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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: 16yearcycle who wrote (7192)	5/25/2001 4:39:22 AM
From: furry_creek	Respond to of 57684

Gold is an interesting topic in recent times, and probably will continue on that path. We are in a period of immense flux, and new forces are becoming evident. The Information Age continues, but its role is changing. The Alternate Energy Age is about to replace it as the top attraction. The Environmental Age has emerged as the Best Supporting Actor/Actress, and may yet take the gold in the coming years. Both are driven out of necessity, a compelling business case. The ultimate goal is free energy, and zero unrecoverable environmental damage. That can't happen overnight or even soon, but we will drive much closer to it or face extinction. Don't you think more of us would be less stressed, more healthy and much closer to our true nature? Hey, I'm no Luddite, but I'm also really looking at our unmasked reality. Not intending to downplay Infotech (we'd be nowhere without it), but bigger gains in life quality will be driven by the energy and environmental advances. Infotech drives and enables these advances, and is insidious everywhere else. Quantum leaps in Infotech driven productivity have stalled, and now must be leveraged to a higher multiple. Infotech really needs a new "killer app" after the recent fakeouts from wireless and others. Back to gold for a sec., I think it will become harder and harder for the powers that be to suppress gold, as we accelerate into change. Today's political change (out of the GOP) will hopefully drive us forward on these paths in a more strategic manner.

To: 16yearcycle who wrote (7192)	5/25/2001 1:10:34 PM
From: craig crawford	Read Replies (1) \| Respond to of 57684

>> You are thinking gold is going to go up, but I don't think it will. << Fair enough. First of all understand one thing. I do think gold stocks will outperform tech stocks over the next 5 to 10 years. I think many things will outperform tech. That doesn't mean it has to happen this week, next week, or next month. I am not saying gold is my single best investment idea for the coming decade. I'm sure there will be plenty of other commodity plays that outperform. The reason why I have been focusing on gold stocks lately is because they have 1) been the best performing sector as of late and 2) they fit a few of the criteria that I'm looking for in an investment. All my investments going forward need to have some basic characteristics to them. 1) They need to be in the natural resource/commodity area. It's so obvious this area has been overlooked as everyone has poured all their dollars into technology and the internet and left everything else for dead. 2) It needs to be cheap. Gold stocks are cheap by almost any measure. Gold/Silver was the hottest thing 20 years ago and there were mines and exploration sprouting up everywhere. Gold stocks were high flyers like the internet stocks were last year and they paid huge dividends. Everyone followed them. Now gold stocks are largely ignored and the people who do follow gold get laughed at. Don't forget, even if you believe the lies the government tells you about inflation, their statistics say inflation is up 125% or so since 1980. So at $275/oz gold is like $130/oz in 1980 terms. Or you could look at it in reverse and say that in 1980 gold hit about $2000/oz in current dollars. So when you take into account inflation, gold is cheap. It has been accepted that for many centuries 1 oz of gold should buy you a finely tailored mens suit. Well for $275 you can't even get a cheap Men's Wherehouse suit! 3) Another characteristic I'm looking for is 20 year lows. My commodities mentor Jim Rogers says no commodities have ever stayed bearish or have been stable for 30 years except the artificially rigged price of gold from 1935-1970.. Commodities are cyclical just like everything else. When it dawns on everyone that there is a shortage, people scramble to rebuild their stockpiles. They don't want to suffer the pain of having to ever live through another shortage again, so they hoard too much and over-stock. Too much supply comes on stream as people stock up, and that triggers a nice boom on the way up, but after it peaks it's what triggers the downward cycle and gives you a bear market. It seems to take about 20 years or so to work off the supply and work down the inventories until you start seeing shortages again. It hasn't been cool to be a miner for several years now. Many mines (especially the marginal ones) have shut down production, because it just isn't profitable. Some have just plain failed and run out of money. Environmentalists have chased some miners out of business with lawsuits. That is why we are seeing tightening supplies in many natural resources. It simply hasn't been profitable enough to pull most natural resources out of the ground lately and there were plenty of inventories above ground to dump onto the market. Well eventually that has to end because people are too busy paying attention to technology and not paying attention to see that inventories and stockpiles are decreasing. After 20 years of declines people come to accept that prices are just going to get lower, why should I worry about stocking up, it will just be cheaper next month, next year etc. Kind of like the stock market when it's in a protracted bear market. Why should I buy stocks this year when they will be just as cheap if not cheaper next year? Well Gold hit 22 year lows recently. 4) Dwindling supply. Supplies have tightened up. You do realize that for several years now we have not pulled enough gold out of the ground to meet demand. It's even more out of whack for silver. I believe the deficit is 12 years in a row for silver. Demand has been made up from above ground inventories--mainly central bank sales. Well if gold prices start heating up central banks might say, "Hey wait a minute. Maybe we should lighten up on our gold sales a bit because we think we can get better prices down the road" What's going to happen? There will not be enough gold coming out of the ground to meet demand and prices will rise. Now unfortunately for gold bugs 80% of gold demand is for jewelry, so that can be somewhat elastic. Demand for gold jewelry might decrease or people might starting bringing their gold to market if the prises rise significantly. 5) Demand. Gold demand has been outstripping supply for several years. It's possible that Greenspam's money printing schemes start to spook people and they might just start piling into gold and out of the dollar. I know that seems so far-fetched and it seems kind of like conspiracy talk, but something has to explain for the rise in gold stocks over the last 6 months. Raging inflation could be it. Glenn has just said that gold Jewelry demand is picking up. I realize there was a bump going into Y2K and then it cooled off, but indications are it's picking up again. More importantly, gold has many unique properties that can't be substituted with other metals. Golds use as an industrial metal is going to increase now that it is significantly cheaper than platinum/palladium. There is also quite a lot of research into the use of gold and silver for medical purposes. Gold has a promising future as a catalyst for clean air, and silver is widely recognized as great at killing bacteria and keeping water clean. With GW giving everyone the go ahead to drill for more oil and burn more coal, it's only natural that in the coming years people are going to real be up in arms about clean air and clean water. Gold and silver can play a big part in this. Like I posted on the amazon board, gold use in electronics was up 15% last year. With platinum and palladium prices skyrocketing high above the price of gold, you will have substitution back toward gold. That's why when the commodities boom gets in full swing everything will feed off each other. If platinum and palladium get so expensive substitution switches to gold and other base metals, pulling them along with it. Eventually silver will start joining the party as well, and there just aint much of that out there either. Eventually people will come to find out that there just isn't enough metal out there to substitute anymore, and it takes time at that. That's exactly what we've seen with energy. Oil was the first to bottom, so then natural gas started picking up. Obviously natural gas prices skyrocketed and didn't solve the problem, so people started going back to that dirty little energy source coal. Now people are talking about going back to nuclear energy and you have uranium stocks going up. Of course anything to do with alternative energy is flying as well. You see how it spreads? Well it's going to spread to all the metals eventually as well. Titanium was the first to pop (thanks to Russia), then Platinum/Palladium began to pop, and they haven't gone crazy yet but you are starting to see moves in gold/silver. Before all is said and done it's going to spread to nickel, lead, zinc, copper, tin etc. Of course higher energy prices all play into this as well because everything in the economy costs more when you have to use a lot of energy to mine it, refine it, smelt it, and transport it. Producers will have to demand higher prices or they will simply stop production because it won't be profitable. Well there aren't very many miners left these days so it only takes a couple to go out of business or stop production before supplies will get even tighter. Wait just a darn second. It doesn't stop there. What happens when metal prices start going up and mining companies start ramping up production again? Workers start demanding higher wages, or they will strike. Many miners have had a rough go of it for the last 20 years and they will want their piece of the action. Miners demanding higher prices or striking will exacerbate the pricing situation even more as costs of production go up. I could go on and on with more examples of how these things gain momentum and feed on themselves, but this post is getting quite long. 6) Short positions. When commodities go down year after year after year they attract a lot of shorts. Eventually the shorts have to cover, and that's why you can have violent swings in metals and other commodities. Of course after a violent spike upward, many shorts think it's just one of those typical bear rallies that will quickly be over with. That emboldens them to short even more, and then when it spikes up again, they are burnt to a Krispy Kreme-ation. >> There are too many jewelry merchants around like Glenn, who wouldn't think of passing the increased costs on to the customer, and so, how can any gold inflation occur? << That is ridiculous. You think businessmen like Glenn are in the business of losing money? If gold hit $500/oz you can bet prices in his store would go up.

