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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (91394)	6/8/2001 12:05:31 PM
From: Frank Pembleton	Read Replies (1) \| Respond to of 95453

Bullish on gold By Carlyle Dunbar The upturn is for real, all right — and I'm talking about the gold mining stocks. Of course, the market generally is having a real rally, but this is not a real bull market. The weight of evidence says it is a rally in a bear market. The rally could go on for some time, but it is getting overextended. As for gold and gold mining, the informed opinion on Wall Street says their rally is on a dead-end road. Such negative belief in the face of a rising market is fuel for the Theory of Contrary Opinion. When big-league money managers, economists and analysts continue to scorn golds despite the uptrend, be bullish. Examine the action of the market and what it is saying. There are significant upside breakouts in the gold sector. Since October 2000, the gold stocks have struggled. But since that point, the Toronto Stock Exchange gold mining index has gained 55 per cent — most of that gain made in April and May this year. A long-awaited bull market has arrived. Consider factors supporting this. Increased inflation is first. Interest rates have responded to the insistent pressure of higher consumer and industrial product prices. Bond yields are rising, implying higher inflation rates. The U.S. dollar gives more indication its strong two-year push upwards has ended. Overall, the U.S. economy is slowing, and that is what the stock market foresees. But we are perhaps several quarters away from a certified recession. Gold mining flourishes in economic bad times. Greater inflation, a weaker greenback and a sagging economy — all these fuel the potential for gold and gold mining stocks. The Fed's "broad" U.S. dollar index shows a weakening of the greenback. In almost 30 years, this index of the dollar in relation to other major world currencies has climbed from 29 to as high as 128 this year. That's a bull market. The long uptrend line since 1981 has been broken — instead of being technical support, it is likely to be a ceiling on any further upmoves. Short-term indications, though, are downward. The dollar index has dropped more than one per cent since the beginning of April. Rates of change have turned downward. Because gold is the alternative currency, U.S. dollar weakness is positive for gold. (If the greenback isn't safe enough for you, which other paper currency would you convert to?) Gold mining shares typically lead when gold revives, and they are doing this again. Gold itself is reviving slowly. The cash price of gold (London fixing) climbed above US$290 per ounce, up from the US$260 zone in February. The "breakout" level for the London gold price is now US$305. The price hit a 20-year low in 1999.