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To: ms.smartest.person who wrote (1609)	8/18/2002 7:58:06 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 5140

GoldTrends 3 By: Adam Hamilton, Zeal Research GoldTrends 3 Speculators in the general US equity markets are not the only ones who have been entertained by an uncharacteristically wild summer this year. Gold and especially gold stocks have performed just about every kind of wild gyration imaginable during recent months. While the volatile summer has certainly been emotionally challenging for all playing the markets, it was really a blessing for speculators. For those who are able to harness and suppress the inherent human greed and fear dwelling within their own hearts, this year has proven to be very profitable across the whole gold arena. It has been about 4 months now since I hammered out my GoldTrends 2 essay, so this week felt like a good opportunity to take another look at the gold charts. We built some new graphs with current data in order to attempt to once again command the strategic perspective in the sometimes chaotic gold and gold stock action. As daily volatility hammers investors and speculators alike and challenges worldviews and perceptions, it is incredibly easy to become mired down in the tactical daily market noise. Just as a good military general craves a satellite-level big-picture strategic overview of any unfolding campaign in war, gold speculators and investors can benefit tremendously by stepping back, ignoring the countless tactical day-to-day distractions, and focusing intently on the strategic big picture. Gold’s strategic fundamental picture is well known. It is believed that around 140,000 metric tonnes of gold have been mined in all of world history. Today about 30,000 of these tonnes are believed to be held by various central banks around the world. Most of the rest is in private hands, either in the form of pure investment gold like coins and bars or worn as jewelry. Each year all the world’s mines only manage to painstakingly chisel 2,500 tonnes of fresh gold out of the bowels of the earth. This number divided by the total gold supply yields an average annual gold “inflation” rate of about 1.8%, right in line with centuries-old historical averages. As long as fiat currency supplies around the world including the dollar are generally inflating faster than the total global gold supply, each ounce of gold will ultimately grow more valuable in currency terms. Case in point, mega-inflationist Alan Greenspan has ballooned the US MZM money supply by an absolute 12.9% in the last 12 months. This hugely inflationary environment is fantastic for gold! Relatively more dollars chasing relatively fewer ounces of gold each year yields higher gold prices. Unfortunately, since sycophantic bureaucrats who hate freedom are running central banks all over the world, they too are inflating rapidly and intentionally destroying the savings of their people. Gold thrives in such environments of socialist government-sponsored theft through inflation. As an added bonus, gold is also running a gaping natural annual supply and demand deficit. Today worldwide gold demand is believed to exceed 4,000 tonnes. Marginal new investment demand for gold, crucial for its price, is almost certain to continue increasing as the brutal supercycle Great Bear market in US equities continues to pour out its wrath upon the markets. As more and more investors worldwide grow weary of their relentless general equity losses and they witness the magnificent gains the gold investors are reaping, a deluge of fresh capital is almost certain to flood into the very small and lightly-capitalized gold and gold stock markets. Fundamentally, the gold market looks like an outstanding investment and speculation opportunity in coming years any way you slice it. Fundamentals are crucial to determining price and trend direction, but fundamental analysis is unable to provide buy and sell signals. Since we know the fundamental strategic environment for gold is quite dazzling, we can use technical analysis to flesh out the current situation for gold and gold stocks. If good fundamentals coincide with positive technical action, the probability of the gold rally continuing is very high. Obviously, the key to gold and gold stocks performance is the price of gold. The correction in the gold price since early June has definitely tested investors’ and speculators’ mettle. By transcending the daily tactical market noise and looking at the big picture however, it is readily apparent that gold’s strategic uptrend remains intact. Gold still looks gorgeous technically! click on link for rest of article & charts goldseek.com