To: 16yearcycle who wrote (7192)	5/25/2001 1:29:34 PM
From: craig crawford	Read Replies (1) \| Respond to of 57684

Don't get me wrong. I'm bullish on silver and other metals as well. You just don't hear me talk much about them because there aren't very many ways to play them anymore. There are only a handful of pure silver plays out there and most of them have been down so much they stopped trading options on them long ago. SIL is about the only one I can think of off the top of my head that has options. This is just a short-term leverage thing I am referring to. If you are just into stocks and not derivatives, you can just buy something like SIL or PAAS and hold them for the next 5-10 years. I am sure they will outperform all these bubble stocks you all keep buying. I think your best bet is to learn to play the futures markets so you can use leverage on the actual metal itself. Furthermore, I can grasp the principles of gold a little easier right now. There are many easy ways for someone like me with little knowledge about commodities to play gold. I need to do much more research before I ramble on these boards about hogs, sugar, rubber, etc. Do you know a highly leveraged way to play rubber? I mention rubber because Jim Rogers has mentioned that. He has also mentioned lead. I'm not aware of any pure plays on lead are you? I thought much of lead was a by-product of mining other metals. I have found some zinc plays however and I am keeping an eye on them. Of course there are a few large copper players out there as well. Inco is a large nickel-zinc producer in Canada and their stock will do quite well over the coming years. Also, I am bullish on coal and oil. Not so bullish that I am going to chase the stocks after they are up 10 fold, but the first real break in the stocks and I am going to jump in in a big way. Coal stocks are taking a big breather the last couple of days because people took profits into all the IPO hype. I'm looking for an entry point for some nice option plays. I missed the pullback in oil prices to jump in, so the next big correction for oil stocks and I'm there. That will give me time to get up to speed. I did run across some sugar refining stocks a while back but there has been a glut of sugar for so long that many have gone out of business or are penny stocks on the bulletin board. I'm all ears people if you want to help me out and find pure leveraged plays on sugar, wheat, cattle, hogs, soybeans, cotton, rubber, all metals, all energy etc. Does anyone have a pure-play on eggs? I think people are finally going to wake up and figure out that eggs are one of nature's perfect foods, and eggs are going to make a serious comeback. I eat probably 3 dozen eggs every week.