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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (4061)	8/7/2002 11:02:42 AM
From: Jim Willie CB	Read Replies (1) \| Respond to of 89467

expect big mistakes made on Islamic, Iraqi conflicts / jw

To: stockman_scott who wrote (4061)	8/7/2002 11:34:26 AM
From: Jim Willie CB	Read Replies (2) \| Respond to of 89467

article: A Summer Sale on Gold Stocks, by Lawrence Roulston Aug 5 2002 The extraordinary volatility in the stock markets over the past few weeks has spawned a commentary and opinion as wide as the swings in the market. Forecasts range from a complete breakdown of the financial system to jump into the markets quickly or miss the buying opportunity of a lifetime. It's worth a few moments to summarize what I believe are some of the more rational commentary. First, its not surprising to see some panic selling in the markets. We have just witnessed two large, and what appeared to be solid, companies disappear practically without warning. It is bad enough that the Nasdaq has lost three-quarters of its value. Nearly every company in the high-tech sector was systematically slaughtered over the past two and a half years. However, investors knew, or at least they should have known, that the high-tech companies were highly speculative. Just when things began to look OK, we discovered that some of our Captains of Industry are no more than common criminals. One, and then another of the largest companies in America simply disappeared in a puff of smoke as the frauds and other crimes were brought to light. On top of that, a major brokerage firm agreed to pay a $100 million fine for effectively lying and stealing from its clients. Federal investigators are digging through the books of hundreds of companies and rumors abound. The government has now passed a law that makes it a crime to steal from people even if you wear a white collar while you commit your crimes. People are understandably wondering what will be the next surprise. Who can you trust? This vivid demonstration of American business ethics caused some foreign investors to pack up their money (or at least what was left of it) and head home. As investment dollars left the country, the dollar came under increasing pressure. Governments outside of the U.S. like a strong dollar, because that makes it easier for American consumers to keep buying up the billions of dollars of consumer goods that come pouring into the country from every corner of the planet. The U.S. government likes the economic clout of a strong dollar, and is frightened of the inflation that would accompany a falling dollar. For most of the past few years, the dollars that flowed out of the country to pay for the surplus of imports over exports came back into the country as investments. As the flow of investment dollars into the country slows, or begins to reverse, the slide in the value of the dollar accelerates. The stock market scandals put so much pressure on the dollar that action was required to stop it going into a free fall. On July 22nd, at least one and more likely several government stepped in to prop up the dollar. Whether or not gold was a specific target of that action is a matter of considerable debate. One way to look at it is that gold once more filled its role as a reserve currency, as an asset of last resort. Gold was there when it is needed, soaking up unwanted dollars as fast as the traders could press the enter keys on their computers. Once those first trades began to push down the price of gold, a few speculators and investors got nervous and also bailed out, bringing more dollars back to New York and further depressing the gold price. Will the gold price continue downward? Possibly, but not a long ways. The selling will continue, and it's possible that there will be a further small dip in the gold price. Investors and physical buyers see a price near $300 as being too attractive to pass up. Longer-term, fundamentals will always overwhelm short-term market action. In the June issue, I stated that "The gold price is going to go higher yet, but it may take some time. And, it definitely is not going to go in a straight line. The gold price chart demonstrates the upward ratcheting of the past year and presents a very clear picture of what to expect in the coming months." This dip is simply one more down leg in a long term upward trend. I have also repeatedly stated that investors should take some profits on a spike in the gold price to be able to take advantage of a pullback. I know that is easier said than done. It is especially difficult to sell when a stock price has upward momentum. That time when the price seems strongest is usually the best time to take some profits. Now, when the mood is filled with doom and gloom is the time to come back into the markets. For anybody that has cash available, there are several good companies available at deep discount sale prices. This issue highlights a few of the companies that I believe will be among the first to rebound as the gold price continues long-term upward ratchet. Please visit our website www.resourceopportunities.com