namely the general equities bulls. Why?
Because, essentially, goldbugs and bears have had next to ZERO credibility this past decade. Sharp analysts like
Puetz have beem mocked and derided an dismissed as effective retards.
On the other hand, a fellow like Acampora has been heralded as one of the Stock Bull's demigods. Not because his
analysis is so astute or well-educated but simply because, with a combination of corrupt government intervention in
the markets and a good deal of luck, he has proven to be correct. So, when a fellow who commands such reverence
amongst stock bulls turns bearish, THAT is a major event!
As part of this paradigm shift, GOLD MUST RISE! Yes, it is very discouraging to see gold fall with the general
market. So discouraging that most goldbugs are finally surrendering and dumping their gold equities....in some cases,
even their physical. Again, this is because most goldbugs have failed to recognized the new paradigm shift. However,
it should come as no surprise that a time lag exists between the start of a general equities bear and a real substantive
gold bull.
First, people must ACCEPT the reality of the general equities bear. Once acceptance takes place, then they must do
some research and investigation as to alternative bearish investments. Naturally, their own financial advisors push
bonds and Utes as flights to safety, at the same time continuing to extoll key bullish investments. However, once
these various, purported flights to safety prove to be as susceptible to a downslide as equities, then these same
disillusioned investors will begin to listen to the "fringe and/or peripheral analysts."
For example, since I have been bearish for some time, as such I am a member of this lunatic fringe. I am well aware
of the standard reactions to this "lunatic" bearishness. People raise their eyes and look far off into space when you
attempt to explain the paradigm shift that is occurring and will continue to develop. Yet, now I am seeing evidence of
the paradigm shift slowly developing into a populist fever. I am receiving more and more phone calls from people
who, in the past, listened politely to my analyses at best or simply chose to cut off all communication with me,
regarding me as a doomsaying oddball. Today, these people are calling me up for opinions and analysis. Their own
investment advisors appear uncertain, confused, and nervous. They no longer recommend equities with heart-felt
conviction...they're not really certain about bonds. They're not really sure Clinton is good for the country or ever was.
Basically, as they see their world crumble around them, they're not sure if up is up or down is down anymore.
So, people are calling and they're asking, "Where do I buy gold and silver? How should I buy gold and silver?" It is
really an amazing phenomenon to see, given that so many of these individuals would normally have shunned me if I
walked into a room.
Yet, when they call me, they find that nothing has changed. I still speak with full conviction that PM's are the ONLY
flight to safety in the new economic devolution spreading across the world. I still extoll various gold and silver
producers as inevitable beneficiaries of this flight to safety. I still state categorically that NOT all paper will burn in a
market crash...it NEVER did before, why now? Nothing has changed in my perspective. I am solid as a rock ( as
Bob Seger would say ) and people gravitate toward analysts with pure unqualified conviction. It is all part of the
paradigm shift.
Falling demand for gold in Asia or Europe? Falling silver demand in India? Big F*ing Deal!! It will be more than
made up for by an amazing surge of PM demand right here in N. America and Europe as people clamber for an
investment alternative to collapsing equities and bonds. Rest assured that the bonds bubble will burst, independent of
the direction of interest rates. With an equities market collapse, many companies will become insolvent and unable to
make payments on their bonds. Many statea and local governments will also become insolvent and fail on their
payments. The resultant panic in the bonds market will prove devastating.
As an alternative investment which acts as a hedge against global currency chaos, GOLD and SILVER are it!
Deflation, when it triggers pandemic currency crises, CANNOT result in the negation of gold and silver in the long
run. There simply are no other historical flights to safety available.
Finally, One thing I speak of with the utmost conviction is this: last Thursday, the gold shorts piled on when gold broke
technical support at 278. It was NO accident. Gold was ALLOWED to break technical support; it did not do so on its
own momentum or of its volition. Very shortly, we will see a consortium of CB's, power players, and institutions bid
gold through the roof. So, unfortunately, the upsurge in gold shorting was a major and fatal mistake for the funds that
did so and, shortly ( I would guess within several weeks ) , they will ALL be wiped out.
Repeat. They will ALL be wiped out.
I say this without qualification and without a shadow of a doubt.
GOLD and SILVER have been set up for short squeezes of monumental proportion. There is simply little to no
eligible gold/silver inventories available against the massive demand that is building up.
Yes, it is true that commodities fall during deflations. However, what the PM shorts never fully understood is this:
gold and silver never were, and are not, and never will be mere commodities.
There never was a NEW PARADIGM.
Just go ask Acampora.
Thanks.
F* >>
russell |
